In New Jersey, a quiet solar revolution is underway

Investing in solar or wind is like printing money, according to Pro-tech Energy Solutions principal John Drexinger. I spoke with him about bringing New Jersey on-board with renewables.

One hundred and thirty years ago, inventor Thomas Edison was granted a patent for the first electric lamp -- the precursor to the modern light bulb.

Now, another New Jersey resident wants to take light to a whole new level.

Pro-tech Energy Solutions principal John Drexinger says the Garden State is ripe for more solar power -- and has been for almost a decade.

That's why his company is moving quickly to conduct energy audits for hospitals, farms, public schools, industrial facilities -- heck, even an Air Force base -- with the hope that when the great solar revolution finally washes over the state, Pro-tech has a seat at the head of the table.

I spoke with Drexinger from his office in Branchburg, N.J. about why he's so intent on making solar make sense for local businesses.

SmartPlanet: First things first: how did Pro-tech get started?

JD: Pro-tech is a company of six partners. We all came from different sectors of the industry. We came together in our belief that the sum of our parts is a stronger approach.

We all share the belief that we're building an industry. When you have that belief, it's not about the project, it's about building things up to be sustainable to allow for new entrants to come into the market. That requires a staying power.

We want them to, when they make that final decision, know that the information that we provide is accurate and transparent.

I came out of commercial real estate, managing a really large portfolio. Back in '03, a friend of mine started telling me about solar in New Jersey. There are things you can't control. One is snow. The second is increasing utilities -- when New Jersey deregulated, it was a runaway freight train for awhile, and rates raised 80 percent in some cases.

Lighting upgrades, air conditioning upgrades, understanding a "building envelope" -- leaving the door open and you air-condition the street in the summer -- those things intrigued me.

In '03, I started a solar company, brought two partners on and did my own house. New Jersey was giving away a 70 percent rebate at the time. Seventy percent, Andrew. What I saw was that solar was an industry of leftover guys from the '70s who were hanging on. There was no sophistication.

I truly thought that when Wall Street and others got their hands on it, it would explode. So I wanted in.

The economics are much better than we thought, and our annual rate of return was 35 percent with the [state] rebate.

I was building residential and small commercial, and in '05, I got an opportunity from DT Solar. I went from a 21-kilowatt to a 700-kilowatt portfolio overnight. In the middle of this whole thing, Ted Turner goes and buys DT Solar. All of a sudden, I'm on the national scene.

In early '09, two of our partners approached me and asked if I was interested in joining them -- one [John Martin] is in the electrical and lighting side of the business, and our CFO [Paul Shust] is a CPA and spent 13 years in finance. At the end of '08, I had personally built 10 percent of the market. But I was living and dying by policy changes.

SmartPlanet: So you're gung-ho on solar. Where does the business model come into play?

JD: It's not about [just] the generation. People who invest in solar or wind, it's printing money. When it's raining, this system's making power.

The solar industry is not a one-product industry. It has to be a full energy solutions approach.

We go in and perform an energy audit. We give them a summary of their building, lighting, HVAC, building envelope, and make recommendations. Often, clients say "Do the lighting first," because it's a very fast payback -- we have clients that have gotten a six-month payback, thanks to incentives from the state. We suggest putting into an energy monitoring system that will baseline your consumption.

Commercially, people only know what their utility bills tell them. What happens physically, psychologically, when you monitor your energy use in your building and put it on a big screen out front -- people shut off lights, they take the stairs, they subconsciously think about their energy usage. I've personally seen [energy use in] buildings go down 5 percent just from that.

You reduce your consumption -- we call it "right-sizing" your solar. We're not going to do solar until you're as efficient as possible.

It's been a very successful model. At this moment, we'll build 11 percent of the entire market in New Jersey. Next year, it'll probably be close to 22 percent.

It's still early in its infancy. I don't want to be the guy who's considered the person who made the mistake with the gas pedal for Toyota in the energy industry. We're very transparent.

Intellectual property is about 1 percent of everything.

SmartPlanet: So how do you convince schools, governments, et cetera that solar is worth their limited attention and budget?

JD: We've been telling municipalities that 69 percent of property taxes go to school, and a big chunk of that goes to utilities. So why not fix the lighting?

Take that $400 million [in federal education grants] that New Jersey lost out on because of an application error. Divide it by 652 school systems -- that's $613,000, and each school system has on average nine schools, so it's a $68,000 investment in each school, which is, on average, [the price of] a lighting project.

Our typical project reduces their use by 40 percent. I told one of my politician friends that I could make up the [initial investment] money in a year. And he said, "Are you sure about this?" And I said, "We're doing this all day, every day."

We're a self funded company. We'll take the energy savings of a project and split it with a town 60/40 -- the town will pay for the project over five years with its part. The savings goes right to their bottom line.

SmartPlanet: You mentioned that you suggest that clients invest in smart meters, but don't have a deal with any major players. The smart grid is still in its infancy. Why not build a system that's more future-proof?

JD: We're putting them in our clients' buildings where we work at. Quite honestly, Cisco Systems and Johnson Controls and IBM and Honeywell do really well, but what I believe is that our monitoring system will in the future be adaptable to what they're doing. We want to be in a supporting role.

With smart grid, the utilities or Ciscos of this world have to get into the building to get the data out. We have a fair amount of locations in those buildings. If a Cisco approached us to license those buildings, well yes, we would.

One of the biggest problems right now is that the data is not transparent. None of that data goes back to the state so they can understand what they got for their investment.

A lot of times the school doesn't own the project -- an outside company does, and there's an energy-sharing agreement.

We use Sa-tech for meters and software -- it's a utility-approved system. We took their energy-monitoring package and built a front-end solar package. Satech sells to Lockheed Martin and Johnson Controls.

SmartPlanet: There's more energy to be saved in new buildings, but the majority of what's out there requires a retrofit. How do you address these markets?

JD: We're doing new construction, not really retrofits. We'll go into a school and go into a gymnasium and replace a 400-watt HID fixture with induction lighting technology. LED is the new technology, but it's very project-specific. We're working with two U.S. LED manufacturers, but there's not an LED technology for every solution out there. So we use the technology that gives the client the greatest return in the shortest amount of time.

In our lighting performance, we have a line item for maintenance and HVAC. Those old lights throw off a surprising amount of heat, and they burn out.

SmartPlanet: You serve an array of different clients. Tell me about them.

JD: School districts, retail stores, ice skating rinks, parking lots, refrigerated warehouses, self storage facilities -- any facility where the lights are on more than eight hours a day. Malls, parking decks, U.S. naval bases, a car rental agency at an airport -- we're working with Enterprise, for example.

Think about distribution facilities, Home Depot, Walmart -- those stores are open from eight in the morning to 10 at night. Lighting is a vast expense.

Schools -- they never shut their goddamn lights off. Motion sensors for lighting is a really big thing. In a warehouse or an office building, we can reduce usage by 25 percent without doing anything [else]. We use motion sensors that use infrared to detect heat, too.

The U.S. military is the largest energy user in the entire country. The typical norm is, 'Work for the military and charge 50 percent more.' I don't. I charge them the same as commercial clients. Their lighting usage is unbelieveable. You want to talk about shutting off lighting and air conditioning -- they don't care. But they've got a job to do. They shouldn't have to care. But I do.

You're building a powerplant. A revenue-generating asset that has to last 50 years. If you educate society and people about renewable technology...you have to prove it to people that it works. That's how you start to get this thing to scale.

This post was originally published on Smartplanet.com

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