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Rainwater, Inc ET CitySmart Smart Irrigation for the Future

Rainwater, Inc ET CitySmart Smart Irrigation for the Future. [Karen Cheng] [Eddy Fong] [Paras Gandhi] [Julia Pashin]. Background – Water Conservation. Austin Key Measures Total Usage/Peak Day Outdoor summer water use Water Conservation Task force Conservation initiatives

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Rainwater, Inc ET CitySmart Smart Irrigation for the Future

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  1. Rainwater, Inc ET CitySmartSmart Irrigation for the Future [Karen Cheng] [Eddy Fong] [Paras Gandhi] [Julia Pashin]

  2. Background – Water Conservation • Austin Key Measures • Total Usage/Peak Day • Outdoor summer water use • Water Conservation Task force • Conservation initiatives • Goal: 1% water use reduction • Grant • $500,000 • Solution for outdoor water use BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  3. Background - Rainwater, Inc • 4th: irrigation industry • Products: sprinkler/drip irrigation systems, basic controllers • Develops, manufactures and markets • Goal: product differentiation • Pursue enhanced technology • Utilize strategic conservation strategy • Grant competition as launching pad • Assume • Existing research/production facilities BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  4. Strategy The Genesis Way Current Technology Competitive Environment BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  5. Overall Strategy – The Genesis Way Utility Savings Grant & Partnership Rebates BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  6. Overall Strategy: Current Tech • Basic controllers – timer feature • ET ‘smart’ controllers: • Calculate optimal water need creates watering schedule • Methods to adjust original schedules • Solar/rain/soil moisture sensors • Real-time weather data • Proven successful • SWAT testing • Experimentation BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  7. Overall Strategy – Competitive Environment BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  8. Our Solution The ET CitySmart Competitive Environment BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  9. Our Solution – The ET CitySmart • Expand into the smart controller market • Best available technology • Differentiate: • Utilize LCRA water usage data • Emphasize low cost to customers • Bigger rebates • Using phone line • Using minimal sensors Rainwater ET CitySmart BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  10. Our Solution – Competitive Environment BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  11. Technology ET Healthy Range How It Works Database NRE Costs BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  12. Technology - ET • Current ET algorithms combine • Sensors • Weather forecasts • Landscape information • Calculates optimal level of water needed BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  13. Customize your Water Zone Rainware ET CitySmart BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  14. 1. Data is collected at home 1 Solar Sensor Homeowner Profile City Water Data 2 Weather Forecast Rainwater Servers 3 4 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  15. 1. Data is collected at home 1 2. ET CitySmart sends data to servers Solar Sensor Homeowner Profile City Water Data 2 Weather Forecast Rainwater Servers 3 4 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  16. 1. Data is collected at home 1 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly Solar Sensor Homeowner Profile City Water Data 2 Weather Forecast Rainwater Servers 3 4 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  17. 1. Data is collected at home 1 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly 4. Rainwater sends customized water schedule to household Solar Sensor Homeowner Profile City Water Data 2 Weather Forecast Rainwater Servers 3 4 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  18. Technology: Database BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  19. BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  20. BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  21. Software engineering: Algorithm revisions $115,000 Web interface $65,000 Mechanical engineering: Engineering/Circuit Development $85,000 Prototype Development $35,000 Testing: $37,500 IBM Server: $17,500 LCRA Link: $25,000 Training: $112,500 Technology - NRE Costs Total NRE: $492,500 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  22. Implementation Timeline Partnerships Marketing/Distribution Sustainability Scalability BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  23. Partner with LCRA/Austin R&D: Design, Build and Test Prototype Manufacture Controllers Sell Controllers Target High-Water Users Widespread Advertising 2 4 6 8 10 20 25 30 35 Implementation - Timeline Months 15 Year 2 Year 3 Year 1 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  24. Implementation – Partnerships • Partner with the City of Austin • City provides: • $200 rebates • Utilities bill mailings • Access to usage database • Rainwater provides: • Water consumption decrease of over 1% by 2011 • Partner with Home Builders/Landscapers/Irrigators • Target new homes BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  25. Implementation - Marketing • Marketing • High vs. General users • High users consume over 25,000 gallons a month • Target High users initially • Extend advertising to general public after 2 years • Pricing • Controller: $249 • After rebate: $49 • Annual subscription fee: $36 BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  26. Implementation - Distribution • Sales Channels • Hardware stores • Website • Landscapers • Irrigation Installers BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  27. Implementation - Sustainability • Short-Term • Low price • Quickly and aggressively penetrate market • Long-Term • New Homes: Maintain home builders partnership • Communication: Include broadband/wireless BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  28. Implementation - Scalability • Expand into other cities • Las Virgenes, CA (76.2% outdoor) • Scottsdale/Tempe, AZ (66.5%) • Walnut, CA (63.9%) • San Diego, CA (62.8%) • Denver, CO (59.7%) • Phoenix, AZ (58.7%) BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  29. Risk Analysis City of Austin Partnership LCRA Partnership Price Match BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  30. Risk Analysis • No City of Austin Partnership • Unlikely because Rainwater saves water and money for Austin • Marketing • Rebates • Contingency (No Partnership) • Higher Prices = Lower Market Share (3%) • 2008: 151% ROI • 2011: 254% ROI BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  31. Risk Analysis • No LCRA Partnership - minimal risk • LCRA statistics are a core component • Publicly available • Competitors Price-Match • Low price is competitive advantage • City Partnership: Cost below Manufacture • No Partnership: Cost still below Manufacture BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  32. Bottom Line Rainwater City of Austin Consumers BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  33. Net Income 2011: $2,000,000 Cash Flows 2011: $1,300,000 Bottom Line: Rainwater BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  34. Bottom Line: City of Austin BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  35. Bottom Line: Consumers BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  36. The Genesis Result Rainwater City of Austin Consumers BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  37. The Genesis Result Utility Savings Grant & Partnership Rebates BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  38. The Genesis Result Utility Savings Grant & Partnership Rebates BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  39. The Genesis Result Utility Savings Grant & Partnership Rebates BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  40. The Genesis Result Utility Savings Grant & Partnership Rebates BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  41. Thank you.

  42. Appendices BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE

  43. Appendix: Rainwater Projected Financials

  44. Appendix: Water Conservation and Costs

  45. Appendix: Consumer Costs and Savings

  46. Appendix – Water Assumptions -Percent Households – High Water vs. General: normalized distribution graph of water use by frequency (16,000 household sample); sample from Austin Green Building Program Database March 2001-2003 - Average Water Use –180 gallons per day (TWDB Water Use Survey X 3 ppl per household (US Census data) X % High Use/General water use growth rate equal to household growth rate -58% Outdoor Water Use – given in case -12% Outdoor Water Saved - Study

  47. Appendix – Market Assumptions Number of Austin households: City of Austin data for 2005 and 2010, annualized for growth rate) Market penetration estimates General: 5%, 9, 10, 11, 12; growth rate in teens High: 5%, 9, 10, 11, 12, 15; growth rate in teens

  48. Appendix – Product Cost/Price Assumptions Product cost: $165 cost comparison of competitor products (based on 80% mark-ups) closest product from ET Water save about $30 from using only a phone line (no broadband) for internet access Selling price: $249; 50% markup of cost

  49. Appendix – City Cost Assumptions Amount of rebate: $200: existing rebate is $100 for replacing residential controllers with smart controller equivalents Justification: cost analysis to city of Austin: percent of water conservation budget that will go toward rebates net of savings in water bought (under 10% after 2007) cost of gallon by acre-foot: $57.50 (LCRA website – rate for pre-bought water) 1 acre foot ~ 281K gallons Austin water conservation budget: Austin Statesman article: With conservation, city could delay $330 million water plant, 2/12/2007

  50. Appendix: Rainwater Assumptions • Rainwater has existing, and the new product will make use of: • Research facilities • Production facilities • Labor • Website

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