Five Questions with George Burnes of SmartCool (TSXV:SSC)

Energy efficiency has come a long way in a short time. A typical refrigerator built in 1986 uses 1,500 kWh and costs $120 – $150 per year to run. A refrigerator built today would use approximately one third less energy. Newer light bulbs use three-fourths less energy and produce the same amount of light as incandescent light bulbs.

Vancouver based SmartCool Systems (TSXV:SSC) is a company trying to bring these kind of efficiencies to air conditioning and refrigeration systems which, until now, had lagged behind other systems. Smartcool’s Smartcool’s ESM™ and ECO3™ are after market products that have been verified by third parties like the Oak Ridge National Laboratory. ESM™ and ECO3™ do not affect the temperature or humidity of the controlled space, they can be manually bypassed at any time, and they have no impact on existing equipment, controllers or warranties.

Cantech Letter talked to George Burnes, President and CEO of SmartCool

Tell us a bit about your business. How do you make money?

Smartcool provides clean technology products to customers both directly and through a worldwide network of independent distributors. We follow a sales process that begins with a complimentary review of a customer’s existing air conditioning, refrigeration and heat pump energy usage. Based on our findings, we then provide customers with an estimate of the energy and money a Smartcool project could save at their facilities. Provided this estimate meets with approval, Smartcool then begins a customized installation of the ESM™ and/or ECO3™ and monitors energy performance to prove savings. This sales process is also followed by our independent distributors, whom we provide with extensive training and support.

Is your space growing? How are you positioned to benefit?

Energy efficiency is of increasing importance to businesses around the world as prices continue to rise and concerns over greenhouse gas emissions from electricity generation continue to mount. As a well established company with a history of success and proven, unique technology, Smartcool is ideally positioned within the growing energy efficiency industry. Our company is tightly focused on markets where energy efficiency in cooling systems is of particular importance, such as climate-controlled storage, supermarkets, data centers, telecommunications, hospitality and commercial real estate. Smartcool’s global reach also allows penetration of key geographical markets. For example, Europe has proven to be our largest market, thanks to the acceleration of legislation and government support for energy efficiency across the continent. Smartcool is also very active in North America where energy prices continue to rise in step with increasing government and utility incentives to improve energy efficiency. Smartcool is also experiencing considerable growth in Southeast Asia and Australia, where we are able to supply an ideal solution to the increasing costs of air conditioning in these hot climates.

What is the most common misconception about your company or its business?

Many people confuse energy efficiency with conservation, leading them to believe that our products force a change in behavior or reduction in cooling performance. Rather, Smartcool’s energy efficiency technology allows businesses to maintain the same cooling performance with less energy and less money.

What’s your financial situation like?

In the first quarter of 2011, Smartcool completed financing for $4 MM, providing the company with working capital and the ability to complete a key acquisition. In Februray, Smartcool successfully acquired Smartcool Systems UK Ltd., one of the most successful and well-established of the independent distributors of Smartcool technology. With this acquisition, Smartcool has secured a vital doorway into the growing European market for its products, as well as adopting a very experienced and knowledgeable staff.

What is your key competitive advantage?

Smartcool’s competitive advantage lies in the unique nature of its products within a vital market. Many products exist for energy efficiency of lighting, but there are very few that address the problems associated with the energy consumption of air conditioning, refrigeration and heat pump systems. Those few products that do exist lack many of the features and benefits of Smartcool’s ESM™ and ECO3™. Our products have been thoroughly tested and proven to work by independent third parties, including Oak Ridge National Laboratory and the University of Miami. The savings achieved by the ESM™ and ECO3™ are immediately verifiable, allowing them to easily qualify for government and utility rebate or incentive programs. Smartcool’s products are risk-free, as they do not affect the temperature or humidity of the controlled space, they can be manually bypassed at any time, and they have no impact on existing equipment, controllers or warranties. In addition to these valuable benefits, the ESM™ and ECO3™ offer applicability to all cooling systems, whereas other products on the market have limited compatibility. Smartcool can improve the energy efficiency of any kind of cooling system, from a small packaged air conditioning unit to a major chiller or multi-compressor refrigeration rack.