Solar Energy Firm Sees Brighter Horizon

Carmanah's purchase of Soltek intended to put parent at centre of global industry.

Monday, August 8, 2005
Art Aylesworth, CEO of Carmanah Technologies

Carmanah Technologies CEO Art Aylesworth says the company's plan is to broaden its reach across all types of applications.

VANCOUVER -- Working from a tiny base in Victoria's harbour district, Carmanah Technologies Inc. has emerged as Canada's largest supplier of solar systems, with a 60-per-cent share of the domestic market.

It got there by finding buyers for energy-efficient, solar-powered lights that can outlast an incandescent bulb and come encased in a waterproof, polycarbonate coating that can withstand the impact of a hammer blow.

But becoming No. 1 in Canada was only the first step in Art Aylesworth's plan when, five years ago, he left a secure job in consumer electronics to become chief executive officer of Carmanah, a company then in a startup phase.

His ultimate goal is to position the company at the centre of a $10-billion (U.S.) global industry that is growing so rapidly that manufacturers of solar modules used to convert sunlight to electricity are struggling to keep up with demand.

In keeping with that strategy, Carmanah recently bought privately owned Victoria firm Soltek Powersource Ltd., at the time the largest Canadian supplier of solar systems and solar-related equipment, for $12-million (Canadian) in cash and stock. The purchase is designed to transform Carmanah, which has been known mainly for its energy-efficient lights, into a supplier of integrated solar systems, not only to the home and cottage market, but also to sectors such as telecommunications, security, and oil and gas.

"Our plan is to broaden out across all types of applications," Mr. Aylesworth said during a recent interview.

With projected revenue of $35-million this year and 180 employees, Carmanah is among a handful of Canadian firms that hopes to benefit as rising oil prices start to make solar and other renewable energy sources a more viable alternative to fossil fuels.

The challenges they face include low installation rates in Canada and a shortage of solar power modules caused by the lack of raw silicon used to make solar cells.

But Mr. Aylesworth said he wouldn't have quit his previous job if he didn't think Carmanah had the intellectual properties to compete head on in the solar industry.

Based in former Coast Guard buildings in Victoria, the company got its start in 1996, when founder David Green was looking for a way to keep the anchor lights on his sailboat from draining the battery during a boat trip back from Fiji.

He invented software that efficiently collects energy from solar panels. That energy is then used to power LEDs `light-emitting diodes` which are more efficient, durable, and last at least 20 times longer than incandescent bulbs.

Because Carmanah's solar-powered lights require no external electrical source and operate with virtually no maintenance for up to five years, the company quickly became a supplier of marine navigation lights to the Canadian Coast Guard.

But Mr. Green had a hunch that solar LED lights could be used in a range of applications including roadway hazard warnings, on airport runways, and to light bus shelters.

So far he has been proven right. "The London transit authority was one of the first industries to show that they were interested in our product," Mr. Aylesworth said.

In the next few months, Carmanah hopes to win a contract, expected to be worth about $10-million, that would allow it to install a minimum of 7,000 solar-powered bus shelters in London.

"This would be our biggest single order if it comes through," he said.

Hoping to win even bigger contracts in future, Carmanah is moving to establish a presence in Europe, using distribution and product assembly facilities in Britain as its European hub. Those facilities will be added to existing facilities in Victoria, Calgary, Toronto and Santa Cruz, Calif.

Solar industry officials say Carmanah is eyeing expansion in a year when worldwide industry sales are expected to surpass $10-billion (U.S.) for the first time.

Driven by booming markets in Japan and Germany, the installation of solar voltaic modules worldwide grew by 40 per cent in 2004 from the previous year, according to the Solar Energy Industries Association in Washington. Even in Canada, where solar product sales are expected to be in the $200-million (Canadian) range this year, industry officials see signs that government support for solar energy may be around the corner.

Last month, for example, Canada Mortgage and Housing Corp. launched the first phase of a program that will lead to the construction of 1,500 energy efficient homes that can supply as much energy to utility grids as they consume.

Meanwhile, an analyst who follows Carmanah says she is watching to see how the company progresses with Soltek's integration.

"This is a very large acquisition for a company of Carmanah's size," said Sara Elford of Canaccord Capital Corp. Ms. Elford remains cautious on the outlook for the stock, which closed at $3.05 on the TSX Venture Exchange Friday.