Business model

Operating income

  1. Customers segmentation (CS)

These are the key segments: investors of wind power generate electricity, local governments needing to promote renewable energy, private businesses with the demand of carbon neutral, and also are all the customers of solar power plants from King Energy.

  1. Value proposition (VP)

As a renewable resource, wind power plants are almost only limited by wind speed. King Energy has reduced the risk by surveying metrological data and high efficiency wind turbines that are tested by the Government. If we chose an area with average wind speed of 7 meters per second, then it is possible to make 10% in gross profit return rate. Moreover, the wind power turbine owners could deal with Taiwan Power Company about wholesale contract that make sure of reasonable purchase rate for 20 years.

  1. Value delivery (CH, Customers Channel)

King Energy will build demonstration wind power plants to promote renewable energy and environment education.

  1. Customer relationship (CR)

King Energy will sign 20-year contracts with Taiwan Power Company for electricity wholesale, also signs a 20-year contract with investors for maintenance.

  1. Operating Income (RS, Revenue Streams)

Operating income of King Energy mainly comes from selling electricity wholesale to Taiwan Power Company, selling wind power turbines to customers, and charging maintenance fee from customers.

Cost

1. Key Resource (KR)
King Energy has surveyed metrological data of Taiwan, and has developed high efficiency wind turbines that have passed MIRDC test. It means we are ready to commercialize, and we think we are the first one to do so in Taiwan.

2. Key Activity (KA)
King Energy is going apply a license for electrical industry, build demonstration wind power plants, and sign wholesale contracts

3. Key Partners (KP)
King Energy will focus on IP management, selling wind turbines, and maintenance. We will outsource for manufacturing to cost down and create more value for shareholders.

4. Cost Structure (CS)
Costs come from research and development of IP, outsource for manufacturing, management of company, and also from depreciation and amortization according to the law.

Average wind speed and annual ROI, wholesale income

Annual ROI (gross profit): line, Annual wholesale income: bar, Wind speed: 4 m/s ~ 11m/s Original source: Central Weather Bureau (CWB), Metal Research & Development Center(MIRDC)

Annual ROI (gross profit): line, Annual wholesale income: bar, Wind speed: 4 m/s ~ 11m/s Original source: Central Weather Bureau (CWB), Metal Research & Development Center(MIRDC)

Cash Flow

The value of plan comes from “The discount value of future cash flow.”

Annual cash flow = Operating Income – Cost Structure

We should consider about the “Variance of ROI” to decide “Discount Rate” and “Net Present Value (NPV)”.

Risk Assessment

The risk of new product development comes from marketing, product function, and technology development. They are as follows:

Marketing Risk

In order to avoid wasting time and money, the first step of new product development is confirming marketing strategy. King Energy grasps the trends of Electricity industry liberalization and Nuclear-free Homeland, what will create a huge gap of power supply in the future. And The Electricity Act allows private power plants to sell electricity to Taiwan Power Company at a statutory price. So King Energy have customer already and profit ratio is protected by law. It means the marketing risk is acceptable.

Product Risk

It is a key point for a new product to fully fill customer`s demand. King Energy`s wind turbines operating almost without noise pollution, which is a big problem for large wind turbines. It means the product risk is acceptable.

Technology Risk

King Energy`s wind turbines have passed the tests of MIRDC and the efficiency Cp is 33%, which is a high performance around the world. It means King Energy has leading technologies, so we think the technology risk is acceptable.

The Variance of ROI

How much electricity a wind turbine can generate in a year depends on wind speed, not capital market rising or falling. According the test report of MIRDC and the wholesale Purchase Rate of 2016, there will be 10% of ROI if the wind speed is 7 meters per second. If we chose locations depending on long-term statistical metrological data, we could say that the variance of ROI is 0.