Enrvate secures loan to jump-start ‘proof of concept’ projects

Enrvate, a company jointly formed by CAC 2000 and Tropical Battery Limited, has secured $50 million in debt financing to be used as working capital while it takes on two projects lined up for next year.

It’s the first of what Enrvate CEO Steven Marston expects to be five drawdowns on a five-year, $250-million loan from VM Investments Limited.

CAC 2000 and Tropical Battery Company seeded the start-up with $5 million each.

Enrvate, which markets itself as an energy conservation and efficiency company offering custom-built, environment friendly solutions to minimise the price consumers pay for electricity and water, has been trying to lock in external funding for the business since its operation begun in June 2021.

“The idea was that we didn’t want to burden Tropical Battery and CAC with demands for money, but for it to be an independent operation with its own source of fund. The good news is that we sent off a set of documents just this morning to get final approval for the loan, and we are now going in to set up this initial injection of money to support our proof of concept projects,” Marston told the Financial Gleaner on Tuesday.

Proof of concept is akin to a pilot project, the results of which are used to demonstrate whether a product or business idea is feasible.

“Our target is really $250 million over a five-year period, but so far we have been approved for $50 million, which should be in our account by year end,” Marston added.

The first proof-of-concept project will begin in January, and will see Enrvate renovating and upgrading a solar energy unit at energy storage company Tropical Battery. Later, it will tackle another solar system upgrade at CAC 2000, a provider of air-conditioning systems that Marston founded and formerly served as CEO, prior to taking on the job of leading Enrvate.

Tropical Battery has a 150kW solar system installed at its main base at Ferry in Kingston, of which only 100kW is said to efficiently serve the company. Enrvate’s job is to get the underperforming 50kW working, as well as to commission a further 25kW on the existing solar system. Tropical Battery will then install 200kWh of battery energy storage to the system.

On completion, the upgraded energy system is expected to slash Tropical Battery’s electricity by roughly 80 per cent. Similar savings are expected for CAC 2002’s project.

Both projects are to be executed between January and April 2023, with funding for the system upgrades to be borne by the respective companies. Enrvate, meanwhile, will use the $50-million loan for its working capital needs.

“We have this concept called ‘pay as you save’. Basically, we use the savings that we generate to help with the cash flow. The clients will put some money up front, and the balance will be paid out of the savings,” said Marston.

Although Enrvate is hoping to land more contracts based on the results of the proof-of-concept projects, Marston said they won’t be the company’s first jobs.

“We also have some work going on with some other companies which we don’t wish to name as yet. But those two projects were the proof of concept that we wanted to show. Tropical sells battery systems, so it is a way of demonstrating to our customers what to expect from the partnership between Tropical Battery and Enrvate,” he said.

Tropical Battery will serve as primary supplier of solar batteries for Enrvate, which will then retail the batteries to clients, along with its solar panels, energy-control and management systems offerings to commercial businesses and mid-sized residential homes. CAC 2000 will provide Enrvate with technical services and air-conditioning systems, as needed.

Enrvate now has on staff four individuals to manage its business, but by year end is looking to push that number to 10. The company eventually plans to expand beyond Jamaica to the Caribbean.

“We will never really be a large company, because our business model is designed around depending on the resources of Tropical Battery and CAC 2000,” Marston said.

karena.bennett@gleanerjm.com