Green tech makes a move into the top corporate ranks
Touted as the next sector to attract the interest of investors, green and environment-friendly technology is already making its presence felt on the list of B.C.'s top companies. While wind energy companies pull together the resources needed for the massive investments planned for the province's north coast, the foundation laid by Ballard Power Systems Inc. is bearing fruit in a host of small-scale successors.
Ballard launched in 1979 on the heels of the energy crisis, focusing on fuel cell technology. But with dreams of a "hydrogen economy" all but evaporated, the company turned its attention to industrial applications in 2007. While 2008 revenue dropped nine per cent from the previous year to $63.5 million, the company's earnings finally moved into positive territory, notching $36.3 million in profits.
Meanwhile, solar energy is powering the rise of the new lights of B.C.'s alternative energy sector. A 2008 PricewaterhouseCoopers study for the B.C. government describes B.C.'s hub as the third-largest in the world and growing at an annual rate of 11 per cent. Companies such as solar-powered lighting systems manufacturer Carmanah Technologies Corp. of Victoria and solar panel manufacturer Day4 Energy Inc. of Burnaby are leading the charge.
Headed by MacDonald, Dettwiler and Associates co-founder John MacDonald, Day4 Energy debuted on this year's list of the top public companies with revenues of $76.8 million, up 266.7 per cent from the previous year. The company offers a vivid illustration of the kind of traction the industry is gaining. Day4's largest solar energy installation in North America is an industrial facility in Portland, Oregon, with a generating capacity of 870 kilowatts. As impressive as this installation is, it's relatively minor in Day4's overall operations; approximately 90 per cent of its sales are in Europe, making it a true international player.
As bullish as MacDonald may be about his own company's prospects, he feels it represents the potential for the B.C. industry as a whole. "The field of renewable energy, clean energy, green energy, whatever you want to call it, is a huge opportunity for this province," he says. "There's an opportunity over the next decade or so to build a really world-class industry here, and I think people have to start getting that message."
In the industry's favour, green power companies can tap a plethora of renewable energy sources in B.C., including solar, wind, tidal and hydro, and according to MacDonald the province attracts an innovative pool of potential employees. On the downside, a lack of funding is stalling growth. The credit crunch and crumbling equity markets helped eclipse financing for solar and other alternative energy projects, and MacDonald isn't placing any bets on when conditions will improve. "There's a lot of hesitation," he says.
Day4 was not immune to the collapse of equity markets last fall. Its share price reached a high of $6.19 last summer but this spring was trading at $1.20, a drop of just over 80 per cent. And in January, less than a week after the close of its fiscal year, Day4 announced the layoff of 95 staff at its Burnaby plant - more than a third of its workforce. "We've all got to work our way through this financial crisis at the moment, but once that's behind us, and it will get behind us, I think there will be very rapid growth," MacDonald says.
Global demand for conventional energy supplies is approaching the point where it will exceed what's available, MacDonald says: "Renewable energy is inevitable. It is going to happen. The only question is when."
Government support, however, is just as important as private funding to the industry's future. MacDonald argues that green energy has to reach a cost where it's competitive with mainstream energy generation. This is what made hydro power a success for the province in previous generations, and similar measures are needed to ensure the adoption of the new alternative energy sources.
While much more could be done in B.C. to facilitate the development of alternative energy providers, the government's vow to be carbon neutral by 2010 is a great step, says Pascal Spothelfer, president and CEO of the B.C. Technology Industry Association. "The political climate, or the political environment with the greenhouse gas initiatives, is fertile for these types of companies," Spothelfer says.
While the sector has just 3,000 people, representing a mere five per cent of total employment in the B.C. technology sector, Spothelfer believes the industry is poised for growth. "It's probably where Internet companies were in the late '80s," he says. "It's something that's really waiting for the break," he adds. "This is the next big growth sector within tech."