Sales activity lights up at Encorp

WINDSOR –The blackout of Aug. 14, followed by Hurricane Isabel in September, left a dark impression on much of the eastern United States.

Those same events have bathed Windsor-based Encorp Inc. in a new light.

Encorp, which specializes in distributed generation technology, has found itself in great demand in the wake of the two summertime disasters.

“Virtually everyone east of the Mississippi we have been talking to has called back and asked if we can move faster,´ said Encorp CEO Dennis Orwig.

Orwig expects Encorp sales to double in 2004, and the company should hire about 40 people in the next 12 months. Additionally, Orwig thinks Encorp can begin to show profitability sometime next year for the first time since the company was founded in 1993.

Distributed generation is the practice of using on-site power generators as a regular source of electricity rather than simply as emergency backup power.

Encorp’s software and hardware tools allow power customers to link their generators with the utility grid. During peak demand periods — when utilities charge the most for power — Encorp’s technology switches the on-site generators into action.

Furthermore, in the case of utility-system failure, Encorp customers will be diverted back to on-site power without a hitch in service.

Encorp’s technology also allows institutional customers to pool the capacity of their various generators. For example, Fort Bragg, N.C., employs the Encorp system to aggregate electricity from 11 different generators.

Such pooling of power makes it possible for institutions to sell electricity back to the utility when the grid is in need of additional juice.

Encorp has found customers in a variety of business sectors. One major contract gained in the past year was with Equity Office Properties Trust, a major commercial property real estate investor based in Chicago.

“We just shipped systems for five of their buildings in San Francisco,” Orwig said. That could be just the start. Equity Office Properties owns 720 buildings around the country.

Earlier this summer, Encorp won a $870,000 contract to support a new 1.7 million-square-foot entertainment complex in Mexico City. The Foro del Azteca, expected to open in 2005, will have its own 9.2-megawatt power plant.

Encorp started to “get traction” in the marketplace after it adopted a broader business strategy last year, Orwig said.

The company previously marketed itself to single-location users. That market was about $500 million, and included high-profile competitors, including General Electric Co.

A new strategy aims at larger businesses and organizations that want to use distributed generation as a primary power source, and want to install “a large fleet of distributed generation projects.” Now, Orwig said, Encorp is competing in a $14 billion market that could grow to $18 billion by 2007, according to energy-industry research compiled by Navigant Consulting.

“We only need a small percentage of this market to be a huge success,” he said.

Encorp’s target markets include commercial property investors such as Equity Office Properties, health-care and academic campuses, and industrial users.

Encorp expects to finish this year with revenues between $7 million and $8 million. The company’s order backlog by the end of the year should guarantee at least $8 million in business next year, although Orwig expects to double sales in 2004.

Employment, now at 81, should increase to 120 by this time next year and 158 by the end of 2005.

Market potential seems to support Encorp’s projections.

According to the U.S. Department of Energy, electricity consumption in the United States is expected to grow 1.8 percent a year between now and 2020. The American Gas Foundation predicts that 20 percent of new generating capacity built between now and 2020 will be distributed generation.

Encorp appeared to be on track for growth before the one-two punch of the blackout and Hurricane Isabel. But the events “opened eyes” around the country, Orwig said.

“We’re excited about how fast the distributed-generation market is growing,” he said. “But we’re more excited about the fact there’s just a bright light on this space, because our products work in the retrofit market as much as in the new market. There’s already some 40 gigawatts of distributed generation installed as standby generation that’s sitting there not being used.”

A gigawatt is 1,000 megawatts. A megawatt is enough electricity to power 1,000 single-family homes.

Encorp is talking to potential customers that already have a generator in place, but aren’t connected to the grid. “They never made it a practical asset to use for peak shaving or any kind of capacity,” he said. “A great number of those generators did not start during the blackout.”

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