Due Diligence
Background
For most of his life Dr Eli Yasni the inventor pursued the goal of optimising the energy extraction from the input to steam turbine generation plant. His approach was to use the second law of thermodynamics to monitor where, in each element of a generation plant, the basic physics of that law showed there were inefficiencies. He developed this into an operator assist programme which he personally installed and supported in several plants. This system monitored performance and suggested adjustments to control elements to operators who could accept or reject the recommendation. It also estimated the ongoing cost of the issue to allow it to be assessed for importance.
The system was never able to optimise the operation of the plant for two reasons:
- The analysis was essentially a batch operation, assessing at a point in time and reporting.
- The thermodynamic cycle could not be described in conventional terms in a form that would allow normal mathematical min/max optimisation as there were undefined losses and the equations were not well posed as the cycle is not reversible.
The inventive step was made later as described in the patent by adding a reversible Carnot engine to the thermodynamic model to represent the losses which provided a well posed set of equations and a reversible process that allowed conventional mathematical optimisation. (This inventive step has significant implications for the further use of the technique for optimising any process that involves a phase change and thermodynamic cycles e.g., liquefaction of natural gas).
The analysis process is continuous and could be used to monitor and optimise in real time, controlling the generation plant to operate at its most efficient point for the external environmental conditions at all times.
Dr Yasni arranged for some power stations to provide historical data files from their monitoring systems to test the software and installed the system in a parallel operating mode not controlling the station but using real time data for analysis as a research project in the Kwinana power station in Western Australia where he could monitor the system remotely.
He was part way through this research when he died.
Reason for Sale
The company has investigated the possibility of developing the patents into commercial systems given the potential that was demonstrated by the prototype testing underway at the time of the death of Dr Yasni. The loss of all records when Dr Yasni’s computer and hard drive were stolen and the cost of developing the software meant that the development was beyond the capacity of the shareholders. Securing the patents was given priority. Seeking partners was investigated but the market environment was not encouraging.
Having reviewed options and trends the shareholders came to the following conclusions:
- The unique physics and mathematical basis protected in the patents has genuine value and potential to improve the economic performance of the power generation industry.
- The current climate crisis needs this carbon dioxide reducing technology to be developed as a low-cost option to reduce carbon dioxide discharge from thermal power
- The climbing cost of carbon is making the economics very attractive
- The system is best developed by an organisation with market penetration in the thermal power industry, an interest in physics based digital twins, and capacity to develop the software required.
- The growing appreciation of the technical and commercial advantages of digital twin asset management
- The first mover market advantages to an organisation that supplies complete systems for power generation
- The patent describes a step by step process to implement the intellectual property, all that is required beyond the patent is prior art.
On the basis of this analysis the shareholders decided that outright sale (or exclusive licence) was the best way to bring this technology to the market.
Assets
The company’s only assets are the patents held in USA, China, Japan and the European Patent registered in the UK, France and Germany.
There are no licences given or promised for any of the patents.
The company does not have a bank account because it is not running any taxable activities.
There are no annual accounts because it is not running any taxable activities and the company is inactive and running on shareholders advances that will be repaid from the proceeds of sale.
Patent Advisers
The company has used major and respected patent attorneys for advice and to manage the intellectual property.
List of the attorneys for each patent.
USA:
Ellen M. Bierman
LOWE GRAHAM JONES
701 Fifth Avenue, Suite 4800 - Seattle, Washington 98104 US
206.381.3300 Fax: 206.381.3301 www.lowegrahamjones.com
Email: Ellenb@lowegrahamjones.com
China:
Xiaodan Zhang (Ms.)
T: +86-10-5873 2666 ext. 122, accounting@insightip.com
Insight Intellectual Property Attorneys
19th Fl., Tower A, InDo Bldg., No. 48A Zhichun Rd., Haidian Dist., Beijing 100098, China
T: 86-10-5873 2666, F: 86-10-5873 2989, insight@insightip.com, www.insightip.com
Japan:
Reiko Baba (Ms.)
COO Executive Director of Business Management
RB/ase
SUGIMURA& Partners
Kasumigaseki 3-2-1, Chiyoda-Ku, Tokyo
1000013 Japan
Tel: +81 3 3581 2241
Fax: +81 3 3502 0031
Email: sugimura.ann@sugimura.partners
Europe:
Patent attorneys
Ray Charig
Potter Clarkson LLP
The Belgrave Centre
Talbot Street
Nottingham
NG1 5GG
United Kingdom
+44 (0) 115 955 2211
Payments administered by:
Australia & New Zealand Customer Engagement
CPA Global
Level 4 10 Barrack Street
Sydney NSW 2000
Australia
Tel: Toll free 0800428 571
Fax: +612 9993 3009
Email: PATENTSff@cpaglobal.com
Legal Advisers
The companies have no formal arrangements with legal advisers, but use their long-term personal lawyers for commercial advice as needed. The advisers are:
John French
French Burt Partners
110 Don Street
Invercargill 9810
New Zealand
Tel: 03 218 7346
Email: john@frenchburt.co.nz
Website: www.frenchburt.co.nz
Company structure
There are two companies with interests in the assets.
Entropy NZ Limited 506766
Ownership Donna Zhu 100%
Exergy Limited 3153265
Donna Zhu 51% Stephen Jenkins 49%
Employees
The companies have no employees or agents.
Clear ownership and resolution to sell
The companies have clear ownership of the patents and have resolved to sell the patents through the direct sale of the patents. A selling consent letter from Entropy NZ Ltd is available. The owners of Exergy Ltd have resolved to sell.
Once the buyer buys the Exergy Ltd shares, they can decide what to do with the company as they will have full control. The patent is owned by the company and will transfer as the sole asset of the company.
Company documents are available free on-line from the New Zealand Companies Office.
Financial Arrangements
Both companies are self-financed with funds advanced by the shareholders.
The companies have no external debt.
The sale of the patents is to be for cash.
Sale can be for one or all patents. The preferred option is for all patents to be sold to a single developer.
Insurance arrangements
The company has no insurance contracts.
Market Position
The company has had successful installations of the precursor operator assisting programme Entropy which is the basis for the analytical engine that collects the basic information to model the thermodynamic digital twin. These installations proved that the system works and delivers value through physics-based identification of operational inefficiencies based on the second law of thermodynamics. Installations included Huntly 1000MW Eraring 720MW (Unit 2) and installations in Macau and Israel. The Entropy system is considered to be proven to working levels but does need to be reprogrammed from scratch and to use current languages.
The optimiser programme which is the technology that is patent protected has been prototyped at Kwinana Power station in West Australia and was, at the time of the inventor’s death reported to be providing sensible results. It was running in parallel and not controlling the station which was running the entropy system for operator assistance. Both systems have been run in China on historical control archives offline where Dr Yasni reported the testing of the programme predicted improvements of up to 10% for older stations.
Relationship with GNS
While the initial development was carried out in a joint venture with GNS this was dissolved at GNS request as they were instructed by their Board to focus their commercial efforts into the development of geological analysis and fossil fuels. The separation was amicable with an agreement between GNS and Entropy that should there be a sale or commercial income that would support GNS making some recovery of their investment costs, Entropy NZ Limited would pay a portion determined in the agreement to cease the joint venture and capped at a maximum. This arrangement is entirely the responsibility of Entropy NZ Ltd and outside this offer of sale.
We understand that GNS, who have some institutional knowledge, could be interested in assisting in further development on a paid basis at commercial rates.
Risk Management
There is little technical risk in this transaction. The systems have either run in commercial situations or have been prototyped. While the physics and thermodynamic concepts are a unique application based on Dr Yasni’s insight into the way reversible systems can be modelled, optimised and reverse masked back to the real plant, there are no assumptions that can weaken the conclusions. While data mining, condition monitoring and statistical predictions can provide some predictive insight they are unable to represent actual real time conditions inside the thermodynamic cycle. These existing techniques can be added to the optimiser system and assist in identification of issues and assessment of how serious they are in terms of potential physical maintenance but they cannot tune the thermodynamics in real time. The optimiser would add this capacity making an existing system such as EtaPro significantly more valuable
The system was proven at prototype level to work. It needs to be coded and connected to a human machine interface. The risk, if any exists, is the ability of the programmers and mathematicians needed to resolve the matrices and generate the necessary numerical solutions. Pathways for these steps are outlined in the patent and precursor papers.
The seller of the patent does not guarantee that the purchaser will be able to programme the system, that depends on the skills of the programmers which are out of the sellers control. Numerical methods are required and some that Dr Yasni used are noted in the patent documentation. All equations are solvable.