©2009 ViTAL Economy, Inc. 1 Energy Cluster Tuesday, March 24, 2009 9:00am-11:00am Marion...

©2009 ViTAL Economy, Inc.— 1 —

Energy ClusterTuesday, March 24, 2009

9:00am-11:00amMarion Man-Tra-Con office

ViTAL Economy Alliance Steve Martin- [email protected] Rob Beynon – [email protected]

Industry Cluster Opportunity Analysis

Second Cluster Meeting


Industry Cluster Second Workshop Agenda

Step One – Getting to A Vision

5 Min. – Welcome & Introductions

5 Min. – 60 Day Work Plan Review

10 Min. – Draft Cluster Vision Statement

10 Min. – Preliminary Cluster Research and the Interim Call

40 Min. – Indigenous Resources to Leverage

7 Min. – BREAK

Step Two - Action

20 Min. – Niche Market Prioritization

10 Min. – Cluster Recruitment Plan and Contact Assignments

10 Min. – One Month Cluster Team Work Plan

5 Min. – Next Meeting


Southern Illinois will:• Be the fastest growing economic region in Illinois

• Be the regional gateway:– From America’s Heartland to the global economy

– From the global economy to America’s Heartland

• Be named a national and regional model for collaborative, regional rural economic transformation

• Achieve a positive balance between livability &

sustainable growth

Southern Illinois will:• Be the fastest growing economic region in Illinois

• Be the regional gateway:– From America’s Heartland to the global economy

– From the global economy to America’s Heartland

• Be named a national and regional model for collaborative, regional rural economic transformation

• Achieve a positive balance between livability &

sustainable growth

Why….? Connect SI Vision and Goals


Stage #1: 60 Day Workplan – Where We Are

COMPLETED

STARTED

Research Team• Market attractiveness research – each

niche– Size– Growth rates– Business trends– Political, economic & business data

• Expanded value chain mapping• Niche market

– Demand trends– Supply trends– Regulatory and political trends

• Conduct hypotheses testing• Conduct preliminary industry interviews• Refine niche market focus• Prepare for interim conference call

Industry Cluster Team• Determine core cluster leadership team

• Draft cluster vision statement

• Complete cluster participant recruitment plan

• Conduct recruitment calls

• List indigenous resources leveraged – each niche market

• Link resources to hypothesis to be tested Begin list of key regional, national industry interviews

• Refine niche market focus


Energy Industry Cluster Team Schedule

Cluster Work Plan Jan Feb Mar Apr May June July Aug

Stage 1: Formation x x x

Cluster Kickoff Event with VE x

Market-Segmentation, Attractiveness

Identify Niche Markets

Interim Conference Call x

Hypotheses Testing

2-3 Hour Update Meeting with VE x

Review Primary and Secondary Research

Stage 2: Recognize-Research x x x

Identify Trends and Opportunities


Refine Niche Market Opportunities

2-3 Hour Update Meeting with VE x

Identify Connectivity Requirements

Stage 3 :Report x x x x

Complete Competitive Analysis


Issue Cluster Report x


Cluster VisionWhat is our goal? Jobs? Economic Impact?


Draft Cluster Mission

The mission of the SI Energy Industry Cluster Team

is to support the achievement of the overall

Connect SI 2012 goals which include

5,680 energy industry jobs in SI region


Additional Preliminary Research


Waste to Energy - Cogeneration

Waste to Energy is the process of creating electricity from the burning of waste materials. It can produce electricity directly, or a fuel commodity such as methane, methanol, ethanol, or other synthetic fuels.

Waste to Energy (WTE)

In 2007, the US incinerated approximately 14% of its waste for energy, 88% of the resulting energy was used by electricity producers.

Source: US Department of Energy 2008, Recovered Energy Inc.


Projected Waste Energy Markets Growth

Municipal Solid Waste Energy Generation Forecast

Source: Energy Information Administration

0

5

10

15

20

25

2006 2007 2008 2010 2015 2020 2025 2030

Bil

lio

n K

ilo

wat

tho

urs

US waste to energy forecast to reach over 22 billion kilowatt hours in 2030, accounting for 3% of renewable energy.

US waste to energy forecast to reach over 22 billion kilowatt hours in 2030, accounting for 3% of renewable energy.


Strong Niche Growth Projected

Source: US Department of Energy

The US uses 14% of its waste for energy. In some European countries, as much as 40% of waste generates energy.

The US uses 14% of its waste for energy. In some European countries, as much as 40% of waste generates energy.

US Municipal Solid Waste (MSW) Disposal


Energy Markets: Production/Capacity

The majority of US waste to energy is on the East Coast. The Midwest region used 1% of its waste for energy in 2004.

The majority of US waste to energy is on the East Coast. The Midwest region used 1% of its waste for energy in 2004.


Cluster Scale: Will the Cluster Contribute to SI’s Goals?

Source: Sysav, GreenField Ethanol

The Sysav waste to energy facility in Malmo, Sweden sees 200 refuse collection vehicles tip waste per day. The combustion process happens 24 hours a day. The waste left over after combustion is recycled.

The Sysav waste to energy facility in Malmo, Sweden sees 200 refuse collection vehicles tip waste per day. The combustion process happens 24 hours a day. The waste left over after combustion is recycled.

Edmonton has signed an agreement with Greenfield Ethanol for a $70 million biofuels facility that will use 90% residential waste diversion from landfills to produce 36 million litres of biofuel per year.

Edmonton has signed an agreement with Greenfield Ethanol for a $70 million biofuels facility that will use 90% residential waste diversion from landfills to produce 36 million litres of biofuel per year.

Examples of the scale and scope of WTE projectsExamples of the scale and scope of WTE projects


Energy Niche Examples – C02 Capture

The separation of CO2 from sources of emission or the atmosphere.

It can be done through post-combustion or pre-combustion techniques.

It can be stored permanently underground or transported by pipeline for industrial uses.

CO2 Capture and Sequestration

New and existing power and fuel plants can be retrofitted with CO2 capturing technologies.

Source: Department of Energy

CO2 Capture Process


CO2 Capture Niche Market Segmentation

Enhanced Oil Recovery

Enhanced Oil Recovery

Material SynthesisMaterial

Synthesis

Fuel SynthesisFuel Synthesis

ChemicalChemical

The best segments have Potential, Lifespan, Accessibility, and

Profitability

CO2 can be reused in several intermediate chemicals and commodity materials. It has been used by oil companies for EOR and can increase the extraction of oil by as much as 20%.

Transportation/Pipelines

Transportation/Pipelines

C02 UsesC02 Uses


SI CO2 Capacity

CO2 Capture and Storage

CO2 Capture and Storage

Saline formations in the Illinois Basin have potential CO2 storage capacity from 20-79 billion metric tons.

Saline formations in the Illinois Basin have potential CO2 storage capacity from 20-79 billion metric tons.

Source: Department of Energy


Cluster Scale: Will the Cluster Contribute to SI’s Goals?

Source: US Department of Energy

CO2 is sent via pipeline from a coal gasification plant near Beulah, N.D. to the Weyburn Oil Field in Saskatchewan. It is expected to result in an additional 130 million barrels of oil and a 25 year life span increase of the oil field.

CO2 is sent via pipeline from a coal gasification plant near Beulah, N.D. to the Weyburn Oil Field in Saskatchewan. It is expected to result in an additional 130 million barrels of oil and a 25 year life span increase of the oil field.

CO2 captured from an ADM ethanol plant in Decatur, Illinois will be stored in the Mt. Simon Sandstone to test sequestration potential in the Illinois Basin. Drilling was set to begin in February of 2009 and 1 million tons of CO2 could be injected over three years.

CO2 captured from an ADM ethanol plant in Decatur, Illinois will be stored in the Mt. Simon Sandstone to test sequestration potential in the Illinois Basin. Drilling was set to begin in February of 2009 and 1 million tons of CO2 could be injected over three years.

Examples of the scale and scope of CO2 projectsExamples of the scale and scope of CO2 projects


There are seven Regional Carbon Sequestration

Partnerships spanning the US and Canada. The Midwest

Geological Sequestration Consortium (including

Illinois) accounts for 9% of stationary source CO2

emissions

There are seven Regional Carbon Sequestration

Partnerships spanning the US and Canada. The Midwest

Geological Sequestration Consortium (including

Illinois) accounts for 9% of stationary source CO2

emissions

Source: US Department of Energy, 2008

Energy Markets: Production/Capacity


Observations


Energy Cluster

ViTAL Economy Alliance Steve MartinRob Beynon

Industry Cluster Value Chain Mapping

Identification of a set of regional goals and issues to be addressed, ex.• Increase regional average wage• Raise per capital income• Lower Poverty• Increase private payer healthcare coverage

Determine market segmentation for each niche market

Identify niche markets and hypotheses for each initial industry

Determine market attractiveness for each niche market

• Market size, growth rates, general trends, demand trends, supply trends, market profitability

Cluster team and research team test hypotheses

Conduct primary and secondary research review

Identify and quantify industry trends and opportunities

Cluster team inventory of indigenous resources supporting niche markets

Cluster Team conduct regional industry cluster mapping

Determine top two industry clusters to be opportunity analyzed

List the key questions that need to be answered for each hypotheses

Return and identify other

niche markets if current are not

feasible



feasible

Develop strategic and implementation strategy

ViTAL Economy Industry Cluster Opportunity Analysis

Prioritize niche markets for continued primary and secondary research

Start

Cluster Analysis Milestones

• Milestone #1

• Milestone #2

• Milestone #3

• Milestone #5 & #6


Regional Niche Markets:Hypotheses from the 1st Meeting and Call

Niches Hypotheses Hypotheses Hypotheses

Algae Biofuels SI has indigenous resources to support production

SI has CO2 production to support Algae growth

SI has relevant basic and advanced R&D

Waste to Energy

SI has a sufficient waste stream to support energy production

SI has sufficient landfill gas (methane)

Smart Grid Utilities committed to smart grid improvements in SI

Undeveloped applications exist

SI has indigenous resources: R&D, delivery, applications

Electric Vehicles

Significant developing market opportunities for EV technology

SI has indigenous resources to develop and serve this market

Wind Energy Components

SI has excess manufacturing capacity

SI has available workforce SI has indigenous R&D in advanced composite materials

Readiness Assessment Identified Markets• Green Technologies

• Mining Technologies

• Clean Coal

• Bio-fuels


Regional Niche Markets:Initial Research Completed

Niches Hypotheses Hypotheses Hypotheses

Waste to Energy

4 waste sites in SI are large enough to support commercial power generations

The generated energy can be sold into the grid

CO2 storage capacity

Geologic formations in SI are suited for C02 storage

C02 has multiple industrial uses

C02 could be created by energy production or used to create energy

Coal to liquid fuels

SI has a significant supply of appropriate coal

SI is suitably situated for a coal gasefication site

Cogeneration Cogeneration is a developing source of energy opportunity

Cogeneration opportunities are readily developed as additions to existing sites

Additional energy generated can be sold into the grid or used for other purposes

Algae Biofuels Algae biofuels will be a significant area of energy growth

SI has the indigenous resources required to support them

SI has significant relevant research assets

Readiness Assessment Identified Markets• Green Technologies

• Mining Technologies

• Clean Coal

• Bio-fuels


Industry clusters and market sub-segments with an indigenous competitive advantage are identified through the asset mapping and research process

PEOPLE

TECHNOLOGY

INFRASTRUCTURE

LOCATION

NATURALRESOURCES

INDIGENOUSASSET MAPPING

FOCUSES

PRELIMINARY CLUSTER

LIST

PRIORITIZEDCLUSTER AND

MARKET SEGEMENT LIST

ASSET MAPPING PROCESS

PRELIMINARY CLUSTER LIST

SCREENED AGAINST INDIGENOUS ASSETS


Fuel Energy Source

Generation Energy Storage

Transmission Distribution Customer Energy

Services

Company Presence

Special Infrastructure

Skilled Workers R&D/Innovation

Step #1 – Identify each element of the industry value chain Step #2 – Identify whether the element exists in the study region

Discover the SI Energy Value Chain Elements

Distributed Power

Energy Storage

Fuel Energy Source

Generation Transmission Distribution Customer Energy

Services


Identifying SI indigenous assets

Distributed PowerDistributed Power

Energy StorageEnergy Storage

Fuel Energy Source

Fuel Energy Source

GenerationGeneration TransmissionTransmission DistributionDistribution Customer Energy

Services

Customer Energy

Services

Microsoft Office Excel 97-2003 Worksheet


BREAK TIME

Identification of a set of regional goals and issues to be addressed, ex.• Increase regional average wage• Raise per capital income• Lower Poverty• Increase private payer healthcare coverage

Determine market segmentation for each niche market

Identify niche markets and hypotheses for each initial industry

Determine market attractiveness for each niche market

• Market size, growth rates, general trends, demand trends, supply trends, market profitability

Cluster team and research team test hypotheses

Conduct primary and secondary research review

Identify and quantify industry trends and opportunities

Cluster team inventory of indigenous resources supporting niche markets

Cluster Team conduct regional industry cluster mapping

Determine top two industry clusters to be opportunity analyzed

List the key questions that need to be answered for each hypotheses



feasible



feasible

Develop strategic and implementation strategy

ViTAL Economy Industry Cluster Opportunity Analysis

Prioritize niche markets for continued primary and secondary research

Start

Cluster Analysis Milestones

• Milestone #1

• Milestone #2

• Milestone #3

• Milestone #5 & #6


Prioritizing Niche Markets: Group QDT

Opportunity Thumb Nail Description

Name:

Relevant Indigenous Resources:

Market Opportunity Served:

How It Addresses Connect SI Goals:

Opportunity Thumb Nail Description

Name:

Relevant Indigenous Resources:

Market Opportunity Served:

How It Addresses Connect SI Goals:


Prioritized Niche Market Teams

Niche Market Action Team

Team Name:

Who Will Help:

Niche Market Action Team

Team Name:

Who Will Help:


Observations


Cluster Recruitment PlanHow Are We Going to Get the Right People Here?


Overall Roles and Responsibilities

• Establish a leadership team

• Recruit members to the cluster team

• Keep industry cluster team members engaged

• Identify existing local research

• Attend key cluster meetings providing input and analysis

• Create and lead action teams

• Provide input and analysis of market niches and hypotheses

• Conduct industry cluster asset mapping

• Provide input to final report

• Present cluster report in public session

• Provide guidance and advisement to VE industry cluster approaches

• Provide key primary research based upon the cluster work plan

– Market Attractiveness

– Macro and Micro analysis

• Regional and national industry interviews

• Provide facilitation of key industry cluster meetings and teleconferences

• Transfer knowledge to the cluster team

• Prepare final cluster report

Industry Cluster Team Research Team


Cluster Recruitment Plan

• Next Steps


WorkplanWhat are we doing next?


Stage #1 Work Plans Next 60 days

Industry Cluster Team• Determine core cluster leadership team • Draft cluster vision statement • Complete cluster participant recruitment plan• Conduct recruitment calls • List indigenous resources leveraged – each

niche market• Link resources to hypothesis to be tested

SLIDE 29• Begin list of key regional, national industry

interviews• Refine niche market focus

Research Team• Market attractiveness research – each niche

– Size– Growth rates– Business trends– Political, economic & business data

• Expanded value chain mapping• Niche market

– Demand trends– Supply trends– Regulatory and political trends

• Conduct hypotheses testing• Conduct preliminary industry interviews• Refine niche market focus• Prepare for interim conference call

Interim Conference Call - Date: Time:

Month #3 Meeting - Date: March ? Time: Location:


Next Steps


ViTAL Economy Alliance Steve Martin- [email protected] Rob Beynon – [email protected]

Industry Cluster Opportunity Analysis

Second Cluster Meeting

Energy ClusterBackup Slides


Industry Cluster Team Guiding Principles

1. Industry cluster leadership and participation are key to generating outcomes

2. Work plan discipline, completing all elements of each phase, is key to achieving success

3. Trust and respect is required between companies and individuals

4. Collaboration is recognized as a key to achieving regional goals

5. Uncovered opportunities will have action teams assigned with leadership immediately

The Vital Economy Industry Cluster approach achieves measurable results through the recognition

and endorsement of key principles

The Vital Economy Industry Cluster approach achieves measurable results through the recognition

and endorsement of key principles


I. Market Description/Segmentation

II. Market Attractiveness• Market size--regional, national, international• Market growth rates• General business trends within markets• Demand trends--regional, national, international• Supply trends--regional, national international• Market profitability

III. Regions Competitive Position to Produce a Product or Service• Local production capabilities• Local technical capabilities• Local capacity utilization• Cost components, i,e, labor, raw materials, finance costs, etc• Cost curve position vis-à-vis potential regional, state, national and

international competitors

Framework…Cluster Assessment Outline


IV. Timing Issues to Establish Competitive Position in Market• Length of time to establish industry• Likely actions of potential competitors

V. Financial Viability and Financial Resources Required to Pursue Opportunity

• Business Case Assessment• Capital requirements• Availability of capital at the regional, state and national level

Framework…Cluster Assessment Outline


Industry Cluster Roadmap

Stage #1 – Formation

• Establish broad-based core leadership team

• Define the industry cluster, geographic boundary, and niche or sector identification.

• Invite and recruitment of key cluster participants

• What will keep a participant at the table for 18 months?

• Define industry cluster team vision

• Pursue short term wins

Stage #2 – Recognize & Research

• Begin industry cluster mapping

• Be on the lookout for linkage opportunities

• Map the industry cluster indigenous resources

• Determine economic value of the industry

• Identification of workforce development needs

• Industry cluster gap assessment

• Global and national industry research exchange


START 3 MONTHS 5 MONTHS 8 MONTHS

Stage #1 Stage #2 Stage #3 Report

Stage #3 – Report• Global and national industry

research exchange• Analysis and apply new

information into the industry economy

• Benchmarking the industry cluster

• Delivery of Industry Cluster report


ImplementationInstitutionalize


Framework…Structured Fact-Based Analysis

1. Structured framework utilizes fact-based hypotheses• Followed by fact information gathering and analysis

• To prove or disprove the hypothesis

2. Defines the “boundaries” of an issue and breaks it down

into component parts

3. Eliminates blind alleys quickly, allowing you to focus on

the main issues

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.


Framework….Hypothesis Testing

1. A set of propositions based on facts already at hand, and intuition to

address issues, challenges, and industry and economic trends.

2. Propositions will be prioritized and evaluated through questions,

research and Quick and Dirty Testing (QDT)

“Not everything that can be counted counts and noteverything that counts can be counted.” Albert Einstein

“Not everything that can be counted counts and noteverything that counts can be counted.” Albert Einstein

Today, you as the core cluster team members will define the key initiatives of this cluster team as you determine the critical questions (hypotheses) for the research team to analyze.

©2009 ViTAL Economy, Inc. 1 Energy Cluster Tuesday, March 24, 2009 9:00am-11:00am Marion...

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