The Business Herald’s markets and banking reporter.

Heat-pump business running hot

Econergy keen to start exporting its energy-saving device

David Senn says government grants have helped but cannot be relied upon. Photo / Steven McNicholl
David Senn says government grants have helped but cannot be relied upon. Photo / Steven McNicholl

An Auckland manufacturer is eyeing an expansion into export markets, including South Africa and Britain, for its energy-saving water-heating device.

Onehunga-based Econergy makes hot-water heat pumps it says save home owners up to 75 per cent on their water-heating bills.

Founder and managing director David Senn said he got the idea for the device while renovating a unit in Grafton.

The body corporate wouldn't allow him to install solar panels and there was no access for a gas connection, leaving few options other than installing a hot-water cylinder.

Senn, who was working for engineering consultants Beca, said he found imported hot-water heat pumps but they were designed for the Australian market where hot water cylinders were stored outside.

"We needed something that could just connect to the Kiwi hot-water cylinder ... and start energy saving."

After two years of product development the Econergy device hit the market in 2008.

It uses electricity to drive a heat-pump cycle that takes energy out of the surrounding air before transferring that energy into the water.

Senn said its main point of difference was that it could be retrofitted to existing hot-water cylinders.

"It basically saves about $2000 on the installation cost by not having to replace the hot-water cylinder."

Econergy is looking to expand into South Africa next year and Australia and Britain after that. "South Africa's got a lot of hot-water cylinders because they don't have an established gas network in the country - it's a bit like New Zealand in that sense."

Senn said all three countries' governments offered grants to consumers who installed energy-saving devices in their homes.

In the longer-term Econergy might also look at entering Asian markets and the United States, he said.

But it's been challenging getting the business this far. The Econergy device's market debut could not have have been made at a worse time.

It was launched at the Autumn Home Show in 2008 but by the time the "main event" - the Auckland Home Show - came that September Lehman Brothers was collapsing in the US and the onset of global financial crisis stifled the housing boom.

"We had no concept of what [Lehman Brothers] meant and people kept carrying on their business so we had a reasonably good home show," said Senn. "But over the next two years [the GFC] started to bite."

He said a Consumer NZ report in 2009, which found the Econergy product "blitzed" its mainly Australian competition in terms of energy savings, buoyed the firm's growth.

"That really established us," Senn said. "People were knocking on my doors wanting to buy me out and all kinds of crazy stuff was happening."

Another helping hand came from the government, which began offering a $1000 grant to consumers who bought the device, which retails for about $4000, in March 2009.

But Econergy had the rug pulled out from beneath it that year when the government killed the grant.

"I told them, 'No you can't do that - we've taken on staff'," Senn said. "They just sort of laughed at me."

A $500 government grant was offered for the product from February last year until June this year but Senn said it never drove sales as much as the $1000 grant.

He said the experience had taught him a thing or two about state subsidies - namely that they could not be relied upon.

* Founded in 2007.
* Based in Onehunga.
* Makes hot water heat pumps it says can save users up to 75 per cent on their water-heating bills.
* Employs four staff.

- NZ Herald

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