In many businesses the world over, higher oil prices have hurt the books and led to worries about a new energy crisis. It is no different in the Philippines, where energy prices are skyrocketing due to the current power supply struggling to meet the unprecedented increase in energy demand.
Environmental concerns in the last year have also led more and more companies to re-examine the way they operate and to become more proactive in terms of sustainable development. Smartcool Systems, Inc., a clean-tech Canadian company that specializes in energy and cost reduction, presents two product solutions that address the growing pressure to minimize energy costs and greenhouse emissions: the Energy Saving Module (ESM) and the ECO3—both designed to reduce the energy consumption and demand of compressors in refrigeration and air conditioning systems.
“When you look at a facility, whether a mall, a call center or a convenience store, the cost of electricity can be anywhere between seven to eight percent of the operating cost—and 50 to 70 percent of the electrical bill is cooling,” says David Verlee, Smartcool’s CEO for the Asian region. “So if you can have an impact on cooling, you actually have a huge impact on electricity reduction. Here in this country, in the next two years we’re going to see brownouts again because we don’t have the capacity. We don’t have enough power plants, and with the demand increasing and there’s no more supply, what’s gonna happen? The only way you can help the problem is really by reducing the amount of kilowatt needed.”
According to Verlee, the current trend in the United States has been power companies giving true green incentives to its biggest customers in order to get them to save energy. “A power company in Florida, for example, is paying its big customers money to save energy,” Verlee relates. “You would think that’s the opposite of what they should be doing, but the way they think is that by you (the client) saving energy, you’re allowing them to not have to build another power plant. Which means it’s better for the client and the power company. So the government giving true green incentives not only helps with global warming, it also helps with the economy. That’s where other countries are heading, too. In Singapore, for example, the government is giving our clients grant money to install our technology.”
In the country, there is a massive market of opportunity for both Smartcool’s retrofit technologies as the green movement steadily gains momentum. With the ECO3 catering to air-cooling systems with single and double compressors, and the ESM to larger chillers, they fulfill the energy-saving needs of cold storage facilities, supermarkets, convenience stores, hotels, malls, hospitals, casinos, office buildings and restaurants. Ayala Land’s Greenbelt, in particular, recently received the 2009 Don Emilio Abello Energy Efficiency Award given by the Department of Energy. Smartcool’s ESM was installed in Greenbelt’s eight chillers and this saved the company 31% of the energy required for its cooling systems.
Upon seeing how effective Smartcool’s technologies were, more companies have since followed suit. However, when Verlee put up the company’s Asia Head Office in the Philippines two years ago, it wasn’t so easy. “The first year, we didn’t really make any money because it was not so much about selling, it was all about establishing the brand,” shares Verlee. “The good news about the Philippines is that there’s a lot of interest in saving energy, but the bad news is that there have been a lot of (energy-saving) technologies that were thrown to clients. We thought we were special, but when we came here we realized that companies had a bad impression of energy-saving devices because most of them do not work. So we had to go and prove to our clients that our products worked properly and that it was safe.”
Wooing the Philippine Market
One way the company did this was to give away the products for free, and it’s a strategy they implement to this day. “What it is is that there’s no downpayment, no capital expenditure required,” says Verlee. “We install the units, we prove the savings to the clients (with the engineer) by doing a trial on three or four of the units, which shows how much energy is saved compared to before.
Whatever is the savings, we share it with the company and that’s how we earn. If they don’t want it, we go in and remove it, so there’s no risk for them. If we don’t achieve the savings, they don’t pay—it’s pretty simple. But we know it works because we have many units now in the Philippines.”
With the country’s warm climate and expensive kilowatt prices, there’s clearly a huge market for Smartcool to saturate. “We may have hit two percent of the market—it’s a big market, especially with big chillers,” said Verlee. “There’s a lot of companies that we can go in and talk to, but our business plan is to actually not to go to too many new clients. We would rather target the top companies in each sector that the industry looks up to—we do all the Ayala, 7/11, Globe Telecom, Jollibee and David’s Salon accounts. These are our clients and we had to work extra hard to gain credibility with them.”
In line with its business plan, Smartcool currently focuses on the clients they already have. And it’s a strategy that not only ensures there is quality control, it also increases the value of the brand. “We want to keep it very simple, we want to build the company slowly and the most important thing we have going for us is our reputation,” Verlee shared. “I want the company’s reputation to be our strength. If people trust us, we’re here for the long term.”
With over 25,000 clients from all over the world that include big names like AT&T, Apple, Accenture, IBM, TESCO and Dell Computers, Smartcool is building a solid reputation that’s steadily increasing its growth. Last year the company witnessed extensive growth in Europe. “This year will be Asia,” informs Verlee. “There’s more people, more buildings, and faster return on investment. One of the things that I’m most proud of in the last eight months is also that nobody’s left the company. Nobody’s leaving, everybody’s happy and this, in turn, has made the clients happy. One thing I tell my staff is that they’re not just making money here. They come to work and they save energy. You’re making an impact on the environment and that’s a nice way to make a living.”
Published in Manila Bulletin, Business Agenda section, 20 April 2010