Gridco Ltd
Contact:
Yvette Webb, Cofounder & President
Email:
yvette@gridcoltd.com
Phone:
1-866-388-4888
Website:
www.gridcoltd.com
Region:
Ontario, Canada
Industry:
Cleantech Category:
Event or Program:
10Q Program:
Year Participated:
2011
30-Second Pitch:
Energy efficiency solutions for commercial building HVAC focus on solutions for peak demand when electricity is most expensive. However, peak demand is responsible for just a fraction of a building's HVAC energy bill. Improving HVAC efficiency throughout demand cycles can provide improvements of 15 to 20% with the addition of an intelligent control system. Rooftop HVAC equipment is oversized as a standard of practice and tends to overrun. This results in temperature fluctuations, uncomfortable room space and wasted latent heat and cold in the rooftop system. Gridco Ltd’s patented technology predicts the amount of latent heating /cooling in the HVAC system and reduces excessive run times.
With 18 month payback and the ability to install both new and retrofit systems, Gridco Ltd has attracted the interest of major chain customers such as Dunkin' Donuts and Burger King. Ours is the only solution that provides the following combination of benefits:
- Savings for both heating and cooling;
- Off-peak savings;
- Retrofit capability;
- Data reporting; and
- Partnership opportunities
Our hardware manufacturing is outsourced and the resulting products with integrated software are delivered to our channel partners and energy company partners for distribution to building owners. We receive recurring revenue via software upgrades and through our proprietary data reporting services sold directly to the building owners. This approach will bring us to profitability in 2011 with 67% gross margin. Our team, which has over 30 years of experience and contacts in the HVAC industry, is poised for rapid growth.
Market Size and Market Pain:
There are 9 million rooftop HVAC units in North America conditioning over half of the available commercial space. Most of them are throwing away money. They are often oversized - even for peak load, let alone non-peak operation. To make matters worse, 75% of them are not properly maintained, leading to additional inefficiencies. This combination of factors results in unnecessary temperature fluctuations, uncomfortable room space, wasted latent heat and cold in the rooftop system and significantly higher energy bills.
For rapid adoption, energy efficiency solutions must have an ROI of less than 3 years. Energy costs for HVAC represent 30% of a typical building’s annual budget. Gridco Ltd systems are priced for an 18 month payback, and our monthly service fees are a fraction of the energy savings, making our systems a straightforward financial decision. Commercial business owners, especially companies that own many buildings based on a franchising model, such as Dunkin' Donuts and Burger King in the food industry or retail chains are key customers.
Our Gridco solution presents a $3B opportunity where building owners can save as much or more yearly.
Technology and Products:
Most HVAC energy efficiency solutions are focused on the very small period of time that demand is at a peak and electricity is at its most expensive. Gridco solutions provide savings during peak demand, but our biggest impact is during the intermediate load periods that are used throughout the majority of each day.
In traditional systems, the HVAC system is engaged whenever the thermostat set point is passed in the wrong direction: one degree too hot or too cold, depending on the season, and the HVAC system turns on. However, this approach ignores the current status of the building as a whole, especially the latent heat or cold in the rooftop that remains because of the oversized equipment. Gridco’s predictive analytics determines when the HVAC should be engaged or disengaged. As a result, the HVAC system operates more efficiently, reducing energy usage by 15 to 20%.
Our Gridco Energy Saver retrofit system is designed for rapid deployment on the rooftop, installed between the existing HVAC unit and thermostat. It communicates wirelessly with the Gridco Hub located with the customer's webserver. Our wireless technology transmits even through concrete walls. The Hub sends data to the Gridco server, which collects data and monitors the status of the Gridco Energy Saver and the rooftop. The data are compiled and analyzed to produce energy savings reports, maintenance scheduling notices and service alerts, services that set us apart from the majority of our competitors.
Our base technology is ready for extended application for boilers and refrigeration.
Sustainable Competitive Advantage:
Gridco Ltd provides a solution that is unique in the industry in the combination of benefits it provides to customers. These benefits include:
- Comprehensive reporting: Our customers receive direct reports on their energy saved, maintenance needs and service alerts.
- Service for heating and cooling modes: Unlike most of our competitors, our system provides benefits in all seasons.
- Savings off-peak as well as on-peak: Most of our competitors have designed their systems for optimum operation during peak demand only.
- Available for retrofit and new installations. We provide a much lower cost solution than a replacement of the existing rooftop system.
- Practical for various partners: because our solution is comprehensive and cost-effective, our technology can be installed in new and existing systems to enhance the offerings of companies that would otherwise be competitors.
Commercial building HVAC is a large market with many competitors but no dominant player.
- Retrofit component efficiency plays: Intellidyne and Smart Cool are retrofit solutions that enhance the efficiency of specific components, such as the compressor. However, they offer no data logging and therefore no ability to provide reports or specific customer ROI. They are either for cooling only or separate products for heating or cooling.
- Peak load optimized plays: ReGen uses Zigbee data transmission and hive logic to decrease energy use during peak demand, but does not provide maintenance notification or service alerts. Require a minimum number of rooftops to optimize their technology.
- Programmable HVAC system plays: Programming options are limited to time of operation, temperature settings and operational zones.
- Replacement rooftops: Leverage the latest technology and designs, but still require sizing for space and demand considerations.
Of these, all but the first category represent opportunities for partnership with Gridco Ltd.
Business Model and Financial Projections:
Gridco is focused on remaining a lean, flexible organization focused on delivering new technology and services to our customers. To that end, we have outsourced manufacturing of our products and are obtaining sales primarily via channel partners we have developed over decades of involvement in the HVAC industry. We plan to add partnerships with energy service and peak demand companies as our business and reputation grow.
This model has served us well to date; we will be profitable as of 2011 Q3 and on track to sales of almost $ 130M by 2015, with an industry-leading gross margin of 67%.
Our channel partners include mechanical contractors and energy consultants. These commercial HVAC experts have existing relationships with building owners and managers to whom they resell Gridco solutions, as well as offering our optional data collection and energy savings report options. A term contract for these data provides ongoing revenue streams for Gridco. Software enhancements will be offered for a onetime fee as they become available. Additional opportunities for OEM and technology licensing are being explored with strategic partners.
At this time, we have 60 early adopter customers awaiting the results of initial trials. This group represents a backlog of 1,000 units, or $500,000. Post trials, the rate of delivery will be determined primarily by our capitalization.
Team:
Our team has broad and deep experience in in HVAC, technical sales and startup companies. We are committed to the success of Gridco Ltd because of the business opportunity it represents and because of the reduction in energy usage that we enable.
Clive Webb, cofounder, COO has worked in commercial HVAC for over 30 years and has been self employed in the industry as a sub contractor and in running a successful air filtration business. It was Clive’s work experiences with building control systems and rooftops that led to the development of our product. Clive trained in the UK under a 4 year City and Guilds advanced apprenticeship with both refrigeration mechanical and technical designations.
Yvette Webb BSc, RRT is cofounder, President and has worked for over 20 years in medical sales and marketing including with an American start up for automated external defibrillators, today known as AEDs. She has had many successes in working in direct and channel partner organizations as a top sales performer and change manager. She worked with large medical device companies in the development and launch of new medical devices.
Peter Smith, Advisor, Executive in Residence, Hamilton Innovation Factor. He is also Managing Partner at The Meaford Group, Corporate Director at gShift Labs Inc and CSDC Systems Inc.
Development Plans:
Gridco Ltd is poised for rapid growth. Our history in commercial HVAC and key channel partners has resulted in early adopter customers, who now represent a potential backlog of 1,000 units depending on trial results. With a series A of $2M, we expect to increase that demand to 15,000 units from 10 major customers in the next 12 to 18 months. We plan to develop and release new software options to provide system alert and maintenance scheduling during this time frame.
The momentum we generate with these activities will open the opportunity for partnerships with energy service and peak demand companies, who will then be able to provide industry endorsement for our technology and data acquisition. Extending our patent for application to other HVAC products will broaden our customer base and permit us to revisit our current customers.
Building upon sales with a white box/ OEM partnership will set the stage for acquisition in about 5 years by a building control company such as Honeywell, Siemens or Johnson Controls.