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SUCCESS STORY Permo-Drive Technologies Pty Ltd

A cleaner, for heavy transport R&D thegreener key toenergy a newsolution aquaculture industry

SAE World Congress, Detroit Michigan, 2003: L–R at back: Ken Deylami (National Automotive Centre US Army) and Allan Rush. L–R in front: Permo-Drive CEO Max Bosotti, Simon Basely (Dana Corporation) and Jim Borovac (Permo-Drive).

An R&D Start grant helps Permo-Drive climb to the top of the hill. When a client approached Allan Rush, now Permo-

Permo-Drive’s major competitive advantage is that the

Drive Technologies’Director of Research, in late 1997

system isn’t limited to new vehicle manufacture; it can

to investigate a means of storing and harnessing the

also be retrofitted in existing vehicles. It’s this that

energy normally wasted in the heavy transport industry,

attracted the attention of the United States military,

it was a challenge he couldn’t resist. Today the solution

with an existing fleet of 246,000 tactical vehicles and a

– an innovative hydraulic regenerative braking and

target to reduce fuel consumption by 75 per cent by the

propulsion system for heavy vehicles – is set to become

year 2010. The result for Permo-Drive has been a rare

a standard feature in United States military vehicles

Cooperative R&D Agreement with the National

as well as civilian heavy transport all over the world.

Automotive Centre (NAC) to develop the system for

In simple terms, the Permo-Drive system stores the

use in tactical vehicles.

braking energy of a vehicle and allows it to be

The road to success started, quite literally, as a hilly

released later when required; for example, a truck

one. Research began with a working group of three

descending a hill or braking can store energy and use

travelling back and forth between Sydney and

it later to accelerate, climb, or change gears. In terms

Brisbane in a semi-trailer, armed with a stopwatch

of reductions in fuel costs and brake and drive-line

and a spreadsheet measuring the ratio of ‘down hills’

wear, the benefits are impressive, but even more so are

to ‘up hills’and the potential of the terrain for energy

the environmental implications. Projected reductions

regeneration. Things got a little easier with the

in fuel and greenhouse gas emissions are as high as

development of an electronic device to collect the

40 per cent for vehicles in urban driving conditions.

data necessary to build a convincing case.


SUCCESS STORY Permo-Drive Technologies Pty Ltd

A‘proof of concept’working model

United States military contributing

launched in 1998 received an

funding and two tactical trucks for

enthusiastic reception, but the system

use in the test evaluations.

still needed to be tested in a working

With leading truck manufacturers

environment. That’s when a staunch

in the United States, Europe and locally, which was oversubscribed.

Asia also showing considerable

to a brand new truck – and the

Says Allan, “The AusIndustry

interest in the system, the

means to put theory into practice. In

support combined with the

pressure for the company to ‘go

September 1998 the trio established

investment funds enabled us to

global’has been irresistible.

H.B.P. Permo-Drive Pty Ltd, and

really forge ahead, developing the

Hence, the March 2002

applied for patents for the concept.

system into an efficient functional

appointment of Max Bosotti as

supporter handed the group the keys

With support from the Department of State and Regional Development and

model and undertaking independent performance trials.”

Permo-Drive’s new CEO, bringing with him the global company expertise needed to take Permo-

a small grant for feasibility studies

When the Ford Motor Company

Drive to new heights.

the company pressed on, officially

announced in 2001 that it had

For Permo-Drive it’s becoming

becoming Permo-Drive Technologies

developed a similar system for

a great view from the top of the hill!

Ltd (an unlisted public company)

sports utility vehicles, Permo-Drive

on 1 July 2000. Accepted to the

was spurred into action. Allan and

Contact

Australian Technology Showcase

Permo-Drive’s Marketing Manager,

in 2000, the system was radically

Greg Beaver, embarked on a

redesigned to simplify and improve

whirlwind tour of nine US states,

the overall efficiency, the reworked

a chance meeting with a United

concept attracting even greater

States military representative en

interest than before.

route leading them to the Executive

After receiving a Commonwealth

Director of the NAC. Now Permo-

R&D Start grant of $920,000 in

Drive is well on its way to finalising

May 2000, the company issued an

specific evaluation criteria for the

Unlisted Prospectus for $5 million

military’s requirements, with the

Allan Rush Executive Director – Research Max Bosotti CEO and Managing Director Permo-Drive Technologies Pty Ltd 203 Southern Cross Drive Ballina New South Wales 2478 Tel: 02 6686 1100 Fax: 02 6686 1199 Email: allan@permo-drive.com Web: www.permo-drive.com

The R&D Start Program is a competitive, merit-based program which provides grants and loans to assist companies to undertake R&D and its commercialisation. Through R&D Start the Commonwealth Government will provide approximately $1.7 billion to June 2006 in direct support for business research, development and commercialisation through the Backing Australia’s Ability initiative. Non-tax exempt companies incorporated in Australia, who conduct research and development activities or early commercialisation in Australia, are eligible for support under the program.

APRIL 2003

R&D Start For further information on R&D Start or the range of AusIndustry innovation programs contact: AusIndustry Hotline 13 28 46 Any of AusIndustry’s State and Territory Offices Or visit the AusIndustry website at www.ausindustry.gov.au

ITR 2003/031


From: “Colin Dunstan” <colingd@tpg.com.au> To: “John Hannaford" <hanno7@tpg.com.au> Sent: Thursday, 30 October 2008 3:16 PM Subject: Save Our Technology feedback John, I have sent a letter to the ACT bus fleet operator, recommending it evaluates Permo-Drive units, and have sent a copy to "Save Our Technologies". Hope all goes well. Best wishes, Colin Dunstan


Colin Dunstan Tuesday, 28 October 2008 Ph: Mob: Email: colingd@tpg.com.au Mr Tom Elliott General Manager ACTION PO Box 158 Canberra City ACT 2601 Email: action@act.gov.au cc:

Chairman Save Our Technology Inc 12 Carrington St BALLINA N.S.W. 2478

Dear Mr Elliott, Cost-Effectiveness of Permo-Drive for ACTION A few years ago the ABC TV made a documentary on a New South Wales engineering business developing a braking energy recovery device for heavy vehicles. See the AusIndustry Report, “SUCCESS STORY, Permo-Drive Technologies Pty Ltd, A cleaner, greener energy solution for heavy transport”, April 2003:

“In simple terms, the Permo-Drive system stores the braking energy of a vehicle and allows it to be released later when required; for example, a truck descending a hill or braking can store energy and use it later to accelerate, climb, or change gears. In terms of reductions in fuel costs and brake and drive-line wear, the benefits are impressive, but even more so are the environmental implications. Projected reductions in fuel and greenhouse gas emissions are as high as 40 per cent for vehicles in urban driving conditions.” Recently I wanted to obtain some engineering advice on engine management technology and, recalling the expertise of the business that was the subject of that ABC TV documentary, I searched for contact details on the internet. As a result, I was able to find the business, which trades as Permo-Drive, and also learned that it was at risk of going into receivership as it had been unable to successfully market its product in any significant numbers. I had a look over the information that Permo-Drive has made available. Either the current design of their product is priced too high to give purchasers a sufficient fuel saving to justify the expenditure, or alternately, the business, that clearly possesses a lot of engineering expertise, may simply not have identified the correct market segment and savings their product will provide to potential customers. A website discussing Permo-Drive’s future mentions the possibility of orders being placed by trucking companies. It seems to me that drivers of heavy vehicles cruising down the Hume Highway will rarely need to touch their brakes, and the potential


fuel savings from a device designed to recover the energy of braking a heavy vehicle will be insignificant in this market segment. However, the situation is quite different for large buses in urban transport roles – like those of the ACTION bus fleet – that are constantly stopping and starting. If PermoDrive’s product at its current design price has any chance of commercial success, then it has to measure up in the economic realities of ACTION’s bus fleet operations. I have found a copy of ACTION Authority’s Annual Report 2005-2006 and have attempted to estimate the annual fuel usage and fuel costs per bus in the ACTION bus fleet based on some information in that report. The objective is to find the price at which Permo-Drive’s device becomes costeffective. I am forwarding a copy of this letter to the Chairman of the shareholder organisation that is considering further investments to keep Permo-Drive in business; The hope is that this information may assist both Permo-Drive - to determine if PermoDrive has any prospects of commercial success - and ACTION – to determine if Permo-Drive’s product offers a cost-effective solution with which to cut the fuel consumption and running costs of its bus fleet. My estimates are based on an interpretation of the limited information I have found to date, that is, the ACTION Authority’s Annual Report 2005-2006, and should only be considered as a starting point. These estimates can be refined with more recent information from ACTION and from Permo-Drive. Passenger Fleet and Special Fleet (from Table 1, page 12) Number of buses Kilometres Travelled (000)

2004-05 391 23,339

2005-06 387 23,450

Operating expenses (from Note 10, page 86) Bus running expenses ($,000)

2004-05 9,135

2005-06 10,367

My Estimates per Bus Bus Running Expenses per bus ($) Kilometres Travelled per bus

2004-05 $23,363 59,691

2005-06 $26,788 60,594

Using the following two assumptions: 1. “Bus Running Expenses per bus” in 2005-06 (of $26,788) represents the cost of fuel, and 2. Actual average fuel savings from fitting the Permo-Drive device to any bus are only 20% (this is a very conservative assumption. I have chosen just half the figure of 40 per cent given as a high estimate for fuel savings in the 2003 AusIndustry report quoted in the opening paragraph of this letter), the savings per bus would be more than $5,000- each year, or $25,000- over 5 years. Thus, if the Permo-Drive devices cost $25,000- each, then the payback period would be just 5 years: The fuel savings in 5 years would recoup the outlay on the PermoDrive devices. At face value, if the above assumptions are reasonable, there are potentially significant benefits for both ACTION and Permo-Drive Technologies that could be explored.

2


I am not sure of the procedure to be followed to take this analysis further. The final step, I think, following a preliminary feasibility assessment by ACTION, might be a publicly advertised request for tender (RFT) from potential suppliers of fuel-saving measures that are suitable for retro-fitting to ACTIONâ&#x20AC;&#x2122;s existing buses â&#x20AC;&#x201C; and in response to this RFT Permo-Drive Technologies could offer to supply its devices in competition with other suppliers (if any?) of devices that provide similar fuel savings. I hope this information may assist the business objectives of both ACTION and PermoDrive Technologies. Yours sincerely,

Colin Dunstan

3


Link to ACTION Authority Co-Operative Agreement under Greenhouse Challenge Plus

http://www.climatechange.gov.au/cgi-bin/challenge/dbsearch.pl?page=agree_detail;aid=4038

ACTION Authority 2005 ACTION Authority The ACTION Authority was created in January 2002 with a view to emphasising its commercial operations. It provides scheduled route, school and specialist bus transport to the people of Canberra and has service as its principal priority. Company Operations ACTION's operating environment is unique in that Canberra has the highest average income and single and two car ownership in Australia, and a very large "Y" shaped geographical area with minimal traffic congestion, abundant cheap parking and low density housing. ACTION's challenge is to provide travel times that are competitive with a car and at a cost less than parking. To meet this challenge ACTION has 374 buses, 677 staff, two depots, a corporate office and four interchanges to provide 3,000+ services a day to carry 16.3 million passengers over 22.5 million kms a year. ACTION has a fleet of 374 route buses, including 69 accessible buses, and 16 mini buses that are used for special needs transport. The Authority has commenced the process for the construction of a CNG fuelling facility for the fuelling of its new CNG buses. The facility is expected to be commissioned by October 2004. Emissions Update The ACT Government committed to $23.4 million to purchase 62 low floor easy access buses to replace older buses in the fleet. Twenty of these new buses are diesel powered, using low sulphur fuel, and have already been incorporated into the ACTION fleet. The remaining 42 buses, run on compressed natural gas (CNG), are being introduced progressively into the fleet over the next two years. The CNG buses promise equivalent performance to diesel for less harmful emissions, including noise and lower long-term costs. The new buses are low floor with easy access with fold out wheelchair ramps. Each bus has the capacity to carry 2 wheelchairs. Action Plan ACTION Authority will continue to raise awareness to all staff regarding its environmental performance. The Authority will also continue to actively participate in research and development of alternative fuels for its buses.


From: “Richard Matto” <Richard.Matto@act.gov.au> To: “Colin Dunstan” <colingd@tpg.com.au>

Sent: Thursday, November 06, 2008 7:41 AM Subject: Climate Change & Sustainability Colin ACTION is no longer an authority, ACTION since 2007 is an ACT Government Department Enterprise, & as such our administrative environment has changed significantly. Action as a Government Enterprise has commenced with a procurement process for a Consultancy for the next stage of ACTION’s Climate Change & Sustainability Strategy. I can certainly make mention of Permo-Drive Technology to the winning tenderer for this consultancy, the time frame for this project is approx 6 months, as it is a whole of ACTION project. One avenue for Permo-Drive could be to locate venture capital from the Carbon Emissions Market, Investors would purchase the Permo-Drive units for installation into the transport industry, Fleet Operators could reap the fuel savings & the investor could receive the carbon credits. Regards

Richard Matto CMILT Fleet Services Manager Department of Territory & Municipal Services Australian Capital Territory Internal Omnibus Network

T 02 6205 4821 F 02 6207 8056 M 0427 261 720 E richard.matto@act.gov.au


From: “Colin Dunstan” <colingd@tpg.com.au> To: “John Hannaford" <hanno7@tpg.com.au> Sent: Thursday, 6 November 2008 5:16 PM Subject: Fw: Climate Change & Sustainability - Permo Drive and ACTION Buses To:

John Hannaford Save Our Technology Ballina NSW 2478

Hi John, Sorry not to get much joy from my approach to ACTION buses on Permo-Drive. At least we got an acknowledgement of the potential benefits, and hopefully some goodwill towards your organisation's efforts. I am forwarding some further information from Richard Matto, ACTION's Fleet Services Manager, with a positive suggestion for an alternate approach to secure funding for Permo-Drive. … Once again, sorry I couldn't be of more help. Best wishes and good luck with Save Our Technology,

Colin Dunstan


From: “John Hannaford" <hanno7@tpg.com.au> To: “Colin Dunstan” <colingd@tpg.com.au> Sent: Friday, 7 November 2008 9:08 AM Subject: Permo-Drive Colin Thanks for all your work. It has been a long haul with still no end in sight yet. The contacts I had seem to have all dried up now in the current economic crisis. I have put my nomination in for the board to see what else I can from that angle. We should be getting a notice of the AGM very soon as it should happen before the end of this month. Best Regards John Hannaford


Permo Drive for Urban Bus Fleets