BC start-up seeking major share of burgeoning renewable energy market

Day4 Energy using Russian technology

In just a few weeks, Day4 Energy Inc will begin commercializing proprietary Russian solar energy technology that has attracted nearly $10 million in early-stage funding since its founding in 2001. Day4 is the brainchild of Dr John MacDonald, co-founder of MacDonald Dettwiler & Associates (MDA) and Dr Leonid Rubin, former head of the physics department at Moscow State Univ. As CEO and CTO respectively, the two are betting that their technology will drive down the cost of solar panels to the point where a major market breakthrough is possible.

Aimed at the commercial-industrial-utility sectors, Day4 first plans to break into the California market with the production of conventional solar panels, generating initial revenues that will allow it to draw on conventional financing sources. Earlier this year, the company moved into a 3,000-sq-m facility in South Burnaby BC where it will launch its initial production run and expand its R&D program. It also signed a multi-year supply deal for solar cells with Q-Cells AG, Thalheim Germany.

Staff now numbers about 15 including Rudin's son, George Rudin who is VP and COO, and key European recruits who head up the R&D and production operations.

MacDonald and Rubin met in the late 1990s through their sons, who worked at the same Vancouver law firm. During a trip to Moscow with the Asia Pacific Economic Cooperation (APEC) forum, MacDonald was invited by Rubin to take a whirlwind tour of some of the technologies being developed in private sector, government and academic laboratories in the area - an experience he describes as "a drink from a technological fire hose".

When asked which technology he would like to take back to Canada for commercialization, MacDonald jumped on a solar energy project which had particularly impressed him. Convinced it could help to make solar energy more cost competitive, a company was created within one month to take the technology to market. Five years later, Day4 is about to generate revenue for the first time.

FOUR ROUNDS OF EARLY-STAGE FINANCING

The first round of financing was almost entirely angel-based, including an initial investment by MacDonald himself. The $1.4 million allowed Day4 to demonstrate the viability of its technology in Russia, before moving operations and personnel to British Columbia. A second round of financing raised an additional $2.2 million, once again largely angel investment but with one VC firm, the BC Discovery Fund. This round allowed the technology to be further developed while MacDonald and his executive team built a detailed business plan. A third round included another VC firm - Chrysalix Energy Management - followed by a fourth "insurance round", as MacDonald describes it, bringing the total raised to date to nearly $10 million.

Day4's financing also includes a small contribution from the joint funding program of Technology Partnerships Canada and the Industrial Research Assistance Program. MacDonald says IRAP is virtually the only government program he considered using in the company's early stages. He says the majority of "alphabet soup programs" are usually not worth the time or effort.

"They're all run by Industry Canada and the problem with them is they're all run by a flock of accountant," he says. "They try and put in all these measures to avoid stealing the taxpayers' money and the result is, they're extremely expensive to apply for."

KEY TECHNOLOGICAL ADVANCEMENT

Day4's technology focuses on improvements to the electrode component of the solar panel, particularly the contacting and interconnection of crystalline silicon photovoltaic cells. The technology allows for less silicon to be used in the production process, driving down the per kilowatt cost from $4/kw to $2/kw. It also improves slightly on the efficiency of conventional photovoltaic cells under concentrated light.

"It's a piece of polymer film with specially coated copper wiring and an adhesive that's attached to the thing. That's all it is. You simply take this electrode and laminate it to the front of a conventional cell," says MacDonald. "If you can reduce the silicon and maintain the same power, then you change the economics."

RAPID GROWTH ANTICIPATED

MacDonald is convinced that once the product breaks through in California, it won't be long before it will find customers through Asia-Pacific and other regions where solar power is rapidly gaining acceptance. If Day4 Energy finds early adopters and overcomes the ever-present shortage of silicon, its growth could be explosive. He predicts that within five to 10 years, it could eclipse the current size of MDA, which employs approximately 2,700 people and has revenues of nearly $1 billion.

"I believe we have a fantastic future if we do what I believe we can do. Getting into revenue changes our financing picture. We're no longer in the venture of the start-up stage, we're in the commercialization stage so our financing methodology changes dramatically," he says. "Day4 will become a global company fairly quickly."

MacDonald is considered one of the key pioneer's of British Columbia's high-tech industry. After a brief career as a professor at the Univ of British Columbia and the Massachusetts Institute of Technology, he co-founded MDA, focusing on technology development and marketing. MacDonald was instrumental in securing the firm's breakthrough contract to build Radarsat II and after a 30-year career, he retired in 1998.

It wasn't until the Day4 opportunity arose that he delved into the energy sector. He says the time when demand exceeds supply of non-renewable energy sources is fast approaching. When that occurs, the quest for sustainable sources of renewable energy will accelerate and MacDonald predicts that electricity, biofuel and nuclear energy will become the main sources.

"Renewable energy is the energy of the future. This is one hell of an opportunity to do something worthwhile," says MacDonald. "In the contest between economics and the environment, economics wins every time ... The key is to make renewable energy economically viable and that's the quest I'm on."

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