In the May 5, 2016 issue of Growth Company Investor, David Thornton, Editor, looks at the Inspirit Energy approach to the emerging micro combined heat and power boiler market
Who has invented the better mousetrap? Or in the case of Inspirit Energy (AIM: INSP), the better micro combined heat and power boiler.
Last week we spoke to Flowgroup (AIM: FLOW) which has just launched its own innovative gas boiler which generates electricity while heating your house. However John Gunn, CEO of Inspirit believes he has the better technology.
Inspirit’s boiler has yet to generate any revenues, with Gunn hoping to achieve the first installations later this year. Ten trial units are currently going through the approval process which should be completed by late summer. A UK manufacturing partner, who also makes boilers for Baxi, has been lined up to make the product.
Gunn is particularly proud of the precision UK engineering that has gone into his boiler’s design. It’s a sealed unit that won’t require any special installation or servicing. The Inspirit boiler has an adequate heat output, but is said to be a very efficient electricity generator. This means it’s especially suited to commercial premises which are relatively high consumers of electricity, like shops and restaurants. The economics aren’t dependent on selling power to the grid - the boiler should pay for itself within four and a half years purely by generating a building’s own electricity needs. Any surplus electricity sales to the grid would reduce this payback period.
Just as Flowgroup’s boilers will need to prove themselves in the field, Inspirit has to demonstrate that the technology works on site, is reliable, and delivers the savings claimed. So it plans to launch on a controlled way with an initial phase of 1,200-1,500 units. On an annual basis this should equate to a breakeven level and a later build-up in volumes will bring manufacturing costs down. Selling into the business rather than domestic sector should make for a more streamlined route to market.
Inspirit has a market cap of just £4 million and, while overheads have been held down, the company has relied on funding from directors with Gunn owning 46 per cent of the equity. We don’t yet know what working capital requirements will look like when the boiler moves into the commercial phase from testing; but there will clearly be a need for more funds. Meanwhile it will be interesting to see what early traction Flowgroup achieves, now its boiler is in the market.