Kvar Press - Denver Business Journal - Friday, November 13, 2009

Kvar Energy Controller changes Smith’s business focus.

In 2005, Mike Smith set out to capitalize on his 40 years in the construction industry by opening his own construction management firm.

Michael Smith, President Colorado Kvar

But within months of starting Alpine Management Group Inc. in Lone Tree, Smith discovered the green field of energy efficiency.

Friends told him about a box — called a Kvar Energy Controller — they put on their home’s electrical panel to cut electricity use and monthly utility bills.

“I blew it off for the first month, then they told me again,” Smith said. “I started researching the Kvar online and ended up calling the manufacturer to ask where I could find one.”

Gregory Taylor, the device’s inventor and patent holder, answered the phone call and Smith’s questions. A few months later, in early 2006, Smith decided to start selling Kvar units. He’s the most active of three distributors in Colorado, according to the company, Kvar Energy Savings Inc., based in Daytona Beach, Fla. The company has 570 distributors nationwide and has installed units around the world, according to CEO Steve Fish.

The Kvar unit cuts power consumption by storing the electricity that motors, such as compressors, need to create the constant magnetic field in which they operate. The power is recycled between the Kvar unit and the motor, meaning the motor doesn’t have to pull fresh electricity from the grid to create the magnetic field — and then discard the energy as heat, Smith said.

Kvar units can be put on motors such as freezers, air conditioners or compressors in restaurants, grocery stores, apartment complexes or manufacturing plants. In a home, they’re attached to the electrical panel and serve all the motors there, Smith said.

The units are custom-built in Florida and sized for the motor to which they’ll be attached. The units cut power use, protect the motor from power surges and also allow the motor to run up to 10 degrees cooler — extending its life, he said.

Business has been growing swiftly, said Smith, who has altered his company’s name to Colorado Kvar, a division of Alpine Management Group. Smith is the only employee. He contracts with local electricians to help size and install the Kvar units.

In 2008, the company had revenue of just under $200,000 — double the previous year, he said. Smith said revenue may hit $250,000 this year, and 2009 will be profitable.

Commercial-sized units cost $800 to $4,000, depending on the motor, Smith said.

Keith Giacchino, president of Plastics Design and Manufacturing Inc. in Centennial, put Kvar units on the eight largest motors in his manufacturing plant a year ago. The company designs and makes plastic pieces that other manufacturers use in their products.

“We wanted to make our company a bit more environmentally friendly,” Giacchino said. “We use a lot of big motors in here, and they cost a lot to run.”

Giacchino had two goals: cut the motors’ power use, and reduce the company’s “demand charge,” which Xcel Energy Inc. levies on businesses based on how high their power consumption spikes during the month. The charge, common in the utility industry, helps pay for building enough power plants and power lines to handle spikes in electricity consumption.

Since adding the Kvar units, the company’s previous annual power bills of about $175,000 have dropped 20 percent, Giacchino said.

The company’s power use dropped about 11 percent from the previous year, while the demand charge fell about 13 percent, Smith said.

Giacchino figures that while some of the reduction stems from a 10-kilowatt solar power system the company put on its roof in January, as much as 90 percent of the drop in power costs came from using the Kvar units.

And in the rough economic climate, every dollar cut from overhead expenses means a lot, Giacchino said.