When it comes to environmentally friendly lighting products, just being green isn’t enough.
Green products and services continue to capture imaginations and headlines, but the worldwide recession has doused enthusiasm for buying “green lights” unless their CO2-reducing qualities also mean savings for the bottom line. That’s the report from several Victoria firms focused on the research, development, and manufacturing of environmentally friendly lighting products.
Take JSF Technologies. What is sustaining it through the recession and into the vaguely green, vaguely wonderful, post-Copenhagen world, is not the fact its solar-powered lighting products help reduce carbon emissions, but that they save money.
“It isn’t enough to be green. You have to make business sense, too,” says Andrew Evans, vice president and chief executive officer of five years.
JSF Tech is the eight-year-old child of JS Foster, which started 40 years ago and makes sports fishing gear, aircraft parts, and custom products from its Keating industrial park machine shop. While the parent business has suffered during the economic slowdown, the child has prospered.
“Our business has grown 40 per cent,” says Evans. “I am praying for the recession not to end. Barack Obama is my best friend.”
As a Canadian firm, it’s in not quite the right place but with the right product at the right time — solar-powered beacons for school crosswalks. Canadian highway rules require traffic to slow in school zones all day, but in the U.S. reduced speeds are in force only when the beacons are flashing, at the opening and closing of schools.
JSF Tech’s solar flashing lights have the edge where the cost of hooking up to the local electric grid is high. Power delivered to flashing beacons conventionally by underground cable costs between $20 and $150 a foot (it’s at the high end when sidewalks are in the way). “I tell potential buyers, if you are more than 10 feet from a power line, that we can save you money,” says Evans.
In fact, JSF has installed units where power lines ran directly overhead. Even without digging costs, there are fees for tying into the grid and even metering, as well as time-consuming paperwork. It all adds up for JSF’s standalone solar-powered beacons.
Enter Obama’s stimulus package. Suddenly school authorities are being encouraged to buy lots of nifty stuff and solar-powered beacons make even more sense. Sometimes, the buy-America bias in the plan gets in the way, but Evans says most public bodies are finding ways around it. For those that can’t, JSF Tech is setting up a U.S. assembly plant.
Over at Streetlight Intelligence, a firm now coming out of research and development mode and gearing up production, CEO Vincent Krynski reports a different result from the recession but the same overall conclusion about green sales.
Green, by itself, just doesn’t sell. “Until this makes sense, good economic sense, people won’t buy our product any more than they will buy a Prius or a Smartcar,” he says.
Streetlight, a public company trading on the TSX venture exchange, sells hardware and software that promise to save 30 to 40 per cent of power costs to municipalities, other governments, and owners of extensive lighting facilities. “When a municipality spends 40 per cent of its power bill on street lighting, this is a significant saving,” says Krynski.
The technology is new, but the concept is simple. As bulbs get older, streetlights dim, so excess illumination has to be built in at the beginning to keep lights bright to the end of their lifespan. Streetlight Intelligence’s package monitors each light and feeds individual bulbs additional energy as they age.
It cuts the excess power burned by lights in conventional systems during their over-performing early years. Lights can also be programmed to dim or shut off at times of low demand, such as late at night when traffic dwindles. Streetlight’s technology also advises operators when bulbs are malfunctioning.
Between seven and 10 years after installing Streetlight’s technology, most lighting system operators will make back their initial capital investment, Krynski says.
But not every operator will save: Streetlight has had to overcome the disadvantage of its location here, where energy costs are cheap compared to the rest of the world. “Power costs six cents a kilowatt hour in B.C, maybe 11 cents in Alberta, 37 cents in the British Virgin Islands, and 30 cents in the U.K.”
B.C.’s power is famously cheap because it’s generated at hydroelectric dams built decades ago on the Peace and Columbia rivers. It’s green power but hugely expensive in terms of up-front capital investment. Rather than build more dams and flood more watersheds, B.C. has chosen to offer, through its Power Smart program, subsidies up to 75 per cent of the cost of buying energy-saving products. Such subsidies, or others involving carbon offset payments, are part of the decision to buy.
Other factors include the operator’s dimming allowance: the amount it will allow the light to dim during low-traffic hours. The dimmer the lights can be, the bigger the savings with Streetlight.
But the biggest factor is how much cash — or willingness to spend it — there is. Unfortunately, in Streetlight’s own backyard of Canada, there isn’t much since the recession. Ottawa’s stimulus package has mainly impacted the construction industry, not his, says Krynski, although things are looking up. In November, his firm sold 500 of its Lumen controllers for Prince George’s streetlight system, courtesy of the B.C. government’s Pacific Green Energy Initiative, with the chance of selling 7,500 more and earning $2 million for Streetlight.
Earlier last year, Hydro Ottawa invested $500,000 in the firm with an option to double up: a vote of confidence from an experienced power provider, the electric utility in Canada’s capital city.
“We are very excited about 2010,” says Krynski. “There is a lot more awareness today than 10 years ago in our ability to reduce our energy usage.”
The star of Victoria’s green lighting sector is Carmanah Technologies, a public company that designed and installed the two biggest solar power systems in Canada. It sold $60 million worth of solar lighting products in 2007 and again in 2008, although profits have been slim. Carmanah says, “a cautious and challenging 2009 sales environment” saw sales drop by $20 million to $31 million last year. It lost $600,000 on the year. But according to CEO Ted Lattimore, who took the reins 2½ years ago, their corporate restructuring is starting to show results.
Like Krynski, Lattimore believes 2010 will be a big year. “We haven’t seen the U.S. stimulus money reach potential customers. We know they are interested in our product, but they won’t sign on the dotted line until they have money in their bank accounts.”
The U.S. government’s stimulus program has, however, opened doors for Carmanah because spending proposals get judged in part on environmental sustainability.
“It’s given us the opportunity to get in the door and show potential buyers that solar lighting makes sense economically where it didn’t five or 10 years ago,” says Lattimore.
Solar panels have vastly improved and lighting technology now can do jobs it couldn’t before.
Lattimore cites a contract that Carmanah won for 1,520 streetlights at a parking lot at the Stennis Space Center in Mississippi, where NASA tests rocket propulsion systems. “The lot was already built when somebody decided it should be lit,” says Lattimore. “They asked themselves, ‘Do we really want to dig it all up to connect all the lights to a power source?’” They answered in the negative, and the company was able to show NASA the payback would be just 30 months.
r contract will see Carmanah’s product light a highway in South America. Again, the strong selling point is the higher cost of connecting conventional lights to the power grid. In Colombia, says Lattimore, “there is no infrastructure” to connect to.
Green gets a foot in the door, but the demonstrated savings win the contract in the end.