Energy Focus Inc.

Staying Focused

C593 8358

Author

Kevin Verne

Kevin Verne

School

Case Western Reserve University - Weatherhead School of Management

Case Western Reserve University - Weatherhead School of Management

Professor

Chris Laszlo

Chris Laszlo

Global Goals

7. Affordable and Clean Energy

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Summary

About 12 years ago, the US Navy was in search of a more efficient way to light their ships. They were looking for a cost-efficient solution that required less manual maintenance, and was also in line with former Secretary Mabus' vision of the "Great Green Fleet", which has the accompanying motto: "Go Farther, Stay Longer, and Carry More Firepower." During the Navy's search, many lighting and energy companies submitted proposals to solve this problem. However, it was Energy Focus that prevailed with the first tubular LED product ever invented (The M1). This product, along with Energy Focus' "globes" won the bids to be the sole providers of LED lamps for the US Navy. To this day, Energy Focus is still the majority provider of lighting solutions for the US Navy.

Innovation

Energy Focus' aims to deliver innovative and cost-effective solutions for the most demanding applications where performance, quality and health really matter.

"They recognized the need for a a quick and easy retrofit solution to replace the T12 lamps that were the mainstay light source since the 1960’s. The M1's advanced integrated driver can be installed into any compatible fixture and can operate on existing fluorescent ballasts as well as emergency lighting systems. The M1 was also one of the first “dual-mode” products, which means it can run directly from line voltage, in a direct wire installation. This removes the need for fluorescent ballasts and starters, and improves performance at the same time. It also reduces the number of failure-components installed, the number of spares necessary, and the dead weight that the ballasts and starters added" (Energyfocus.com).

Staying Focused

Inspiration

The challenge to provide cost-effective, innovative energy saving products is what drives Energy Focus each and every day. They will not introduce a product that isn’t either the first of its kind to the market or quantifiably the best product of its kind in the market. This multifaceted approach allows Energy Focus to lead the charge in energy solutions.

Overall impact

To date, Energy Focus has sold over 500,000 of their lamps to the US Navy. However, their relationship with the Navy goes beyond just a purchase and a sale. They have a very personal relationship with the Navy, they get hands on throughout the process, and they have in depth conversations with everyone that might be affected by the change. When talking to Electrician's Mates, Chiefs, and Electrical Officers, it is easy for Energy Focus to portray the value of their technology. Their vice president of business development, Tim Grindstaff, can walk on a boat and say, “I can lower your fuel usage, I can lower your maintenance to where you’re not touching lighting anymore, I can lower your electrical overhead so you can use it for other equipment, and I can make it all pay for itself in less than one year.”

In addition to the energy and costs savings, installing these lamps also allows Electrician’s Mates (EM's) to use their time and effort for more important work on the ship, and it avoids the major safety hazard of having them on a man lift 30 feet in the air while out at sea. At the end of the day, Energy Focus knows, “no one joined the Navy to change light bulbs”, and they know by installing their technology, they can improve the quality of life for everyone involved.

Business benefit

Generally, an opportunity with just 1.3 million fluorescent lights is not something a company would build a business around. However, this was a great entry point for Energy Focus. They realized the impact they could have on the Navy's operations, the impact they could have on the environment, and the opportunity for growth and scalability in other markets.

While Energy Focus sells products on value to the market, they do not sell “cheap” lamps. The Navy lamps are some of the most sophisticated LED lamps on the market for any application, but the savings generated pay for the lamp in less than one year. Competitors have tried to replicate Energy Focus' product for years, but their lamps do not have the engineering behind them to meet key performance standards.

As far as costs go, fluorescent lights can cost as low as 20-25% of LED lights, but they fall behind in the maintenance that is required, the frequency at which they must be replaced, and the fact that they emit harmful substances into the environment. To date, there is not a single lamp that can replicate Energy Focus' performance across all modes of operation on a US Navy vessel.

Outside of working with the US Navy, Energy Focus has proposed the use of their lamps and technology in various other settings. This opportunity for scalability is mostly capitalized on in the health care and education industries. With an estimated 12 billion fluorescent sockets around the world, there is a global market of nearly $120 billion.

Social and environmental benefit

Energy Focus creates value and benefits from so many different angles; they have the ability to do so much more than just make lamps. They state, "Our mission doesn’t just push us to make lighting – it drives us to bring technologies to the market that improve people’s lives".

Let's take a look at just one US Navy Destroyer Ship that has approximately 6,500 lighting sockets. They have found that approximately 10% of the power used on each Navy vessel goes to lighting. With the installation of their technology, they can cut that in half, minimum.

Since there are no windows on Navy ships, these lamps generally run all year long (8,760 hours a year). For just a single lamp on a Destroyer, the Navy saves approximately 87.7 KwH/year. Each ship also saves nearly 31,000 gallons of diesel fuel per year, 368 tons of CO2 and 6.5 tons of Nitrus Oxide no longer enter the atmosphere, and sulfur levels are decreased from 10% to 1%.

On a grander scale, total savings for the Navy equates to about 2 million gallons of diesel fuel per year. In dollars, that's about $50 million saved in fuel each year. Because of this investment, over 28,000 tons of CO2, 2 tons of SO2, 500 tons of NOx will no longer be entering our atmosphere, and about 2,300 cooling tons are no longer needed from the shipboard HVAC systems.

Finally, Energy Focus has freed up over 500,000 labor hours for sailors to do more important tasks. They are creating a more efficient, productive, and safe environment in which these Navy service men and women operate in each and every day. Their CEO, Ted Tewksbury III states, "We continue to look to the future with a focus on delivering the most reliable and highest quality solutions to customers because we know that what we do in our facilities makes a difference in our society."

Interview

Tim Grindstaff, Vice President, Business Development

Energy Focus Inc.

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