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Ice Energy set to change industry
By Kristen Tatti
Northern Colorado Business Report

WINDSOR - The past year has been full of accolades for Windsor-based Ice Energy Inc., but this year will be about leveraging the praise into an industry-changing, revenue-generating energy industry powerhouse.

In early June, the company officially launched its next generation of cooling technology - the Ice Bear 30 Hybrid Air Conditioner and companion Ice-Ready Rooftop Unit. The launch represents a huge milestone for the company as it moves toward mass deployment deals, fulfilling its vision of outfitting every new commercial and residential building with the Ice Bear system.

Ice Energy was founded in 2003 with the Ice Bear 50, which uses a seemingly simplistic building cooling technology - ice. The Ice Bear is designed to switch the energy used for cooling buildings from the peak-use hours of the day to off-peak hours at night. Water frozen in the evening is used during the day to cool refrigerant for the air conditioning unit.

Ice Energy's solution is unique because it works with the more efficient refrigerant rather than just water. Buildings greater than two stories use water cooling systems because the water can maintain cooler temperatures for longer distances. But buildings of two stories and smaller make up 98 percent of all structures in the United States. That translates into a market of about 80 million cooling units, according to Ice Energy President Frank Ramirez.

"The Ice Bear 30 took lessons learned from the initial deployment and integrated it into the design," he said.

The Ice Bear 50 allowed the company to prove the technology, demonstrate its efficiency and learn how the challenges presented at different sites. It also garnered recognition and awards.

In early 2004, the Ice Bear received a Gold Award at the World's Best Technology contest, over 60 competing technologies. Ice Energy was also called "Most Promising Company" at the Energy Venture Fair IV in October 2003.

Doing more with less

The attention is not too surprising. A big push now is conservation, but Ramirez said that asking consumers to give up their comfort is a fruitless endeavor.

"It's not just how much we consume; but when we consume," he said, adding that it is 50 percent more efficient to generate and transmit energy at night to be stored for daytime use. Transmission energy loss during the day averages around 20 percent but only 6 percent in the evening. Therefore, even an appliance that uses slightly more energy will be more efficient and less consuming during off-peak hours.

"It is very difficult to change the way consumers behave," Ramirez said. "We can change the way energy is consumed at a facility by having technology do the work."

Ice Energy's technology is about efficiency, not conservation. To Ramirez, conservation is doing less with less and feeling good about it; efficiency is doing more with less by being smart about how it's done.

One of the big breakthroughs for new system is its ability to work with any equipment. The Ice Bear 30 is designed so that it can be outfitted on existing HVAC systems, and available to end-users as an out-of-the-box solution. Ice Energy is also working with air-conditioning industry leaders Trane Inc. and Carrier Corp. to offer cooling units with the Ice Bear 30 already integrated through its resellers, with a similar deal with another major manufacturer in the works.

"The technology itself is only a small part of this," he said.

During the next year, Ramirez said a lot of focus will be put on developing a business model wherein there will be no expense to the consumer. And he isn't talking about a good return on investment.

"The end consumer will be the beneficiary of the technology and the host of the technology," Ramirez explained, but the utility companies will be Ice Energy's customers. Ideally, utility companies would deploy Ice Energy's technology in the same way those companies would deliver any resources to the end-users.

The company is already working with a few California utilities, including Pacific Gas & Electric Co. and Southern California Edison.

"We're in very advanced discussions with a number of large utilities for deployment (of this technology) on a utility scale," he said.

Ice Energy sees the business model as a win-win-win: good for consumers, for utilities and for the company. The company is discussing deployments of 50 to 100 megawatt with utilities. It would take about 14,000 Ice Bear 30 units to fulfill a 100-megawatt deployment. The company manufactured a few hundred units last year.

"The ramp-up in scale is huge," Ramirez said.

Funding like a power plant

In order to fund such an increase in production, Ice Energy is in discussions to land large infrastructure funds more typically used to build power plants. Ramirez said that because the Ice Bear mitigates the need to add generation capacity, it is like a power plant, just storing power rather than generating it.

"In every respect, switching from peak to off-peak demand is like building a new power plant," said Pete Higgens, Ice Energy board member. Essentially, the Ice Bear 30 is a cheaper, less regulated way to build power generation capacity.

Higgens, a former Microsoft executive, went to graduate school with Ramirez and first heard of Ice Energy at a reunion in 2003.

"I view it in a macro sense as an incredible creator of value," he said. "It solves a huge problem."

Higgens said the company is in the process of changing its accolades into revenue.

"I think it's a time of acceleration," he said.

Ice Energy's board of directors and advisory board play a big role in the company's direction and future. The roster reads like a who's who of industry and business, even counting retired U.S. Army General Norman Schwarzkopf as its leadership adviser.

Joe Desmond was able to learn about Ice Energy as a direct observer. Desmond served as the chair of the California Energy Commission when he first saw the product at work in technical evaluations in the state.

"It became clear to me that the technology could solve a lot of the energy problems in California," he said. "The ability to shift 90-plus percent of on-peak demand to off-peak is a great benefit."

Now as a member of the board of directors, Desmond is able to bring his many years of experience working in various aspects of the energy industry to Ice Energy.

"I like to think that I bring a very broad perspective about how the energy industry will evaluate the technology," he said.

For Desmond, the decision to become involved with Ice Energy was about both the experience of the management team and the strength of the technology.

"They had clearly invested a lot in the technology and in testing," he said. "Equally important is the market opportunity."

The energy industry, he explained, has been largely preoccupied with generation, transmission and demand. Energy storage is a virtually untapped aspect of the business.

"This has significant potential to change the industry," he said.

Desmond explained that the launch of the Ice Bear 30 is an accomplishment on many levels. It is a standard unit deployable on a plug-and-play basis; it decreases the cost of installation of new units and integration for existing units and includes a method for real-time communication for monitoring performance.

"Although on the surface it appears to be simplistic, they have significant intellectual property around how to intelligently store energy," Desmond said.

Ice Energy currently has seven patents, issued and owned, and more than 100 in process.

"We're not a manufacturing company," Ramirez said, explaining that research and development is the company's true competency. "The process is one of continuous improvement and refinement."

Greater aspirations

Ice Energy is already cooling the office and industrial building market, but has greater aspirations. Ramirez said that work is ongoing to develop an appropriately intelligent system for cooling residential properties. The company has had about a dozen test units operating for around two years, mining information for further development. The key is to provide consumers with an absolutely simple plug-and-play solution.

"Working with the residential marketplace has different problems and solutions," Ramirez said.

In addition to research and realizing the business model, Ice Energy is also working on landing the financing it will need to ramp up its growth. The company is in the process now of attracting a $25 million Series B round of financing.

"We're into the stretch run with three prospective partners," he said.

A $26 million Series A round came in June 2007 though a partnership led by investment banking powerhouse Goldman Sachs. Ramirez explained that about half of that funding went to debt and note conversion.

Raising capital for the company now should be a walk in the park compared to efforts in the early days.

"When we first started talking about storage five years ago, we were seen as strange people with a strange idea. Now we're seen as visionaries in the mainstream," Ramirez said. "We've just begun to get the momentum and mass to tell this story."

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