Like you said it in the video, that's just sad. Those guys had an idea, failed to realize it's impossible and got tangled up in the convoluted mechanism that obstructed their view of the basic fact that pumping water up the hill requires more energy than you can extract by bringing it back down.
The kickstarter goal of just $1000 tells me they're not trying to deceive people, just that they are completely naive, not only in technical aspect regarding conservation of energy, but in regards to economy and finances as well. $1000 for a mechanical project of that size is just ridiculous. If they think that $1000 is going to make a difference, they are in a very deep delusion. Shame, they seem like nice guys, and I really feel sorry for them.