BASE ROIC
In scenarios where Verus Power builds a new GTCC plant (versus acquisition of an existing plant), in general, the Company would budget eighteen (18) months to permit, build, commission, etc., the new plant (“Pre-Revenue Operations”). Even if Verus Power fails to successfully launch either of the two HV Techs (see “Technology” section), it’s estimated the average annual EBIT over 6.5 years from the date of the plant’s investment (including the 18 months Pre-Revenue Operations) would equal over 13 percent (13%).
Assuming a single investment class, Verus Power targets generating average annualized investment ROIC’s (over the life of investment) in the range of 8 percent (8%). Accordingly, the Company targets delivering solid investment returns, even if no value contributions (zero) result from the corresponding HV Tech investments.
HV TECH
SUCCESS
As stated in the “Technology” section, if either or both of the two HV Techs succeed, Verus Power will advance breakthrough technology to materially assist in achieving the world’s internationally recognized global greenhouse gas reduction targets. An HV Tech No. 2 success will also result in significant economic advantages for the Company and its investors. If during the Pre-Revenue Operations period HV Tech No. 2 achieves its targeted performance milestone, commercial launch of HV Tech No. 2 will be incorporated into the (subject) Verus Power GTCC plant launch. In this event, a 22% increase in the base amount of the GTCC plant investment will be required to commercialize HV Tech No. 2. This “additional funding” requirement would be a welcome opportunity, however, as estimates indicate it would result in a corresponding increase of (i) 220% in revenue, and (ii) 200% in ROIC for investors.