Hydrophobic Coatings for Condenser Systems: Complete Technology Strategy

:
Hydrophobic Coatings
For Condenser Systems
COMPLETE TECHNOLOGY STRATEGY
Ben Gallatin
Derek Phillips
Nigel Walker
April 30th, 2015
Vanderbilt University
ENGM-221-02, Dr. John Bers

Technology Strategy for Hydrophobic Coatings
Gallatin, Phillips, & Walker
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Executive Summary
With global CO2 emissions on the rise and increasing restrictions from coolant
effluent regulations, thermal power plants are under tremendous pressure to increase the
efficiency of their operations and decrease emissions. One partial solution is
implementing a hydrophobic coating for condenser units. In the power generation cycle,
this coating increases the efficiency of the condensation process. It creates a larger
pressure differential between the inlet and outlet of the preceding turbine, driving it
harder and creating more power for the same amount of fuel used. In effect, not only does
the coating yield a positive effect on our environment, but it saves power generation
companies millions of dollars per year.
Founded out of a collaboration between two research laboratories at MIT,
DropWise Technologies Corporation produces a coating that is based on a patented
initiated chemical vapor deposition technique. Utilizing this technique, a portable
dispenser system applies the superhydrophobic coating to virtually any configuration of
condenser - new and old.
This report chronicles a complete strategy for bringing the coating technology to
market. It involves DropWise partnering with multi-billion dollar Exelon Corporation,
the nation’s leading competitive energy provider. Exelon strives to adopt “smart”
technologies and in particular, improve energy efficiency of the company’s pre-existing
facilities. With Exelon’s capabilities, DropWise will be able to first apply the coating to
each of Exelon’s plants before moving on to other energy providers. This will allow the
collaborative to take data from representative plants and condenser units that can then be
extrapolated to find a fitting cost and matching return on investment. Armed with the
resulting data, the collaborative can expand outward, applying the coating to power plants
around the globe. Due to the coating’s limited lifetime, the consumers will re-enter the
market every five years, providing a continuous flow of revenue for the company. Due to
the strong support from our financial projections as well as the maturity of the coating as
it exists today, DropWise and Exelon can collaborate to commercialize this
superhydrophobic coating by the end of this year.

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Table of Contents
Introduction......................................................................................................................... 5
1 Macroeconomic/Social Environment.......................................................................... 8
2 Company Assessment ............................................................................................... 11
3 Market/Demand Environment .................................................................................. 18
4 Technological Environment...................................................................................... 25
5 Competitive Environment......................................................................................... 32
6 Technology/Business Intelligence ............................................................................ 37
7 Product Strategy........................................................................................................ 46
8 Operational Strategy ................................................................................................. 52
9 Technology/Collaboration Strategy.......................................................................... 57
10 Intellectual Property Strategy ................................................................................... 59
11 Project Valuation & Financing – DCF Modeling..................................................... 60
12 Project Valuation & Financing – DCF Modeling..................................................... 67
13 Implementation Plan................................................................................................. 72
14 References................................................................................................................. 76
15 Appendices................................................................................................................ 81

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List of Figures
Figure 1. Example of Technology in Action ...................................................................... 5
Figure 2. Photo of Water Condensation with and without the Coating.............................. 7
Figure 3. Diagram of Implementation Process ................................................................... 7
Figure 4. Photo of a Power Plant Dumping Effluent.......................................................... 9
Figure 5. Company Capabilities ....................................................................................... 12
Figure 6. Awards (Exelon Corporation, About Us).......................................................... 15
Figure 7. Center of Gravity for Exelon Corporation......................................................... 17
Figure 8. DropWise's Ratings for Triggers and Barriers for Adopting this Technology.. 23
Figure 9. Hydrophobic Technology Timeline .................................................................. 25
Figure 10. The Lotus Effect.............................................................................................. 25
Figure 11. Chemical Vapor Deposition Equipment.......................................................... 26
Figure 12. Diagram of a Steam Condenser....................................................................... 27
Figure 13. Steam Generation Process............................................................................... 28
Figure 14. ISF Map of DropWise Coating vs. Advanced Polymer Coating Process vs. No
Coating Present (Incumbent) ............................................................................................ 29
Figure 15. Competitive Landscape of Exelon vs. Key Competitors................................. 33
Figure 16. Market Sizes vs. Total Unit Sales.................................................................... 35
Figure 17. Market Share Projections of Key Competitors................................................ 36
Figure 18. Complete Analysis of ISFs - Relative Advantage vs. Relative Importance.... 40
Figure 19. Penetrating the Market: Bowling Pin Model................................................... 51
Figure 20. High-Level SIPOC Diagram for Hydrophobic Coating Application to Power
Plants................................................................................................................................. 52
Figure 21. SIPOC Diagram for Key Process #1 ............................................................... 53
Figure 24. Total Projected Unit Sales Analysis................................................................ 64
Figure 25. Net and Discounted Net Cash Flows............................................................... 65
Figure 26. Summary of Decision Tree Models................................................................. 70
Figure 27. Option Space Map for DropWise Hydrophobic Coating ................................ 71
Figure 28. Technology Roadmap: DropWise to this Point............................................... 73
Figure 29. Technology Roadmap: Next Immediate Steps................................................ 74
Figure 30. Technology Roadmap: Potential Future Expansion........................................ 75

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Introduction
An important concern for the future is how society will adapt current energy
generation processes to deal with potential scarcity in resources. One such technology
that addresses this issue is water-repellent coatings that would be applied to pipes in
steam power plants. The coating increases the efficiency of the condensation and runoff
of water on the pipes, an essential step in operating the turbine. DropWise Technologies
Corp. will be a leading company in bringing this technology to market. MIT professors
Karen Gleason and Kripa Varanasi invented this hydrophobic coating alongside PhD
researchers Adam Paxson and David Borrelli. They teamed up with Colin Gounden to
start the company DropWise.
Previous attempts at this technology have either yielded coatings that are too thin
and deteriorate quickly or coatings that are too thick and actually hinder the condensation
process. DropWise has developed both a coating and application process that ensures the
correct balance of both thickness and efficiency (see Figure 1 below). This coating will in
turn reduce the amount of water and other natural resources required to produce
equivalent amounts of energy.
Figure 1. Example of Technology in Action
Technology Description
Power plants use cold water running through pipes to condense the water vapor
around the pipe creating a vacuum. The turbines connected to these pipes use this
vacuum to turn their blades and produce energy. The water repellent coating technology
will allow this process to become much more efficient.
The hydrophobic coating improves efficiency by saving both water, fuel, and
time. As the cold water rushes through the pipes, the steam around the pipes cools as
condensation around the pipe. Without a coating, the water sticks to pipe and prevents
more water from cooling. Previous coatings prevented the water from sticking, but
another issue arose: the coating was too thick, which also inhibited water from
condensing. Some thinner coatings have been developed, but they disintegrate in
minutes. DropWise has produced a product that can survive years of steam exposure,
while conserving resources such as water, fuel, and time. They accomplished this feat in

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efficiency using a technique called initiated chemical vapor deposition. This technique
enables the coating to be 2,000 times thinner than a sheet of paper and grafts the coating
to the surface of the cold water pipes using strong chemical bonds. This coating has been
created and survived all tests with no signs of damage.
Application(s)
The researchers at DropWise Technologies Corps. have developed a hydrophobic
coating, which can be installed in power plants across the globe. Steam power produces
85% of the world’s power. This technology can be installed into existing power plant to
reduce the amount of energy and resources that are wasted producing the power that fuels
the world. DropWise has the ability to install the technology in existing nuclear, coal and
other power plants. These plants will use this technology to cover the pipes in their water
vapor condensers.
In the near future, the planet's capacity to produce power will double. New plants
will rapidly surface to supply society with the power to turn on light bulbs and fuel
batteries. This coating will have drastically improved the efficiency of existing plants
and become the standard for having an ideal power plant. As new plants enter the power-
producing arena, this coating will be pre-installed into their water vapor condensers to
begin saving water and fossil fuels from day one.
Significance
At the moment, the pipes that power plants run cold water through become
enveloped in a layer of moisture. This layer drastically hinders the condensation process.
The water repellent coating speeds up the condensation process, making the entire
process more efficient. Since power plants use thousands of cool-water pipes, this small
change compounds to much grander savings on resources.
These plants create steam by burning coal or other resources. With this coating,
the rate at which steam powered plants use water to create power would dramatically fall.
Also the rate at which these plants burn fuel would be cut down from their usual
consumption of fossil fuels. This makes it possible for power plants to reduce their
carbon dioxide emissions and water use.
Nuclear power plants, natural gas, coal, solar thermal, and geothermal processes
all use this steam process to generate energy. This coating immensely reduces the energy
wasted by power companies, saving millions of dollars each year. Not only will
companies benefit, but society will benefit as a whole because the coating will reduce the
carbon dioxide emissions, equal (for each plant that adopts the technology) to taking
thousands of cars off the road.
Team Members
Derek Phillips, Ben Gallatin, Nigel Walker

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Innovation Success Factors
WITHOUT THE REPELLENT WITH THE REPELLENT
Figure 2. Photo of Water Condensation with and without the Coating
1. Efficiency
a. This steam process to generate energy is inefficient without a coating. A
simple water-repellent coating cuts down on the resources power
companies use to generate energy (see Figure 2 above).
2. Resistance to Wear
a. Early forms of this technology became too thick. The coatings would
inhibit the condensation of water vapor on the pipes. Now new thinner
coatings exist, which can be applied to the water pipes.
b. Some coatings became too thin and would wear out because of the heavy
steam exposure. This technology optimizes the thinness and durability
requirements necessary for the steam process.
3. Ease of Implementation
a. This technology has the ability to be implemented on existing power
plants.
Figure 3. Diagram of Implementation Process

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b. Rather than the standard process of a spray coating, this technology is
applied by passing two gases over heated filaments and allowing them to
react, creating a polymer coating that is resistant to wear (see Figure 3
above).
1 Macroeconomic/Social Environment
1.1 Crisis identification
Steam electric power plants diminish the quality of drinkable water sources
throughout the country. Every year these plants emit 79,000,000 lbs. of arsenic, 64,400
lbs. of lead, and 35 other pollutants. (US EPA, 2012) These toxins have been associated
with cancer, neurological damage, and ecological damage. The crisis exists today and
continues to beg for a solution. The DropWise technology makes the steam electric
power process much more efficient by increasing the rate at which steam is condensed.
This reduces the combustion of fossil fuels that produce that produce the harmful
pollutants created by power plants. Not only are less pollutants released into the
environment, but less non-renewable resources are burned to fuel these plants.
These steam power plants produce most of the energy the world uses. However,
these plants also consume vast amounts of fossil fuels, which are irreplaceable. Fossil
fuel plants accounted for 32% of U.S. total greenhouse gas emissions in 2012. (US EPA,
2012) This pollution and depletion crisis is driving innovation forward for the coating
DropWise has produced.
Even if the future shows a turn toward nuclear or geothermal power, the method
of power generation involving steam turbines is still the same, and the coating technology
will still provide huge efficiency gains in the system. (Mission, DropWise Technology
Corps.) Therefore, the overarching crisis is more a matter of guaranteeing a clean earth
and sustainable, efficient power generation for future generations.
1.2 Identification of innovation enablers or inhibitors
Enablers
Steam power plants make up 85% of the world’s power. Steam-powered
generators are used in nuclear, natural gas, coal, solar thermal, geothermal, and biomass
systems. However, the production process is immensely inefficient. These plants heat
and cool water using coal, but without a water repellant coating on the pipes, the plant
works harder than necessary costing millions of dollars each year. The DropWise
technology offers an immediate solution to the issue of inefficiency. The coating that
DropWise invented needs to save these power plants the money they waste each year.
The long term financial benefits enable the macroeconomic environment to be conducive
to the DropWise technology.
Another enabler helping to drive this innovation forward is the environmental
movement, which focuses on humanity as a participant in ecosystems rather than an
enemy. By making the product known to the masses and garnering support from key
environmental agencies, DropWise can overcome any opposing social or institutional

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opposition that would otherwise hinder the implementation of its product. In order for the
product to be materialized, it must be accepted and advocated for by this community.
Power plants using steam as a resource release liquid waste, called effluent, into
natural bodies of water, shown in Figure 4 below. The United States Environmental
Protection Agency (EPA) put regulations in place to limit the effect of steam electric
power generators on the environment. If a power plant could reduce the effluent it
produces without sacrificing power, then the rate at which a plant produces power would
increase. DropWise technology allows these plants to accomplish this goal of producing
more power without compromising EPA regulations. Following these regulations
enables the social environment to be conducive to the DropWise technology.
Figure 4. Photo of a Power Plant Dumping Effluent
Inhibitors
Adopting this coating technology means that power generation companies have to
open their doors to an installation company (DropWise), who updates the preexisting
condensers with the new coating. The coating is applied via a vapor deposition process.
DropWise temporarily integrates the deposition process into the existing heat exchanger
in order to apply the coating. Companies may have an issue with letting someone else
come in, whether for classification or privacy issues. Companies might also hesitate to
upgrade because of the sheer fact that their technology is working and they’re profitable.
To convince these companies to upgrade, it takes some careful discussion of the benefits
of a hydrophobic coating and an advanced economical explanation of the upfront cost
versus the savings provided. In order to gain the trust of power generation companies,
the implementation consultant must discuss upkeep, conditions of product failure,
warranty/protection in the case of failure, etc. These hurdles inhibit DropWise from
implementing their product today.
1.3 Timing
With the Earth containing only a finite amount of natural resources, it is
increasingly important to begin to explore alternative processes and sources for obtaining
the energy that is so vital to society today.

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Methods of harnessing the energy of renewable resources have not been
developed and implemented on a wide enough scale at this point. While these
innovations continue to progress, it becomes increasingly important to make methods of
using nonrenewable resources as efficient as possible. A time may come when energy is
easily and cheaply obtained on a large scale strictly from renewable resources, but it is
unclear when exactly that time will be. Until it arrives, society must plan is if it will
never come, thereby increasing the importance of how people use the resource supplies
that will one day run out. Without a radical change to how humanity produces energy, the
best possibility is to increase efficiency in pre-existing structures. This kind of
engineering will set an example, or new standard, of how steam generators function.
DropWise is in a perfect position to begin increasing this use efficiency as soon as
possible. The coating can be applied to already existing power plants, allowing it to
immediately have an impact on both reducing emissions and lowering resource use.
Furthermore, DropWise’s coating can be applied to power plants that use all different
types of initial energy source, so not only will it provide an immediate benefit, but it also
will have an impact down the line.
The coating can be applied to plants that obtain steam-generating energy from
solar, nuclear, biomass, and geothermal sources as they become more favorable, while
already having increased the efficiency of those that use natural gas and coal.
Power plants should also consider the amount of pollutants they introduce into the
environment. For example, by reducing the amount of coal needed to be burned in the
more efficient process, the DropWise coating will also reduce the amount of consequent
pollution generated per unit of energy produced. This in turn will slow the decay in the
ozone, reduce pollution in the waterways from the effluent runoff, and decrease the
amount of pollutant absorption that could occur in the surrounding soil. It is important to
begin tackling the issue of society’s impact on the environment as soon as possible.
Continued decay will lead to loss of important resources and ecosystems both for us as
humans and for other organisms. Now more than ever, these issues of becoming a more
environmentally friendly society have gained momentum. Companies of all industries are
now facing questions of how they are working to reduce their environmental impacts.
Green organizations will especially interested in the commercialization of the
hydrophobic coating.
No significant issues exist preventing the DropWise coating from beginning to be
marketed to power plants in which it could potentially be implemented. Conversely, the
sooner it is implemented, the larger and more significant impact it will have on the global
issues of declining resources and environmental pollution.
1.4 Strategic implications
First, DropWise needs to focus on current steam power plants in order to gather
data to show the effects of the product on the plant. That data will allow us to generate
complex economic predictions to demonstrate the financial turnaround and long term
benefits.
Showing the results of the implementations of the technology will get more
companies on board for upgrading their process. At that point, DropWise can focus on

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new developments of future steam power plants. As new plants integrate the coating into
their production process, the bar will be raised for energy efficiency standards.
The goal for DropWise’s product implementation should be making these
condenser coatings the standard for all new developments. Once most plants leading the
industry in power production demonstrate the effectiveness of the DropWise coating, a
transition can occur from revamping existing infrastructure to a supply network that will
focus on incorporating water-resistant coatings into the manufacturing process. This
technology, ideally, will be looked at less as an upgrade, and more as an essential part of
the steam-powered generation process. This will shift the company’s focus from
upgrading existing plants to consulting new steam-powered developments across the
globe.
2 Company Assessment
2.1 Capabilities required
1. Environmentally Conscious: the company must have a commitment to increasing
the supply of clean energy and decreasing emissions.
2. Application of Technology: The company must have the means to apply the
initiated chemical vapor deposition technology to existing power plants.
3. Development of Technology: The company must be able to develop the
technology and stay a leader in the industry.
4. Access to Power Generation: The company must have access to pre-existing
generation sites or a location to implement the technology.
5. Worldwide Application: In the future, the company must have the means to apply
the technology on a global scale.
6. Knowledge of the Industry: The company must have up-to-date knowledge on
competitors and leading generation technologies. They must assume and maintain
a strategic presence in key competitive markets.

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2.2 Candidate host companies
❖ Exelon
❖ Advanced Polymer Coatings
❖ GVD Corporation
Figure 5 below summarizes how well each of the candidate host companies fulfill each of
the necessary capabilities that were previously discussed.
Companies
Advanced Polymer
Coatings GVD Corporation Exelon Corporation
Acceptance
Criteria
Environmentally
Conscious 1 6 10
Application of
Technology 5 7 4
Development of
Technology 7 10 4
Access to Power
Generation 5 2 10
Worldwide
Application 10 2 7
Knowledge of the
Industry 6 2 8
TOTALS 34 26 43
Figure 5. Company Capabilities
Exelon
Exelon has become a leader in power-generation in the U.S. Their commitment
to excellence has earned a net income of 1.729 billion, which opens many doors for
future investments in innovative technology.
According to the criteria for the best company to host the DropWise technology,
Exelon rates high among other potential companies. As far as a commitment to clean
energy, Exelon ranks high for establishing their program called Exelon 2020. Exelon
2020 intends to remove 17.5 million metric tons of greenhouse gases annually by the year
2020. In 2013, this company removed 18 million metric tons of greenhouse gases
beating their goal by 7 years.
In addition to being environmentally conscious, Exelon has vast knowledge of the
power generation industry, as well as access to delivering their power internationally.
They rank high in these categories because of their experience with multiple facets of
energy generation, including nuclear, natural gas, and clean energy. Exelon has crossed
borders with their product, making them the only one of the three companies to go
international. Although, Exelon has only reached Canada outside of the U.S., they have

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immense potential to extend their reach and transform energy generation around the
world.
Despite their leadership in the power-generation industry, Exelon falls short in the
application of technology and development of technology capabilities. They have yet to
demonstrate that they have the capacity to innovate towards efficiency. There has been
little invested in the research and development of new technology. Even though Exelon
has faults in these areas, it excels in access to power generation, evident from its top
ranking on the Fortune 500 power company. The company also owns 35,137 megawatts
of power in the U.S. alone. Exelon makes up for their shortcomings with their eclectic
and extensive resources.
Advanced Polymer Coatings
Advanced Polymer Coatings produces coatings for power-generating companies
around the world. This company provides protection from corrosion which occurs in the
infrastructure of power companies. Their accomplishments with durable coatings makes
Advanced Polymer Coatings a great candidate for the efficient DropWise technology.
When comparing Advanced Polymer Coatings to the criteria for a good candidate
for the DropWise Technology, this company ranked above average for the development
of coating technology as well as the knowledge of the industry. Their website describes
an excellent history of providing coatings for power companies, but no specific mention
of hydrophobic coatings, only corrosion prevention. This company also received average
5 out of 10 scores for their access to power generation and application of technology.
Despite supplying companies with their coatings, they have no presence in actual energy
production. In addition to their poor access to power, this company has zero focus on
being environmentally conscious. They supplement this fault with their world wide
application capability. Advanced Polymer Coatings has branched out to over two dozen
countries, making it the widest reaching of the three companies. The reach of Advanced
Polymer Coatings stands out, but the rest of their capabilities do not outrank those of the
Exelon.
GVD Corporation
GVD Corporation specializes in commercializing vapor deposited polymer
coatings for multiple applications, while growing and developing to meet new needs.
When comparing GVD Corporation to other potential companies that could implement
the DropWise Technology, this company was not deemed a good candidate to support the
technology on a large scale. However, GVD Corporation ranked above average in
Environmental Consciousness and Application of Technology because their coatings
have a reduced environmental impact compared to conventional coating technologies,
and they have refined the method in which the coatings are applied. Typically, a solvent
must be present which is not always compatible with the material being coated as well as
providing environmental concerns (GVD). The GVD-developed process is dry, meaning
a potentially harmful solvent is not necessary. Furthermore, significantly less raw
material is used as compared to conventional methods, resulting in less waste.

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GVD Corporation ranked highest in Development of Technology, scoring a
perfect ten out of ten. The founder of the company, Karen Gleason, is also one of the
principal scientists working on the development of the DropWise coating. With this
connection directly to the innovation team, GVD Corporation is in an ideal position for
developing the technology even further. They would not have to research and develop
their own version of the coating, but would rather be able to directly implement the
coating their founder helped develop.
However, it is in the other categories that GVD Corporation was revealed to be a
poor candidate to host the technology, as it scored a two on each of Access to Power
Generation, Worldwide Application, and Knowledge of the Industry. A vital criteria for
a company to host the DropWise technology is its access to the power generation
business, allowing for ease in applying the coating. GVD is a relatively small company
with no direct connection to the power generation business. Because of this lack of
association with power generation companies, GVD also has limited knowledge of the
industry. This is preventative in allowing a complete understanding of how to maximize
the efficiency and effectiveness of the coating in the power plants.
The small size of the company also hinders its ability to score highly in the
Worldwide Application category. GVD only has a few locations, and all are located in
the eastern United States (GVD). This drastically inhibits the company from having a
large global impact on the industry of power generation, an effect that is crucial to
meeting the goals of the technology.
2.3 Company’s business, key customers or markets.
Exelon Corporation is a utilities service holding company and a leading
competitor in the energy generation field. Primarily led by its subsidiary, Exelon
Generation Company, Exelon seeks to expand its holding in the energy generation
business, while also establishing themselves as leaders in both marketing and distributing
energy. Exelon operates through both its owned and contracted electric generation
plants, as well as investments in other generation ventures. As stated in the company’s
2013 SEC 10-K filings (United States Securities and Exchange Commission), Exelon strives
to take a customer-facing approach to energy generation and supply by marketing
wholesale energy operations and offering services in both natural gas and renewable
energy products.

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While limited by various risk factors, a primary concern is the regulatory and
legislative risks associated with energy production business. However, this concern is
lessened thanks to Exelon’s superior commitment to reducing its impact on the
environment and providing clean energy. As stated on their website, Exelon strives to
not only achieve the regulatory levels for emissions, but to exceed expectations in order
to better serve customers and the global community as a whole. This dedication to
environmentally conscious energy production coincides with the primary mission of the
DropWise coating of increasing the efficiency of the energy production process. Figure
6, below, shows some of the qualities of Exelon that make them a suitable choice for the
DropWise technology.
Exelon, although not reliant or leading in research and development areas, has the
capital and proper business values to host the technology. Furthermore, the coating does
not need strong research and development support, but rather needs access to pre-existing
power plants and the ability to be implemented on a large scale. The prominence of
Exelon Corporation in the energy production business makes it a perfect host candidate.
2.4 Analysts’ views of company's strengths, weaknesses, and future prospects.
In April 2014 Exelon secured regulatory approval from the NRC to operate three
nuclear energy plants, five reactors total, and in July 2013 integrated three commercial
power plants to their nuclear generation fleet in New York and Maryland. These business
initiatives streamline revenue margins and strengthen their foothold in the market
(GlobalData Analyst Report, Published 2015) and the DropWise coating technology
works well with nuclear power generation.
A future prospect of Exelon that supports the technology is a company plan called
Exelon 2020, which aims to reduce greenhouse gas emissions. While this is traditionally
accomplished through a transition to renewable energy and nuclear power, Exelon 2020
plans to adopt “smart” technologies and in particular, improve energy efficiency of the
company’s pre-existing facilities (GlobalData, page 12). This is exactly what DropWise
should be looking for in a company - its product is perfect for their vision.
“...Exelon 2020 plans to adopt “smart” technologies and
in particular, improve energy efficiency of the company’s
pre-existing facilities...”
Figure 6. Awards (Exelon Corporation, About Us)

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One weakness of Exelon is their high debt to equity (0.88%) and debt to capital
(0.28%) ratio. This debt was assumed in order to meet its capital expenditure needs
(GlobalData Analyst Report). This points to a scarcity in capital resources within the
company, and this could hinder the implementation of the new technology. This could
also limit the expansion of the company, especially overseas. The limited growth can,
however, make a case for DropWise’s technology in the company: if they do not have the
capital to expand the sheer amount of power generation stations, they can instead focus
on reworking the efficiency of their already existing assets. Also the savings as a result
of implementing the coating could gain profits to fund expansion.
A further cause of concern is the long term outlook of power prices. Recently,
gas prices have plummeted, which is now causing a resultant dive in power prices. For a
power generation company such as Exelon, this is alarming as its profits are based
primarily on the sale and distribution of energy. If prices continue to stay low due to an
oversupply of natural resources needed to produce the power, energy prices will remain
low, hurting future profits.
However, there are opportunities for growth and increased profitability for
Exelon. They have recently announced a merger with Pepco Holdings, another energy
delivery company that is based in the Mid-Atlantic region. This merger expands the
market that Exelon now reaches by an estimated 2 million customers (Pepco). The
increased amount of customers, and therefore, sources of revenue will add an estimated
$0.10 per share in earnings in 2016, if the merger is approved by all necessary parties
(RBC Capital p.1). This added capital will give Exelon the freedom and encouragement
to consider extending their reach into increasing the efficiency of their power generation
system.
2.5 Company’s technical strengths
Exelon possesses invaluable core competencies, especially with regard to
operational leadership. Their company soars above competitors with their focus on using
cutting-edge technology to remain the industry leader in environmental awareness.
Exelon ranked second in Newsweek’s 2014 Green Rankings demonstrating their lack of
impact on the environment. This ranking can only be made possible by their operation
leadership in the power-generating field.

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Figure 7. Center of Gravity for Exelon Corporation
Exelon Center of Gravity Scores:
Product Leadership 2
Operational Leadership 8
Customer Intimacy 5.5
As can be seen in Figure 7 above, Exelon earned high scores for being an
operational leader and for customer intimacy, but a low score for product leadership.
This company established itself as an operational leader by using multiple facets of
energy to produce power. This includes power sources from nuclear to clean energy.
Exelon ranked relatively high on customer intimacy. This company is unique because
they actively help their customers attempt to conserve energy by distributing Smart
Meters. This gives customers access to energy consumption information in order to
enable them to make more environmentally friendly choices with their energy use.
They also promote energy efficiency in competitive markets through their
“Efficiency Made Easy” program which bundles together energy efficient upgrades like
building automation and HVAC upgrades to the consumer alongside their electric supply
purchases. Exelon also appeals to customers through their Exelon 2020 plan, where they
have shown a commitment to the green movement and increasing efficiency by reducing
the amount of pollutants and effluent used.
DropWise has developed a hydrophobic coating to improve efficiency in power-
generating plants. Exelon has acquired plants throughout the U.S. and Canada to produce
nuclear, wind, solar, hydropower and natural gas. Exelon has yet to venture into

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developing a coating like the one DropWise has invented. In fact, it has refrained from
becoming a product leader and actively seeking out new innovation. Instead it
implements the innovations of others to expand its market and network, focusing instead
on the operational aspects. Data shows that Exelon is a multi-billion dollar company
with the power to invest in technology to make their plants more efficient. Despite the
conclusion being that Exelon can develop a coating and become more efficient, the
assumption remains unclear whether they will. Their history of efficiency and
environmentally-minded focus implies that this company will do whatever it takes to seal
the cracks in any energy wasting methods they have.
The success of the DropWise coating as implemented by Exelon Corporation will
be driven by Exelon’s ability to remain profitable and in the top tier of the energy
generation business. Exelon has the resources and increasing annual revenue to
effectively implement the technology. Furthermore, Exelon has a large holding already
in the power generation landscape. This will enable the coating to be put in to use on a
large scale and in various locations, maximizing its impact on both resource use and
emission reduction. However, if slipping power prices and the presence of already
accrued debt prevent Exelon from maintaining its profitable structure, the technology
may be in danger as the company scales back its scope. On the other hand, a slight dip in
revenue may convince the company to move forward with the technology quickly in
order to increase efficiency, reduce costs, and return to, if not exceed, the levels of
revenue that it currently is experiencing.
3 Market/Demand Environment
3.1 Ideal market for your technology
The ideal market for the DropWise coating technology is one that the host
company, Exelon, has immediate access to. Since Exelon has direct access to power
plants, the most obvious choice is to go after the energy industry. After implementation
the data generated can be used to provide an extended look at the return on investment
due to the use of hydrophobic coatings.
In the current age, companies are under increasing pressure to increase their
“green” technologies and comply with strict governmental regulations. The ideal market
will hopefully take advantage of this need, allowing consumers to reduce effluent and
pollution from fossil fuel waste. Energy, and clean energy production, is more important
than ever - so the timing is right for this product’s application.
3.2 Candidate markets
Power Generation
The total market the DropWise hydrophobic coating would address is the steam
condenser market. Most of the world’s power originates from steam power, and the

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plants that produce it use a process much less efficient than necessary. In this power
generation industry, DropWise would market toward the large number of water vapor
condensers these power companies own.
The market DropWise targets will start small in the existing power companies.
Specifically, DropWise will work with “Green” organizations hoping to cut down on
their effect on the environment. Power plants owned by companies like Exelon aim to
create clean energy. This market would develop the results, which reflect the benefits of
the hydrophobic coating. These results will show the reduction of harmful substances
like arsenic and lead, not to mention the financial gain of producing more energy in less
time. Ideally, the market will continue to grow as other companies witness the benefits
of using initiated chemical vapor deposition to install the coating.
Power generation is the market DropWise should pursue because of the clean
energy crisis and environmental crisis. The demand for cleaner energy production grows
as “green” organization spread awareness about society’s impact on the environment.
Also by focusing on the power generation industry, DropWise would have an immense
environmental and financial impact, which would eventually influence the standard for a
cleaner energy production process.
Desalination
The DropWise coating has more applications than just power generation. The
market would also eventually reach desalination processes. Nearly half of the water
produced by the desalination process uses a steam condenser. The desalination process
involves a large system of condensers to produce drinkable water, and the hydrophobic
coating shrinks the surface area necessary to produce the water by 30%. (Applications,
DropWise Technologies Corps.)
This market is an excellent candidate from DropWise, but the timing is better for
power generation companies to begin producing cleaner energy. Power generation is a
more pressing issue currently in the scope of decreasing the environmental impact society
has on the world. While the DropWise technology can at some point branch in to this
market, the largest benefit and immediate impact will be felt from its application to the
power generation industry.
HVAC/R
In addition to desalination, heating ventilation air-conditioning and refrigeration,
or HVAC/R, uses water vapor condensers to remove heat from air. This requires a
hydrophobic coating to improve the efficiency of the cooling process 2% for every 1ºF
decrease in condenser temperature. (Applications, DropWise Technologies Corps.)
According to a market research report, 87,501 HVAC contractors operated in 2002. (U.S.
Census Bureau) This large market could use the coating, however a bigger
environmental and financial impact could be made if DropWise pursued power
generation first.
As with the desalination market, DropWise could easily transition to this market,
as well. It is simply a matter of determining where the technology will have the greatest
effect, both in terms of reducing the industry's environmental impact and in terms of
providing economic savings to potential investors and consumers. After becoming
established in the power generation industry and initiating the transition of making the

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coating the norm, DropWise will be in a stronger position to delve into other industries
and expand its reach into other markets.
3.3 Market size
According to The U.S. Energy Information Administration (US EIA) and their
Electric Power Annual report, there were 3,115 power plants in operation specifically
designated as members of the electric utilities sector at the end of 2012 in the United
States (US EIA). Of these 3,115 plants, 1,961 of them were operating using coal,
petroleum, natural gas, or nuclear power as their primary energy source, providing an
opportunity for DropWise’s coating to be implemented and representing the served
market. It should be noted, however, that each plant potentially, and in most case does,
possess more than one generator system within it. This report collectively counts the
plant as a single unit if every generator present is fueled by the same energy source.
Therefore, the number of generators on which the technology could be implemented is in
fact larger than just the 1,961 units reported. In order to be conservative in the estimate,
the reported number of 1,961 will be used as the market size.
A 2014 report from MarketLine on the United States Power Generation, indicates
that 87.2% of the power generated in the U.S. in terms of total TWh comes from energy
sources that are compatible with the hydrophobic coating system (MarketLine). Coupled
with the report’s projected compound annual growth rate of 0.7% over the course of
2013-2018, it is clear that DropWise Technologies will have an available and viable
market for the foreseeable future, both in existing power plants, and any potential new
developments that may come.
3.4 Technology's key benefits for this market
Current condenser coatings, if used at all, are mostly to resist the corrosion and to
protect the system against a harsh environment, leading to maintained performance and
increased unit longevity. (ACHR News) The issue with these coatings is that often times
there is a negative effect on the performance of the condensing unit when compared to a
unit with uncoated coils. This leads some companies to forgo the coating process and use
uncoated coils with (what they believe is) “high efficiency”. The DropWise coating
boosts this efficiency to a new level, setting a bar for what it means to have a high
efficiency condenser; a high efficiency condenser is a DropWise-coated condenser.
Currently there isn't any quantitative data showing either specific raw number or
percentages of how much money the product will save a consumer or exactly what the
increase in efficiency will be. There are only estimates. That being said these estimates
provide a strong basis to support the technology's implementation. According to
DropWise Technologies, if the coating were to be present on every power plant's
condensers, CO2 emissions would decrease by 0.58 gigatons, which is more than the
current savings of either the global solar or wind power industries (Intro Video).
Furthermore, most of the current coatings with the same designed purpose are destroyed
in the harsh environment of the condenser within a matter of minutes. The DropWise
coating has successfully survived lab testing in a recreated steam condenser environment
for over 48 hours without any signs of deterioration.

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In order to show exact quantitative data on how this technology will help the
customer, rather than just the initial estimates currently available, it needs actual
application on a steam condenser system. This is why the plan for the technology’s
implementation should be to initially focus on existing plants – the hope is that after
application, data will exist that shows an actual, numerical increase in efficiency rather
than the estimates currently available. Taking this increase in efficiency, quantitative data
will be able to show the world that DropWise coatings are not just helpful - they are
essential in the future of clean power generation. The goal should be to make DropWise
coatings the industry standard, and guarantee that every new development will be built
with a hydrophobic condenser coating.
3.5 Pricing – customer willingness to pay
Pricing for this technology is very difficult to gauge. As is the case with all
current competitors and incumbent technologies, the price will vary greatly depending on
the many factors. The type of material being coated, the surface area of the material, and
the type of condenser being coated are just a few of the considerations that need to be
made in order to determine how much the customer will be charged for both the product
and the service of applying the coating. It was discovered on the websites of both
Advanced Polymer Coatings and GVD Corporation as well as other companies involved
in the coatings industry that pricing was strictly based off quotes. The company required
information involving the previously stated concerns in order to accurately determine the
cost the customer could expect.
Pricing was further complicated due to the relatively new use of initiated chemical
vapor deposition in the coating industry. The equipment necessary for the process also
needs to be customized to account for the large scale of the surfaces that will be coated in
the power plants, with costs estimated to run well into the thousands. The materials
themselves involved in the coating will be the cheapest component of the customer’s total
cost. The chemicals necessary can be purchased for relatively low prices from chemical
manufacturers and distributors such as Sigma Aldrich. The thinness of the DropWise
coating is a cost benefit, as less starting materials are necessary to cover the same area as
previous coatings. That being said, the scale of the project as well as the specific
chemicals required will cause the total price of the materials to vary on a case-to-case
basis. Overall, a price estimate of $10,000 was set as an initial basis. Again, this price
could increase significantly for a larger power plant, or potentially decrease for one on a
smaller scale. A deep investigation into all possible surfaces to be coated as well as the
various surface areas of the piping in the 1,961 units of the served market could
potentially provide us with enough quotes. However, because the technology is so new
and each data point could be vastly different from each other, that process is not
viable. Part of this price will be for yearly maintenance and up-keep provided by
DropWise. This will ensure the coating is serving its designated purpose and maintaining
a high level of performance. The portion of the price allocated to these purposes will go
towards the cost of bringing in experts to analyze the efficiency of the system, providing
any necessary repairs, and affirming the success of the coating.
It is estimated that the service life of the coating will be about 5
years. DropWise’s coating has not yet been tested on a large-scale equivalent to a

4/30/15 22
modern power plant. To this point, tests have still only been conducted in controlled labs
on small scale, power plant replicas. Furthermore, the trials have not been carried out
over a long enough time period to definitively determine the coating’s life. That being
said, the coating showed no signs of deterioration or loss of efficiency during the tests
carried out. After speaking to DropWise CEO, Adam Paxson, an estimate of 5 years was
given as the goal for the technology’s life span. The idea is that this duration will allow
the power plant to remake its initial investment in the form of cost savings and energy
efficiency within the first 2-3 years. The remaining 2-3 years would then provide further
profit to the power plant. The lifespan also ensures that DropWise will be able to sustain
business in the form of future reapplications.
3.6 Triggers and barriers to adopting this technology
The DropWise hydrophobic coating has many triggers enabling the adoption of
the technology as well as a few limitations (see Figure 8). The coatings that predate
DropWise do not offer the durability and thinness that this new coating makes possible.
This company has developed a technology compatible with the power generation market.
The power plant companies in this market understand the process of steam power
generation and the regulations the United States Environmental Agency (US EPA) has
put on plants. The DropWise coating easily adapts these complexities in small scale
trials and as power companies apply the technology across many factories. Once power
plant companies understand the benefits of the technology, they have the ability to install
their condensers with a coating that can be customized to fit all services and condensing
vapor types.
As a new technology coming to the market, this hydrophobic coating has what the
market needs to succeed. As far as competing with the current coatings on the market,
DropWise has more benefits. Current coatings in use are too thick to feasibly conserve
resources used in the vapor condensation process. Otherwise, coatings are too thin to last
a reasonable length of time before wearing out. The coating needs to have a thickness
around 100 times thinner than a piece of paper; DropWise’s coating reaches way beyond
that benchmark. This new coating not only is 2,000 times thinner than a sheet of paper,
but also withstands the corrosive environment of a condenser. Furthermore, the use of
initiated chemical vapor deposition to apply the coating provides more effective results
than the typical spraying method. All of these implications combine to give the
DropWise a large relative advantage over incumbent technologies. The only prevention
keeping DropWise from maintaining a complete advantage is that GVD Corporation is
working on a similar technology.
This thin and durable coating easily applies to vapor condensers through a vapor-
based process, making it compatible with market needs. Also for environmentally
conscious companies, like Exelon, this product appeals to the “green” habits, which
reduce emissions and conserve water and fuel. All American power plants fall under the
US EPA regulations that limit the rate at which the condensers produce power (US EPA).
This coating reduces the ratio of toxic emissions to power production to meet these US
EPA regulations. No process or aspect of the industry will have to change to adopt this
technology. However, power plants will have to temporarily cease operation during the

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technology's initial application, leading to a slight decrease in score in the compatibility
category.
Once a company decides to partner with DropWise, the company has the ability to
adopt the technology on a limited basis. The steam condensers have the ability to quickly
produce results, which demonstrate the effectiveness of the coating. However, there are
barriers for the technology’s trialability because no results exist the effect of the
hydrophobic coating on a large-scale factory, or over a prolonged period of time. Despite
the uncertainty, the first plant to take a trial-run can quickly produce the data showing the
financial and environmental gains of DropWise’s coating. The inability to be certain of
the effect of the trial on a power plant decreases the score in the trialability category, but
this is not a very important category in the long run.
In the end, power plants can buy this hydrophobic coating and install it on a water
vapor condenser of any kind. The coating has the ability to be grafted to all metal
surfaces and the polymer film of the coating can be customized to fit the condensing
vapor environment. The potential barrier still exists of how service and support will be
approached over long term implementation. As previously discussed, the technology has
not been tested on a scale equivalent to an operational power plant, or for a time period
long enough to provide a lifespan that justifies its implementation. Initially, the results of
the coating will have to be closely monitored, but as any potential complications are
worked out, the amount of service necessary will decrease. Therefore, the technology still
scores relatively high in service intensity, with a decrease in score resulting from the
initial uptick in required support. However, the technology’s ability to work on a small
scale will give DropWise the opportunity to learn how to solve issues that arise.
Figure 8. DropWise's Ratings for Triggers and Barriers for Adopting this Technology

4/30/15 24
The hydrophobic coating DropWise has developed has a high relative
performance and cost advantage. Power generation plants that use condensers emit tons
of metric carbon through their condensers burning fuel. These plants also waste money
because they have a poor “heart rate”, measure of efficiency. (Applications, DropWise
Corps.) This coating has the potential to reduce the carbon emissions of a power plant
equal to that of taking thousands of cars off the road, saving the plant millions in fuel and
coolant costs. This capability makes the coating a high relative performance and cost
advantageous product.
This coating easily customizes to the needs of a plant using any type of metal in
their condenser as well as different types of vapor processes. Before launching a full
scale commercialization product, DropWise needs to partner with a “green” organization
like Exelon. Exelon 2020 is a project started by Exelon to reduce the production of
greenhouse gases by 17.5 million metric tons annually. (“Linking Environmental
Stewardship to Our Business Strategy”) Exelon stands for environmental friendliness,
which makes it perfect for trials with the coating to verify the compatibility with nuclear
power, steam power, fossil fuel power and other applications to vapor condensers. With
a partnership with a powerful company, this coating rates high with compatibility.
The DropWise hydrophobic coating should be adopted by a power plant in a low-
level trial in order to demonstrate the financial and environmental gain. This minimizes
the risk of the product because DropWise will be able to focus on improvements. As
DropWise documents this trial, a power company, like Exelon, will gradually extend the
use of the coating to plants all over the nation and beyond. This method of
implementation will validate DropWise as a fiscally responsible and environmentally
friendly product. This hydrophobic coating rates high when it comes to its trialability.
Several advantages exist for DropWise, but every technology has barriers in
addition to triggers involved in the innovative success factors of its adoption. These
barriers arise for the service intensity of the hydrophobic coating, giving the product a
low service intensity. This affects the strategic implications by requiring DropWise to
pay close attention to which approach best solves the complications the coating might
have. A power plant has yet to install the technology on a whole factory, which may
make the market hesitate to adopt the product. Without the results of a trial, the low
service intensity for DropWise’s coating stands as a potential initial barrier to adoption.
However, once the process is carried out and observed, it can be fine-tuned and improved
to reduce the amount of necessary service and support. As with any new technology, the
coating will want to be monitored in depth at first to ensure it is functioning correctly. A
company willing to look past this initial question of service and test the coating will learn
that this coating has the flexibility to graft to any metallic surface as well as choose a
polymer which best suits the vapor condenser in which it performs.

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Figure 10. The Lotus Effect
4 Technological Environment
4.1 History of the technology
Figure 9. Hydrophobic Technology Timeline
Humanity has used several methods to generate energy throughout time.
However, steam power generation has surfaced relatively recently. Before steam power
companies introduced hydrophobic coatings to their energy generation method, the
process was very inefficient.
Steam powered generation uses a steam condenser, which contains a system of
pipes with cold water running through them. Steam enters the condenser, surrounds the
pipes, and condenses on the metal surface of the pipes. The absence of steam creates a
vacuum in the condenser, which results in a powerful suction force that turns the blades
in a generator creating electricity. (DropWise - Intro Video)
Without a hydrophobic coating, this process executed inefficiently. The
condensation on the pipes would form a layer of water hindering more steam from
condensing, which slowed the generation of electricity.
While looking for a solution, Scientists turned to nature
to observe the “lotus effect” – the phenomenon of lotus
flower leaves having superhydrophobic characteristics,
as shown to the right in Figure 10, allowing water to roll
off without sticking to the leaf. (Lesson
Superhydrophobicity) If the lotus effect could be
applied to steam condenser pipes, the coating would
save millions in resources and improve power output of
generators. Thus, the first hydrophobic coating was
The First Lotus
Flower
•The Lotus Effect
Typical Spray
Coating
•Advanced
Polymer Coatings
•1993
Vapor
Deopsition
Coating
•GVD Corporation
•2001
DropWise
Coating
•DropWise
Technologies, Inc.
•2015

4/30/15 26
Figure 11. Chemical Vapor Deposition Equipment
used on a flower rather than a power plant.
Once companies began to apply a hydrophobic coating to the pipes in their steam
condensers, the water would condense, slide off, and allow the energy generation process
to become much more efficient. As steam condensers grew to become responsible for
much of the world’s power, hydrophobic coating companies developed products to install
in steam condensers. Companies like GVD Ultrathin Polymer Coating and Advanced
Polymer coatings developed their own coatings to sell to the power generation market
(see Figure 9 above). However, incumbent technology has been too thick. These
coatings prevent a layer of water from sticking to the pipes; however, the coatings
themselves still slow the condensation process.
The market has a demand for a thinner coating. The coating GVD offers is
possibly the thinnest on the market: 50 nanometers to 10 microns thick (About GVD
Corporation). This is largely thanks to the development of the vapor deposition process
by company founder and MIT professor, Karen Gleason. The equipment involved can be
seen in Figure 11 to the left. The
DropWise coating, comparatively, uses
the same type of technology to apply to
surfaces, but offers higher levels of
performance. It is 30 nanometers thick,
making it 2000 times thinner than a
piece of paper (DropWise - Intro Video).
Other hydrophobic coating prototypes
manufactured to be thinner have been
tested in the harsh environment of a
steam condenser and worn in a matter of
minutes, but DropWise withstands the
environment. DropWise offers the market the thinnest coating as well as a long-lasting
one, and once partnered with a host company, like Exelon, the product can be launched
swiftly in no more than a couple years' time.
4.2 Physical architecture
A power plant works by turning water into steam using heat, and then using the
steam to drive turbine generators. Depending on the method of generation, the source of
the heat is different. A coal-fired station will be used for this demonstration. The coal is
first pulverized into a powder, then mixed with hot air and fed into a boiler firebox. Here
the powder burns and heats up the pipes inside the boiler. The pipes inside the boiler
contain highly purified water that is turned into steam by the heat from the coal. The
steam reaches to temperatures of up to 1,000 degrees Fahrenheit and pressures up to 3500
psi (Duke Energy). This high-pressure, high-temperature combination guarantees the
maximum amount of kinetic energy and enthalpy that the water can take on. The steam is
then piped into a turbine, where the pressure of the steam against the blades turns the
central turbine shaft. This transforms thermal energy from the fluid into mechanical
energy. The blades of the turbine are a series of airfoils, where the flow induces a low
pressure on the bottom surface of each blade and a high pressure on the top surface. This
creates a pressure upwards which compounds on each blade of the turbine. The turbine

4/30/15 27
shaft connects to the shaft of a generator, where magnets spin against wire coils to create
electricity.
The technology comes into play after the turbine, in the region known as the
condenser. The condenser remains an extremely important part of steam turbine
generation and plays a large role in driving the turbines as well. When the steam exits the
turbine, it must be cooled and depressurized into usable water that can be used again in
the process. The steam is cooled by a series of metal tubes carrying millions of gallons of
cold water from an outside source like a river or lake. The hot steam condenses into water
on the cold surface of the tube. The extraction of heat by these effluent tubes causes the
volume of the steam in the surrounding air to go to essentially zero. This pressure
differential between the high pressure steam before it enters the turbine and the extremely
low pressure after condensing creates a powerful vacuum force that drives the turbines
even harder, creating more energy. This condensing process is shown in Figure 12 below.
After being condensed the water will be cooled further and sent back to the steam boiler.
This condenser is the point of application of this technology. In particular, focus
will be on the tubes that carry effluent and the condensation process from steam to water.
As mentioned above, this condensation process is the driving force behind the vacuum
force used to generate electricity. Typically, when steam condenses on the tubes it forms
a barrier of water (because the water is actually prone to sticking on the metal tubes of
the condenser). The
hydrophobic coating allows
the condensed water to bead
up and roll off the tubes,
allowing more surface area for
condensation and greater
efficiency in heat transfer.
The application of the
thin, high-strength
hydrophobic coating relies on
a process based on initiated
chemical vapor deposition,
developed by the Gleason Lab
at MIT. The process uses a
very small amount of polymer
precursors and chemically
grafts an ultra-thin film to the
surface of the tubes using strong covalent bonds. The left-behind coating is both strong
enough to persist on the tubes through the strenuous working conditions as well as thin
enough to still allow steam to condense with great efficiency.
The process of coating the tubes with the polymer has been specifically designed
to work on the tight spaces of heat exchangers and condensers. The entire process is
vapor-based, sending a gas across the condenser tubes that will leave behind the coating.
The excess gas is brought out and recovered after passing through the condenser. This
makes the technology useful for coating pre-existing condensers - coating support
equipment will be brought in and attached to the condenser unit, creating a closed system.
Figure 12. Diagram of a Steam Condenser

4/30/15 28
On the small scale, this may not seem like that much of a change. The real effect
of the product is seen, however, in the application of the product to the tens of thousands
of condenser tubes that a power plant will use. When compounded to a larger scale, this
small increase in efficiency per pipe leads to huge savings in effluent and fuel. The plant
will produce more electricity per unit fuel, in less time, with less emissions. Below is a
chart (Figure 13) outlining the generation process described above.
Figure 13. Steam Generation Process

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4.3 Comparison with alternative technological approaches
Figure 14. ISF Map of DropWise Coating vs. Advanced Polymer Coating Process vs. No Coating Present (Incumbent)
Figure 14 above is the ISF map of the DropWise Coating vs. the Advanced
Polymer Coating (APC) process vs. No Coating Present as the incumbent technology. It
compares the newly developed DropWise coating with the APC alternative technology in
relation to their relative advantages over the incumbent technology (on the y-axis) as well
as the relative importance of the factor to the technology's success (on the x-axis).
The DropWise hydrophobic coating has already proven its superiority over
similar developments intended to serve the same purpose. Current coatings in use have
proven to be too thick, forming an insulating layer on the condenser and hindering the
condensation process. Coatings that have been specifically designed to be thin enough to
be efficient are not durable and deteriorate quickly, often within minutes. The DropWise
coating on the other hand combines both the necessary thinness with strength and
durability, resulting in high levels of performance that previously haven't been achieved.
Advanced Polymer Coatings, according to the OneSource business profile, only earns
$736,000 in sales annually. This indicates a relatively low popularity as a coating
supplier as other companies far exceed those sales. Although Advanced Polymer
Coatings has been on the market for over 20 years, their experience in the field has not
boosted the momentum of their product. This is indicative of a lower level of
performance compared to other alternatives.
Both DropWise and Advanced Polymer Coatings offer a multitude of applications
for their technologies. The ChemLine coatings from Advanced Polymer Coatings are
installed on road and rail transportation, tank (ISO) containers, power generation, and

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many others. (ChemLine Coatings for Industry) Furthermore, the technology can be
adapted to apply coatings beyond just hydrophobic ones, giving a wider range of
extensibility. DropWise has not yet brought their product to market, so their known
reach and extensibility is harder to determine. It has been shown that the initiated
chemical vapor deposition process employed can be adapted to function with many
different coatings being applied to various types of surfaces. While there is no
demonstrated extent of DropWise's product yet, there is promise of the ability to expand
in the future.
Finally, scalability is a must for a hydrophobic coating because the power
generation industry involves starting off on one steam condenser and expanding to large
scale factories as the coating becomes more popular. DropWise's implementation of the
initiated chemical vapor deposition process allows them to adapt their scale to meet all
requirements. The coating can be applied to preexisting condenser units, and even just a
portion of the unit. Furthermore, the process can be adopted to a large scale to cover all
condenser units in a power plant. While DropWise scores well in scalability, Advanced
Polymer Coatings lacks small scale experience, reducing their advantage. ChemLine
coatings does not seem to have options for small scale implementation. (ChemLine
Coatings for Industry) This hinders the company's ability to succeed in the market by
limiting the options available to their clients.
4.4 Pipeline (follow-on) technologies
Hydrophobic coatings such as the one developed by DropWise Technologies
present the ability for improvements in any system that requires a condensing unit to
operate. Specifically, this product will have enormous implications on the energy
generation industry, changing the outlook of both the country's and potentially the
globe’s view of the sustainability and associated timeline of its resources. There are not
necessarily any new technologies to follow in succession and replace this product, but as
it becomes more widely used and its success is acknowledged, improvements will be
made.
One area to consider is the chemical make-up the coating itself. If other
compounds both are able to be applied in the same initiated chemical vapor deposition
process while providing even greater performance ability, larger jumps will be made in
the energy generation industry. Research into the ideal chemical makeup of the
compound will be at the forefront of development in this area moving forward. This
equates to the important ISF factor identified above, technology development. By further
searching for the most efficient makeup of the coating, improvements will continue to be
made as the technology develops.
Along similar lines, it will be important to consider the proper makeup of a
coating that can be used for condensing other vapors besides steam. Not all condensing
units in all processes are operated with a steam vapor. The technology has bountiful
potential to be applied to all condenser systems, but it must be ensured that the coating
used is compatible with the chemical makeup of the vapor used in the process. If various
coatings can be developed for different vapor condensation processes, even more
resources can be saved and the efficiency of a variety of industries will increase. This
aligns with the ISF factor of extensibility discussed previously. The technology should

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be able to expand its influence beyond just a single industry, and this is a foreseeable
advancement with future developments.
Finally, the technology will need to be refined to allow for implementation of the
coating into the production process of the condenser. Currently, the obvious use of the
technology is to place the coating on units that are already in place in power plants with
the goal of increasing efficiency in established systems. In the future, the technology
should be expanded to allow for the coating to be directly applied to the hardware that
will be used in new condenser units. This addresses the important ISF factor of
scalability. Not only will the coating be applied to single units that are already a part of
working processes on an individual basis, but it should be able to be implemented in large
scale production.
All of these developments will work to improve the technology as its
shortcomings are identified after initial implementation. Furthermore, they will all serve
to increase the efficiency of the energy generation process by requiring fewer resources
to be used to produce the same amount of energy. This will open up the industry to
further developments in other areas of the process. Specifically, the issues will arise of
where to store and how to transport all the additional energy that is able to be produced.
A ripple effect will be felt in both the battery and electric cable industries as new
developments will be needed to meet the additional demands.
4.5 Implications for your technology strategy
At this point in time, almost no challenge arises that would need to be addressed
prior to the launch of the minimum viable product. The coating has been developed and
tested with results proving it both increases efficiency while remaining durable in the
harsh steam environments. Potentially further long-term testing may be required to
simply convince investors of the coatings durability. Without long-term running data,
companies may be hesitant to adopt the technology with the worry that a short lifespan
will make it financially impractical. That being said, the product itself is ready for
implementation currently.
Looking to the future, all issues and improvements to the technology can be
addressed in future releases. The coating will initially be implemented on a small scale
basis, as it is currently in a perfect position to do, with large scale production becoming
available as the initiated chemical vapor deposition process is refined and expanded.
Furthermore, the coating is proven to have significant effects as it is designed now. This
will allow researchers to continue to fine tune the composition while the current version
still provides both environmental and financial benefits across the board. Research in
coatings that can be similarly be applied that are compatible with other vapors can also be
delayed initially. The energy production industry is clearly the area in which the greatest
benefit will be felt by the technology initially. It is the application that poses an answer
to the most pressing issue presented by condenser systems, and therefore should be the
initial focus.

4/30/15 32
5 Competitive Environment
5.1 Top competitors and basis of competition
Baosteel Group Corp. - Supporting
Baosteel Group Corp. became incorporated on January 1, 1992 in Shanghai
China. (Baosteel Group Corp.) As the world’s third largest producer of steel, Baosteel
Group competes in a variety of industries. Some of these industries include:
petrochemical, nuclear power, metal products, energy and transportation, and machinery
manufacture. Although Baosteel Group does not manufacture their own hydrophobic
coating, as a metal production leader, they serve as a supporting technology provider.
Not only is Baosteel the third largest producer in the world, but they are also the metal
industry leader in sales by raking in an annual revenue of over $300 billion. The next
highest in sales only earned $80 billion. (Baosteel Group Corp.) Other companies look to
Baosteel Group as a model of success. Given that 57% of the geographic segmentation
for the primary metal industry is located in China, Baosteel influences a major portion of
the metal that power plants purchase to place in their steam condensers. If the DropWise
coating manages to have Baosteel support the implementation of the coating on their steel
for steam condensers, then DropWise will capture a large portion of their potential
market.
GVD - Potential Entrant
Dr. Pryce Lewis founded GVD Corporation in 2001 in Cambridge,
Massachusetts. GVD only accumulates $15 million annually in revenue, which cannot
begin to compare to Baosteel Group. (GVD Corp.) However, what makes GVD a threat
as a competitor is not their monetary resources, it is their role as a potential entrant
technology. Like DropWise, GVD uses an initiated chemical vapor deposition process to
produce an ultrathin hydrophobic coating. The Paint & Coatings Industry released an
article explaining how GVD has used their coating to tap several different markets, like
tire production, septic tanks, and several others. (Commercializing a New Generation of
Polymer Coatings) GVD stands as a strong competitor because in addition to their
market reach, their product improves the efficacy of power production. The coating

4/30/15 33
specializes in adhesion to complex surfaces, dry, solvent-free coating process, and ultra-
thin (50nm - 10 microns). (About GVD) These features can push GVD ahead in the
power production industry, if plants begin to coat steam condensers with their product.
However, the hydrophobic polymer coating DropWise has developed is 30 nanometers
thick, making it 2000 times thinner than a piece of paper (DropWise - Intro Video).
Other hydrophobic coatings manufactured to be thinner have been tested in the harsh
environment of a steam condenser and worn out in minutes, but DropWise withstands the
environment. DropWise offers the market the thinnest coating as well as a long-lasting
one; not to mention DropWise has been tested in steam condenser conditions, whereas
GVD has not, which gives it the edge on the market to beat out GVD.
5.2 Competitive Landscape
Figure 15. Competitive Landscape of Exelon vs. Key Competitors
Differentiation in the market comes most broadly in two variables: where the
technology is physically applied in the lifetime of the condenser, and to what type of
business it is applied. Exelon will focus in the beginning on applying the technology to
their pre-existing condenser units. This will establish them as a market leader in this field,
and power generation companies will trust them to refit their condensers with the new
technology. This is an overwhelming portion of the market - as companies are less
focused on building new systems when they can improve the efficiency of their old
systems for less.

4/30/15 34
Another market Exelon can specialize in is condenser manufacturing: developing
a process to apply the coating to the condenser before it leaves the assembly plants. This
strategy would allow Exelon to capitalize on both new and old developments, and extend
its own power generation systems with new, ready-made high efficiency systems. This
would, however, require that the DropWise-Exelon collaborative pair with a condenser
manufacturing company like Graham Corporation or Alstom. The coating technology,
then, could be licensed to these manufacturers. The product is also contingent on
DropWise becoming the market leader in hydrophobic condenser coatings, as well as a
general acceptance throughout the condenser market that hydrophobic condenser coatings
should be essential in all new developments.
Baosteel would be most effective in applying coatings to the steel before it leaves
their plants because of their large manufacturing presence. Many condensers use steel
produced by Baosteel and it’s possible that Baosteel could take precedence over the
coating process by applying coatings directly during manufacturing. This would make
them leaders in the metal-manufacturing with hydrophobic coating industry, and with
their large supplier base, it is possible that they could apply the coating before Exelon
even gets their hands on the product. The main barrier is a lack of knowledge of the
process - Exelon would have a much better product initially and be able to establish
themselves as a market leader. Baosteel could also be effective in the replacement of
condenser units to existing generation companies, so that when companies need repair
they can also upgrade to higher efficiency. Here the biggest block is price - when
companies need a repair they are likely to seek the cheapest option that will put the plant
at operational conditions again. This will change as hydrophobic coatings become more
widely accepted as an industry standard, and companies see the benefits of paying more
to upgrade their systems.
GVD Corp would be most effective in applying the technology to new power-
generation plants before they start operating, as they would lack the skill set to apply it to
systems that have already begun operation. They pose a threat to Exelon because they
could possibly undercut the price for new developments (less research and development
needed). GVD Corp does not have a product tested for the implementation at the high
pressure and temperature required of the product, however, and would not be seen as the
main name in the industry - DropWise and Exelon would. They also lack the depth as a
company to expand overseas or trap markets that Exelon could not reach.
5.3 Customer Value Proposition
For power generation companies who want to lead their industry in power
production, the DropWise hydrophobic coating is an initiated chemical vapor deposition
polymer that improves the efficiency and rate at which steam condensers generate power.
Unlike GVD, DropWise specializes in creating a coating tested at the high temperature,
high pressure conditions that steam condensers require - to outperform and outlast all
other condenser coatings that came before. (Intro Video)

4/30/15 35
5.4 Projected market share
Figure 16. Market Sizes vs. Total Unit Sales
As can be seen in Figure 16 above, it is estimated that DropWise’s coating as
hosted by Exelon will initially be slow to penetrate the market, entering at only 1%.
Power plant owning companies may be slow to implement the technology at first, as
coatings have not had widespread success in this application before. They will want to
see how much more efficient the coating makes the process as compared to the
incumbent technology before committing to pursuing the DropWise technology.
However, with strong potential for success and demonstrated ecological and financial
benefits, DropWise’s coating will soon grow to take control of a much larger portion of
the served market.
With the implementation of DropWise’s coating by Exelon, competitors, like the
previously discussed GVD Corporation and Baosteel Group Corp., will pursue the
technology as well. As all previous attempts at implementing this type of technology
have been relatively unsuccessful, there is not much of an incumbent to compete with.
However, with many potential players possessing either the resources, technological
knowledge, or established position in the market, competition will most likely be
widespread at first. Regardless, it is foreseeable that Exelon will maintain control of a
large portion of the market over time. A “Rule of Three” market will most likely develop
as the technology progresses, as shown in Figure 17 below, favoring a few large
companies, such as Exelon and Baosteel. They will have greater resources and capital
available to more widely distribute the technology, as well as a potential partnership with
the originators of the technology. For this reason, GVD Corporation may find it difficult

4/30/15 36
to gain a large enough hold of the market, leaving them just outside of the “Big Three”
companies and opening the door for a third large company to become the third part of the
market triarchy. Most likely, the third arm of the proposed "Big Three" will be occupied
by a large chemical production company, such as DuPont. A company such as this is
vastly experienced in the production process that is necessary to create the chemical
components involved in the coating. Furthermore, they will have an established presence
and reputation for producing high functioning materials of all functions and distributing
them to necessary clients. Until the identity of this lead company is established, the third
arm will be split by many smaller companies or larger companies not fully invested in the
pursuit of the market. From this group, one will begin to emerge as the dominant force as
the client base is extended and the commitment level increases.
Figure 17. Market Share Projections of Key Competitors
Finally, slight growth in the served market is predicted in the future, as can be
seen in Figure 16. According to a report by the International Atomic Energy Agency
(IAEA), the percentage of energy generated by nuclear power is projected to increase in
the United States moving forward. The report forecasts out to 2050, which is beyond the
scope of this analysis. It should be noted that the report does predict a slight increase in
nuclear power in electricity generation through 2020, but the more significant growth will
occur towards 2030 and beyond (IAEA). For this reason, only a 2% increase in served
market is estimated through 2022.

4/30/15 37
6 Technology/Business Intelligence
6.1 Priority issues for intelligence collection
1. Price the market is willing to pay: We have yet to identify the profit margin of the
coating.
 What is the cost of similar coatings currently on the market?
 What is the approximate cost to manufacture the chemical components
involved in the coating?
 How valuable to power generation companies view efficiency savings?
 This information will enable us as analysts to better gauge whether the
DropWise coating is financially feasible both to make and to purchase.
2. Market share: We have struggled to identify what portion of the market is open
and available for a new technology or company to infiltrate and what portion is
closed.
 What percent of the steam condensing units in power plants utilize
hydrophobic coatings or similar technologies?
 Would power generation companies be interested in adopting this type of
technology if they do not have a coating in place currently?
 Would power generation companies be interested in switching to the
DropWise coating in place of the technology currently in place on their
condensers?
 Answering these questions will provide a greater understanding at how large
of a potential there is for the DropWise coating, as well as how easily it can be
infiltrated
3. Complimentary hardware system: We would like to learn more about the external
technologies and equipment required to apply the coating, and if there are any of
these systems on the market today.
 What types of dispenser systems are required to apply the coating?
 Do similar dispenser systems currently exist?
 Will the systems be designed and manufactured specifically for the use of the
DropWise coating, or can similar systems be implemented?
 What will the cost be to manufacture the supporting equipment?
 Gathering this information will lead to better insight into the operation of the
technology, as well as the logistics involved with its application.
4. Turnover time: It is important to determine how quickly the condenser can be shut
down, the support system attached, the coating applied, and the machine returned
to proper function.
 What type of preparatory work is involved before applying the coating?
 How long does the polymer bonding process take after dispensing the
chemical components?
 Does the coating have to be reapplied at regular intervals?
 These details will provide more information about how invasive the coating
process will be, as it is important to not hinder or delay the power generation
companies' operation.

4/30/15 38
5. Efficiency Gains: We would like to gauge the quantifiable increases to efficiency
expected from the technologies application to a condenser system.
 How much more efficiently will energy be produced in a power generation
system implementing the coating?
 What will be the resource savings (coal, water, etc.) associated with the
coating's use?
 What kind of financial savings/return can be expected by the customer after
applying the coating?
 All of this information will help promote the technology to future customers
by providing hard numbers to the savings that are promised with the coating.
6.2 Interview questions
1. What is your most popular package offered to customers as a product? (GVD)
2. What share of the market do you control? (GVD)
3. Where do you see the hydrophobic coating's place in the market? (DropWise,
GVD, Professor Jennings)
4. What supporting technologies does the coating require? (DropWise)
5. When installing this popular package, how long does is the turnover time for
installation? (GVD, DropWise)
6. What costs come out of your revenue for installing your coating? (GVD,
DropWise)
7. How long does it typically take a customer's return to match their investment?
(GVD, DropWise)
8. Is a hydrophobic coating or similar technology used on steam condenser units in
your power plants currently? (Exelon)
9. How large of efficiency gains/fiscal savings would you need to see to be
interested in the technology? (Exelon)
10. To what extent can hydrophobic coatings increase efficiency in a typical steam
powered turbine? (Professor Jennings)
11. In your research, is this type of technology advanced enough to make it close to
reaching market and being implemented? (Professor Jennings)
12. Who do you recommend we contact to find out more information on the logistics
of commercializing a hydrophobic coating? (All)
6.3 Interview sources
Neal Miller, Exelon Corp., Senior Manager
Exelon is our main consideration for a host company, and they own a large
portion of the energy production market in the U.S., qualifying them as a reliable
source. Neal will ideally provide us with the perspective of the power generation
companies concerning this DropWise coating technology, as well as providing
details about current technologies that are implemented.
Email: neal.miller@exeloncorp.com
Phone: N/A

4/30/15 39
Austin Nowak, GVD Corporation, Sales Engineer
Contact with Austin will provide information about both incumbent technologies
as well as the perspective of a potential competitor. GVD is an established
member of the coating industry, specializing in initiated chemical vapor
deposition, leading to many similarities to DropWise.
Email: anowak@gvdcorp.com
Phone: 617-661-0060
Kane Jennings, Vanderbilt University, Professor of Chemical and Biomolecular
Engineering
Professor Jennings researches thing films and coatings for implementation on
surfaces. He will have a vast knowledge of the quantitative energy efficiency and
heat transfer gains associated with similar coatings, as well as providing insight
into the efficacy of the product in the market.
Email: kane.g.jennings@vanderbilt.edu
Phone: 615-322-2707
Adam Paxson, DropWise Technologies Corp., President & CEO
Adam Paxson is the lead behind the DropWise coating technology. He was at the
forefront of its development and has more information than anyone else
concerning this specific coating. He will provide many of the missing details we
have pertaining to this coating in particular.
Email: apaxson@drop-wise.com
Phone: 509-637-4936
Mark Petty, Vanderbilt University Plant Ops, Director
Mark Petty is responsible for overseeing the operation and utility production on
campus. He ensures utility infrastructure, buildings, and grounds are in order, as
well as focusing on energy conservation and operating the building control
systems. He will provide us with a perspective of a power generation entity,
particularly in relation to interest in the technology.
Email: mark.a.petty@vanderbilt.edu
Phone: N/A
6.4 Interview summaries
Notes and information gathered from interview sources can be found in Appendices
section 15.2.
6.5 Contact log
Contact log detailing correspondence with interview sources can be found in Appendices
section 15.1.

4/30/15 40
6.6 Summary of Strengths, Weaknesses Opportunities, and Threats
This section presents ten of the most critical innovation success factors
surrounding the introduction of the DropWise hydrophobic coating technology to market.
A wide-ranging list of innovation success factors was developed, and subsequently
ranked on both:
-Relative Performance: how does the technology compare with competing
technologies?
And
-Relative Importance: what importance does the market place on the factor?
These rankings were taken and used to create the matrix shown below (Figure
18), which plots the relative importance along the horizontal axis and the relative
advantage along the vertical axis. The following sections will be a discussion of the ten
most critical of these factors, and their impending strategic implications.
Figure 18. Complete Analysis of ISFs - Relative Advantage vs. Relative Importance
6.6.1 Readiness of Society for the Innovation
Importance Rank: 5
Performance Rank: 4
In the current age, companies are under increasing pressure to increase their
“green” technologies and comply with strict governmental regulations such as pollutant
and effluent levels. Energy, and clean energy production, is more important than ever - so
the timing is right for this product’s application. This factor scores high in quadrant 1,
with a 5 on importance and a 4 on performance. The high importance comes from the
green movement and society’s focus and burgeoning obsession with clean energy.
DropWise ranks highly on performance because they can neatly accompany this push

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