Chris Tyrrell and Gerald O’Donnell, former Wall Streeters, want to do their part to change the world by selling energy-efficient lighting technologies to warehouse and factory owners. Their firm, Carnegie Center-based Right Energies LLC, has partnered with a midwest manufacturer and offers no-up-front-cost financing.
For the first half of this year the company had nearly half a million dollars in revenue and hopes to end the year with five times that amount. “Our business cycle is six months, and we have done a lot of preparatory work,” says Tyrrell, the CEO.
Right Energies uses telemarketing to acquire the first client in an area, then visits nearby facilities. For the first four months the company operated out of O’Donnell’s basement, then it spent three months in shared office space on Independence Way before moving to Carnegie Center, where seven of the firm’s dozen employees occupy 1,100 square feet.
Tyrrell and O’Donnell are neighbors in West Windsor; both have military backgrounds, Irish ancestries, and young families. Tyrrell, whose father was a U.S. Army lawyer, graduated from the University of Texas in 1997, then law school at the University of Virginia before landing a job as a finance attorney on Wall Street. He and his wife have seven children under the age of 10.
O’Donnell, director of business development, has two children. The son of an attorney and a World War II veteran, he is a graduate of the United States Military Academy at West Point, Class of 1992. He was a Wall Street professional with GFI Group.
Sean O’Hare, the third co-founder, came up with the original idea for the firm. He is a graduate of Rider University (Class of 2003), where he received the President’s Award and was Collegiate Entrepreneur of the Year. He was doing residential home energy management in Virginia when the bottom fell out of new construction. He told his engineers, who used to work at GE, “We need to pivot.” They came back with the idea of doing lighting. But they needed a financing model.
“I was a finance attorney on Wall Street,” says Tyrrell, “and Sean called me for help. We designed the first financing model. In the midst of that, we ran across Orion Energy Systems and decided to sell what they were manufacturing instead. They had a better technology and a better financing model.”
Right Energies sells “negawatts,” meaning that the customer no longer has to use a certain number of watts. “We replace the entire fixture and use fewer watts to produce the same number of lumens,” says Tyrrell.
The technology is based on improved aluminum that can throw the light of high intensity fluorescent (HIF) light bulbs to a greater distance. Created by Germany-based ALANOD, this aluminum is 94 percent reflective versus competitive products that reflect at 88 percent or less.
Right Energies usually replaces HIDs (high intensity discharge lamps, made of pressurized sodium and metal halide) with HIF lights. Based on their width, these bulbs are called T-12s, T-8s, and T-5s. “We can put fixtures with T-8 bulbs at heights — 40 feet to 140 feet — that no one else can,” says Tyrrell. “Most lighting designers won’t use T-8s higher than 30 feet. Our fixture can hang higher because it reflects more of the light to the work floor. Our fixtures can hang as high as 132 feet or 10 stories from the work floor. “
Right Energies uses GE bulbs in Orion’s fixtures. Most commonly the firm replaces a 465 watt HID fixture with a 221 watt HIF fixture for a 52 percent energy savings. “We also do some replacement of normal fluorescents — leaving the shell of the fixture, ripping out the guts, perhaps putting in a new reflector, and replacing T-12s with T-8s, sometimes T-5s,” says Tyrrell.
The replacements make sense in facilities larger than 40,000 square feet, says Tyrrell, with the most savings achieved with more hours of operation, i.e. three shifts. For example, one client with a 230,000 square-foot manufacturing facility might save $63,000 in energy costs per year, or $1.26 million over the 20-year life of the fixtures.
Potential clients for exterior fixtures could be parking lots, car dealerships, and educational institutions.
Besides being “green,” Right Energies has at least two other intriguing aspects – its finance model and its choice of a U.S.-based provider.
In order to get the upfront cost of the equipment down to zero, Orion set it up so that the customer pays for the light and the utility charge rather than for the equipment. The utility company gives a rebate for each fixture replaced. The customer treats the transaction as a utility expense, so the asset does not depreciate.
This is counterintuitive. How can you buy a negawatt? Tyrrell points out that the customer is already paying for electricity. Orion merely guarantees savings on the electricity bill.
When new equipment gets installed, the customer’s electricity “spend” will be divided between the utility and manufacturer for five years. After that, the customer keeps all the savings.
“They are buying light at a reduced price,” says Tyrrell. “And they are buying kilowatt hours (“megawatts”) they are not using. Instead of spending kilowatt hours to run inefficient lights, they are paying an asset management company a utility charge for the electricity they are not using. Meanwhile they pay the utility for what they do use.”
Tyrrell thinks this financing scheme will spread to other green technologies. “Lighting is the lowest hanging fruit. It’s easy to understand. As this moves forward, the technologies will get more complex.”
He cites a 230,000 square-foot factory that saw its yearly utility lighting bill drop from $115,000 to $52,000. For the new lighting system, his client pays the manufacturer $57,000 a year for five years (showing an annual savings of $6,000). After that it will pay nothing, saving $63,000 a year.
“We don’t know why everyone else isn’t doing this. Imagine an employee is stealing $242 from petty cash every day,” says Tyrrell, referring to that factory. “Some people think it’s too good to be true, but we increased the light by 62.7 percent and reduced the carbon footprint by 2,048 tons per year.”
Orion Energy Systems in Manitowoc, Wisconsin, makes the equipment and Orion Asset Management handles the financing. Orion went public as OESX on NASDAQ at the top of the market in 2007. With more than 120 Fortune 500 clients (including J&J and Bristol-Myers Squibb), Orion has retrofitted 807 million square feet at more than 5,000 facilities.
Tyrrell says Orion’s CEO, Neal R. Verfuerth, invented the HIF market and has been honored by a visit to the Obama White House. The firm has nearly 30 patents with as many pending. In addition to its HIF fixtures, Orion’s product line includes a control platform (to regulate the light according to occupancy, schedules, or light levels) and Apollo Light Pipes. Light pipes reflect sunlight and replace artificially generated light with naturally generated light during peak daytime hours. It also equips clients with cylindrical solar arrays, made in California by Solyndra.
Some competitors are installing LED (light eliminating diode) lights. “LEDs provide a better return than T-8s only in a refrigerated environment with minimal occupancy.
That’s because fluorescent bulbs lose light in cold temperatures, and HIFs don’t want to be turned on and off more than four times a day.” Other competitors aim to update an HID system with replacement HIDs. “They don’t save as much,” claims Tyrrell. “It is hard to get the right amount of light for less energy.”
Though Right Energies touts Orion’s Fortune 50 clients on its website, Right Energies currently represents a very small piece of the business for Orion. But, as a partner with Orion, it aims to grow exponentially. Currently the next nearest Orion partner is in South Plainfield.
Perhaps the best testimonial comes from a potential big competitor, GE. As it turns out, GE is not only the largest investor in Orion, but — in its own plants — it installs its own HIF bulbs in Orion fixtures.
Right Energies LLC, 103 Carnegie Center, Suite 203, Box 7991, Princeton 08543-7991; 609-662-0260. Chris Tyrrell, CEO. www.rightenergies.com