Perpetual motion

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The machine costs around $1,000 to be built and can turn a small fan forever without any energy source. It weighs however 30 kg and takes 1 m3 of space. All materials necessary can be easily bought anywhere. The concept can be enlarged and adapted to provide more power. The scientist estimates that with technical improvements the method can produce, at its best, twice as much energy with four times less weight and space.

The interviewee should ask for more details about the technology:

• Function
• Building materials
• Cost
• Size of machine
• Room for improvement (efficiency, size)

Conclusion

The machine is very big and heavy, generating only a little bit of energy. Even with future improvements, the machine will not be able to generate much more energy than it does now. It can be enlarged to generate more power.

Power plants:
The main and most important energy application field. Power plants generate most of the energy consumed by cities and their inhabitants.
Power plants are in this case all the more relevant as they do not impose weight and space restrictions on the energy generation technology. 

Transportation:
One of the main necessities of energy in our society regards transportation. Combustion engines can be embedded very efficiently in vehicles. This is not true for the scientist’s new energy generator.
With the possible exception of large ships, which have lower weight and size constraints, this technology would not be suitable for land or air transportation. 

Private energy generation:
Many families invest in solar panels as an alternative for buying electricity from power plants. The new technology would also not be suitable for this application as it would take the size of the whole house for the generator to produce a useful amount of energy.

Other fields:
Here we can include all other possible usages of energy. For example the generation of energy for small and isolated groups of people (farms, islands, etc.).

The first question, how to monetize the invention, requires a thorough study of the possible application areas of the invention (ideally a MECE tree). The method is a new energy generation technology. 

Sectors/fields that require/produce energy 

Even though the machine does not require any fuel, it is quite heavy and takes a lot of space for producing only a little bit of energy. This is an important constraint as discussed in the following.

Conclusion

The main market would be the generation of energy in power plants.

To assess how much money we could make in this market, let us estimate its size in a simplified manner (as this is not the focus of this case).

Energy is used mainly by two types of customers:

Households Companies / Government (industry, public illumination etc.).

We will estimate the usage of the first type of customers and, for simplicity’s sake, assume that companies/governments spend approximately as much as people do.

Europe has around 500 million inhabitants. If we take families that have on average 4 people, we have 125 million households.

The amount spent per family per month depends on its social class, so we could segment families in different classes to obtain a more precise result.
However, let us assume that the average electricity bill is around $40. That means that the market of house electricity in Europe totals $5 billion per month or $60 billion per year.

Considering the same amount spent by companies/industries we have a total energy generation market of $120 billion.

If we consider that in the first year we can already build plants that are able to generate 5% of the total market energy (power plants are not built overnight), then the scientist could make $6 billion in the first year (here we are not accounting for the investments themselves).

In order to estimate the profitability of a power plant, necessary investments of the perpetual motion machine for a larger amount of energy must be known.

In addition, the lifetime of a power plant has to be known.

For easier calculation, inflation does NOT have to be taken into consideration for the market price.

From 50W needs of the fan can be concluded that the output of the perpetual motion machine is around 0.05kW.
If energy is sold at 20 cents, the machine generates revenue of 1 cent per hour:

On a yearly basis, this is $87.6 per year:

After all, the PV of the revenue is $1,080.47:

The NPV therefore is positive, with $80.47:

• The project can be seen to be profitable and produce a positive cash flow in its lifetime.
• Quoting the scientist, a duplication of the generated power is possible. Economies of scale can be generated because a lot of machines are needed for power plants to supply Europe.
• Thus, the scientist needs to improve his invention quickly in order to increase the rate of return, which might be too low for investors.
• If not done yet, the first thing the scientist should do is file a patent for his invention in the main patent offices of the world.
• After that, the scientist could negotiate with the most important energy companies (or even with venture capital investors or business angels) in order to get financial support to invest in the new power plants.

Possible answer:

This is a source of limitless energy. As society strives evermore for new and cleaner sources of energy and demand continues to grow, this comes up as precious technology. Who would regret to invest in such a promising energy resource?

Not only would there be social value in the technology itself, but there would also certainly be demand for it and the target market of energy production represents a big opportunity for it.

Suggested answer:

The price of a product is best set by what customers are willing to pay for it. I would price this energy at similar levels as existing sources and market it as zero-emission and 100% environmentally friendly energy.

This would surely suffice for customers and governments to adopt it. The price would slowly be reduced over time as new competitors would possibly appear using similar methods that could not be covered by the patent.