Ice Energy is on fire.
The Costa Mesa-based cooling systems developer is on pace to triple last year’s record sales, without yet tapping into what it sees as its biggest potential source of business—California homeowners.
“The largest [amount of] revenue that we’ve had in history is $5 million,” co-founder and Chief Executive Mike Hopkins said last week.
That watershed was exceeded months ago, according to Hopkins. With several growth initiatives just underway and others in the pipeline, 2019 is positioned to be an even better year, he said.
Growth is taking place on several fronts. Along with recent expansion into the Southern California residential market, Ice Energy said it’s planning a new funding round.
“I would expect it would be around $20 million to $25 million,” Hopkins said, one of five recipients of the Business Journal’s fourth annual Innovator of the Year Awards at Hotel Irvine (see other winner profiles, pages 1, 4, and 6). “It will be an equity offering to support the growth of our company.”
Big Bear
The company’s refrigerator-sized Ice Bear systems freeze and store water at night when electricity prices are low, and uses the ice to cool during the day when rates are higher.
The system looks similar to a traditional air conditioning unit and makes ice through a copper coil system that pumps refrigerant through stored tap water.
The commercial version of its product—the company’s main source of business to date—is typically placed on rooftops of buildings and integrated into air-conditioning systems.
The Business Journal reported in July that the company was planning to install 1,500 cooling systems on buildings in Irvine, Tustin and elsewhere in Orange County.
The project was funded through a $40 million June investment by New York-based private-equity manager Argo Infrastructure Partners LLC and buoyed by a 20-year deal with Southern California Edison.
Under the agreement, Ice Energy will install and maintain the units through local contractors.
Easing the state’s energy grid is a major concern for its three largest utilities: SCE, Pacific Gas & Electric and San Diego Gas & Electric.
Cheaper Than AC
Ice Energy’s new residential system, intended to replace conventional air conditioning units, costs about $14,000; utility rebates and tax credits trim that down to about $4,000, according to the company.
A typical residential AC unit and installation costs about $8,000, according to Hopkins.
During peak power-charging hours—in late afternoon to evening when electricity rises and solar power fades—homeowners can use the energy the system created and stored during nonpeak hours, or sell it back to the utility.
“We thought this would be a good incentive for homeowners,” Hopkins said. “We’ve confirmed that the value proposition of our residential product is even better than what we thought.”
2012 Sale1
Ice Energy was established in 2003 in Colorado by Frank Ramirez, Brian Parsonett and Greg Tropsa, who initially hired Hopkins as an adviser.
The first Ice Bear rolled off the production line two years later. The product is manufactured in New York by Hammondsport-based Mercury Corp.
The company raised $93 million through 2012 from a mix of institutional backers, including then-local Sail Venture Partners and Energy Capital Partners in Short Hills, N.J.
Hopkins, then general counsel, helped sell the company in 2012 on undisclosed terms to Pacific Advantage Capital, a New York-based private-equity firm.
The founders left Ice Energy after the transaction, and Hopkins was promoted to chief executive in 2014.
For much of its first decade, the company was essentially a research and development outfit, handling pilot tests and case studies for smaller utilities and municipalities.
Today it has projects that provide 15 megawatts of energy storage throughout the state and is installing 30 more megawatts.
A megawatt of energy can generally power 750 homes at once.
Ice Energy employs about 40, primarily in Costa Mesa. It’s weighing expansions in incentive-friendlier states, such as Hawaii, Massachusetts and possibly Arizona, but California still presents the best opportunities.
“It’s the largest air conditioning market in the world right here,” Hopkins said. “If we do our job right, we are expecting a real hockey stick in our revenue.”
