redflow "potential" target market as it stands

There has been some very interesting murmurings ($$$) along the way in the REDFLOW story... regarding substantial potential sales targets.

Just the other day in a REDFLOW radio interview update, we were reminded that REDFLOW only need a “small fraction” of their target market to make for a successful business. This prompted me to stop and try and review different portions the size of that market…. with some real $$$ figures attached.

Especially worthy of consideration given REDFLOWS current tiny market cap, cash, assets, backers, limited shares, high priced oppies, limited cash required over next 12 months... etc.

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Radio link… "small fraction" quote at about 14:20….

http://beyondzeroemissions.org/media/radio/chris-winter-ceo-redflow-120724

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The prospects make for quite a compelling case… especially considering they are already selling many trial batteries… with good feedback so far.

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I have calculated many 0.5% shares of annual revenue for potential market. This is a little simplistic, and at times very hopeful… but hey… what can I do. It is just that with all these mind boggling numbers thrown around… 0.5% gives it some scale for comparison. Scale up or down to suit whatever you feel fits. Some companies may cross over into different comparisons… this is just an exercise in defining potential.

Quite hard to structure… so a big long-winded. 1000 apologies. Hope it’s worth a read and sparks some discussion.

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ARGUMENTS FOR REDFLOW POTENTIAL
All keeping in mind that $US = $AUS

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QUOTE 1: July 2012 Progress Update: "Four multi-billion dollar companies have performed global due diligence on RedFlow’s solutions and we are working with/short listed with all..."

It would not be too bold to estimate $5 billion revenue each.

4 companies, multiplied by 5 billion dollar revenue is $20 billion.

Even a 0.5% slice of that combined revenue = $100,000,000

Adjust revenues, %, and number of companied to suit expectations.

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QUOTE 2: REDFLOW PROSPECTUS/IPO: “The planned Phase Four manufacturing (capacity of many tens of thousands of ZBMs per year) will be fully outsourced”

They have not stopped talking to Jabil… just delayed mass production due to corporate due diligence by the ZBM’ prospective customers, and refinements over at REDFLOW.

See the following REDFLOW update. Pages 9,10 and 13 say it all…. JABIL and REDFLOW are working together to get it sorted…. They are ahead of the pack.

http://newwebchart.weblink.com.au/clients/redflow/article.asp?asx=RFX&view=4243044

Nor are Jabil a two-bit operation… they did $16.50 Billion revenue in 2011. Not the types to waste their time with battery companies if they are not serious?

http://jbl.client.shareholder.com/releasedetail.cfm?ReleaseID=608967

So a few annual production examples to suit…

10,000 ZBM’s at even $2000 each is $20,000,000 annual revenue
20,000 ZBM’s at even $2000 each is $40,000,000 annual revenue
25,000 ZBM’s at even $2000 each is $50,000,000 annual revenue
25,000 ZBM’s at even $3000 each is $75,000,000 annual revenue
???,000 ZBM’s at even $???,000 each is $???,000,000 annual revenue…. And so on.

Adjust quantities, and price per unit, to suit expectations.

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QUOTE 3: REDFLOW PROSPECTUS/IPO: “RedFlow has agreed to exclusively negotiate a value added reseller agreement with Jabil for ZBM sales into major OEMs in this sector. Jabil already is a key manufacturer of products for such OEMs in the GSM industry. It is proposed that for Jabil to retain its exclusive position for re-selling RedFlow ZBMs to OEMs in the GSM industry there will be an increasing minimum number of units it must sell each year, rising to 25,000 ZBMs from 2014 onwards”

Combine this with the recent radio interview price targets ($400/kW)…

25,000 ZBM’s at $4000 each is $100,000,000 annual revenue

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QUOTE 4: SANDIA REPORT SAND2012-1352 Unlimited Release Printed February 2012:
“Sprint and Jabil Circuits Inc. are also interested parties in this testing. Sprint is interested because they could make use of an energy-shifting battery in grid-connected telecommunications applications to offset peak load. Jabil is interested because they intend to manufacture RedFlow systems”

http://www.sandia.gov/ess/publications/SAND12-1352.pdf

Nowhere has this Sprint relationship been marked as market sensitive. It is there for all to see. Yet the market seems to ignore it. If REDFLOW have not missed their chance there… it looks to be a tidy like option.

Sprint 2011 Revenue? $33.7 Billion

http://newsroom.sprint.com/article_display.cfm?article_id=2179

Even a 0.5% slice of that combined revenue = $165,000,000

Interesting that Sprint is embarking on a huge $5 billion re-build of its network infrastructure

0.5% slice of that combined spend = $25,000,000

http://newsroom.sprint.com/press_kits.cfm?presskit_id=19

All SPRINT stations requiring batteries (as pictured)….. perhaps a very real chance for REDFLOW in this round of upgrades or in the future?

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QUOTE 5: July 2012 Progress Update:” Key partnerships developing…. Substantial US military contractor”

How do you put a price on this? Some very basic Google research puts it into perspective.

A fancy little slide show of the the top 10 defence contractors in the USA, shows combined 2011 revenues that we may be dealing with.

http://www.cnbc.com/id/42494839/The_10_Biggest_U_S_Government_Contractors?slide=2


All in BILLIONS of dollars…

$112.00Billion, $7.60B, $30.10B, $15.17B, $11.12B, $58.20B, $24.86B, $32.67B, $68.73B, $46.30Billion….

Removed the large $122 Billion figure (McKesson) and averaged the other nine revenues gives us…

$295.75 Billion / 9 = $32,750,000,000

0.5% slice of just one of those nine combined revenues = $163,750,000

Also showing the wide market of defence contractors out there in the USA is a simple WIKI search…. Hunting for details could take a lifetime… might wait in REDFLOW for more details!

http://en.wikipedia.org/wiki/List_of_United_States_defense_contractors

I liked the quote ate the top of the page… “The Department of Defense announces contracts valued at $6.5 million or more each business day at 5 pm’’’….

Yikes…

This is not “pie in the sky” imaginations. Remember that SANDIA are testing the REDFLOW’s.

SANDIA are a division of LOCKHEED MARTIN (LMT) who have an annual revenue of $46.30 BILLION (as in the slideshow link).

SANDIA… LMT… Defense… $$$ ?!

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QUOTE 6: July 2012 Progress Update: ”Key partnerships developing…. A major (unnamed) German industrial Electrical Conglomerate”

I have gone and looked at SIEMENS, AEG, BOSCH then found the 0.5% figure for each. Huge companies all vying for a slice of the energy storage market. A story on its own.

AEG 2011 revenue: €428.2 Million / $505 Billion
BOSCH 2011 revenue: €51.4 Billion / $60.6 Billion
Siemens 2011 revenue: €73 Billion / $86.00 Billion

AEG 0.5%= $2.14 million
BOSCH 0.5%= $303 million
Siemens 0.5%= $430,000,000

http://www.aegps.com/en/3w-power-aeg-ps-investor-relations/investor-news/news-title-investor-news/article/3w-poweraeg-power-solutions-reports-2011-financial-results-1/

http://bosch.ru/language2/press/fiscal-year-2011/index.html

http://www.siemens.com/press/en/pressrelease/?press=/en/pressrelease/2011/corporate_communication/2011-q4/axx20111105.htm

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QUOTE 7: The NEWCASTLE HERALD…. “Ausgrid”… who have 60 ZBM’s in the field in trails right now.

http://www.theherald.com.au/news/local/news/environment/australianfirst-energy-trial-near-scone/2510864.aspx

Ausgrid (AUS) is described nicely on their own website: “State Owned Corporation whose shareholder is the NSW Government… power to 1.6 million homes and businesses… Sydney… Hunter… Central Coast… 200 large electricity substations, 500,000 power poles, 30,000 small distribution substations… almost 50,000km of below and above ground electricity cables….
…run this electricity network, provide emergency services, provide energy efficiency advice and products and maintain public street lights….
…Ausgrid is delivering one of Australia’s largest infrastructure programs – an $8 billion upgrade of the electricity network including 50 new major substations and hundreds of kilometres of new electricity cables. This program includes $500 million in smart grid technology throughout the electricity network including Australia’s first commercial scale smart grid on behalf of the Federal Government’s Smart Grid, Smart City project”
Annual revenue??? $ 4billion.
0.5% slice of that $4billion revenue = $20,000,000
http://annualreport.ausgrid.com.au/
Remember the REDFLOW Radio interview speaking of larger roll-outs at about 10:40. Maybe the likes of AUSGRID will be the ones? Mr Winter also mentioned interest in energy storage solutions by the AGL and ORIGIN. We might find out sooner rather than later.
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QUOTE 8: Multiple REDFLOW Report: Singapore Technologies Engineering (Singapore)

They are a “leading engineering and defence contractor, which will team with RedFlow on specific energy storage project opportunities within the Asian region”.

This could be huge….

According to the latest REDFLOW update, titled…

“REDFLOW MILESTONES DURING THE NEXT 12 MONTHS”

…we read…

2. An agreement in place to install US or Asia based M-class demonstration system
–Discussion with two potential customers underway

3.Agreements in place to develop systems with two major system integrators and customers using RedFlow ZBMs
–Currently in negotiations with four potential system integrators (2 Asian…)

If REDFLOW can crack this Asian market with the help of STE, they have a serious backer.

Singapore Technologies Engineering 2011 Revenue was: $5.9 Billion.

0.5% slice of that $5.9 billion revenue = $29,500,000

http://www.bloomberg.com/quote/STE:SP/income-statement

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Stored Energy Solutions Limited.

Another dark horse.

Mr Serisier, REDFLOW’s major backer at present, acts through SES as REDFLOW “selected partner to act as exclusive distributor in UK and France from 2011”.

Last reference we saw to the SES sales are that it is currently on hold… no doubt in some way to do with refining the product for a fussy European market, before pushing ahead wioth a sales pitch.

To have your major backer happy to sit back and wait before chasing such a huge market… says something for the other avenues that REDFLOW are pursuing as we speak.

Granted they have to raise capital to continue also… a major factor in REDFLOW’s expansion.

EUROPEAN ENERGY GRID STORAGE MARKET???? $??? BILLION !

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THE FOLLOWING SECTION IS LESS DETAILED… A BRIEF DESCRIPTION AND REVENUES WHERE POSSIBLE. Quotes are mostly Redflow’s.

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Ergon Energy (AUS).
“Leading regional electricity distributor in Australia and RedFlow’s foundation customer”. These guys have the 30 units on rural SWER lines plus the Magnetic Island trial Battery. Still in talks with REDFLOW and no negative feedback. Annual revenue looks to be around $750,000,000

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Florida Gulf Coast University (USA)
Trialling one of the 5 batteries sent to USA earlier this year. A sunny state with a keen interest in solar, with strong ties to local utilities.

http://www.news-press.com/article/20120531/GREEN/305310058/At-FGCU-shot-solar-efficiency?odyssey=tab|topnews|text|Home

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Lend Lease Solar Pty Limited. “RedFlow’s partner of choice in Australia for solar PV projects where”. This is spoken of very little in Redflow info… but also have direct links to the USA market. Yet another avenue for revenue.

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Powerco (NZ). Second largest electricity distributor in New Zealand and RedFlow’s
first export customer and exclusive distributor for New Zealand. They are selling the REDFLOW product already and have at least one trial in a rural setting that is being closely monitored. Annual revenue looks to be around $365,000,000.

http://www.powerco.co.nz/Divisions/BASEPOWER/Enabling-Your-Renewable-Energy/Solutions-For-Ultilities/

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University of Queensland (AUS). “From early 2011, UQ will host the RedFlow 200 (MW scale) energy storage prototype in conjunction with the UQ-owned 1.2 MW rooftop solar PV array, the largest in Australia”. Then they went and ordered a $670,000 contract value ZBM steup for one of their flagship projects.

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University of Arizona (USA). AZRISE demonstration. Trialling one of the 5 batteries sent to USA earlier this year.

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While not included in direct sales revenue projections.... REDFLOW are also linked to other groups which can assist the revenues streams of REDFLOW. Some we have seen mentioned are listed below.

Jane Capital (USA)
Sandia National Labs (USA)
State Government of Victoria (AUS)
Zebulon (USA)
Aztera (USA)

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This is not even considering other potential markets, given time and resources....

China
Brazil
India
African Continent......???

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Thought I would just get on and post this analysis as it is… definitely has a few rough edges.. but you can see the potential.

All based on my reading od REDFLOW releases and scouring articles and reports from all over – so please do your own due diligence too before making any investment descicions!

So many other small and mid caps promising the world and with the market pricing in huge amounts of potential.

Yet REDFLOW has real sales, real trials, real contracts, real customers…. And I believe it will be around for a lot longer.

Will post more on other REDFLOW matter (cash requirements, tech comparisons, competitors, upcoming trials etc as I have time)

Only 83,000,000 shares divide REDFLOW into its parts at present.

83,000,000 shares at 7 cents Value REDFLOW at $5.8 million dollars…. The next quarterly and reports will be very interesting indeed.

DYOR and all the best with it

bsh