17.02.2020 | Case | Nordic SME | Industry | China
Cooperation between NEFCO and the investment company Loudspring helps Enersize improve factory processes in China.
If you have a factory, you are probably using compressed air. Compressed air is used in about 90 per cent of all factories in some form and practically all manufactured products have compressed air in their production process. It is an energy intensive process.
“Compressed air is very inefficient, but extremely useful,” explains Anders Sjögren, CEO of Enersize. Compressed air is used to store and transmit energy in factories. Common examples include powering pneumatic equipment, pressure cleaning and cooling. Leaks can dramatically decrease the effectiveness of compressed air systems.
NEFCO and Loudspring team up to support a great idea
The Finnish-Swedish-Chinese company Enersize is a specialist in compressed air management. They help factories monitor and analyse their compressed air systems, as well as find and eliminate leaks. By making their compressed air systems more efficient factories can drastically reduce electricity usage, lowering both their expenses and CO2 emissions.
“Industrial compressed air is used everywhere and there is enormous potential in improving efficiency, but it doesn’t get the attention of mainstream cleantech like solar panels,” says Lassi Noponen, co-founder of the investment group Loudspring. “This is one of the reasons why we are so excited about Enersize. With a relatively small amount of financing the solution can be scaled up and have a big global climate impact.”
“Industrial compressed air is used everywhere and there is enormous potential in improving efficiency, but it doesn’t get the attention of mainstream cleantech like solar panels,” says Lassi Noponen, co-founder of the investment group Loudspring.
Loudspring, listed on the First North Helsinki and Stockholm stock markets, invests in Nordic companies in the areas of energy and resource efficiency. They help these companies expand, taking their green solutions to international markets. Enersize is listed on First North Stockholm but Loudspring owns almost one-fifth of the company.
In November 2018 Loudspring signed a convertible loan agreement with NEFCO for a maximum amount of EUR 2.5 million. Loudspring can access this facility to boost the growth of pre-approved Loudspring portfolio companies. The NEFCO funding allows Loudspring to invest into its green businesses to boost their international growth.
NEFCO and Loudspring share similar goals. Both organisations aim to help Nordic climate solutions succeed globally.
“It’s great for us to work with a prestigious international financial institution like NEFCO,” Noponen says. “We are a relatively small group, so working with NEFCO gives us international recognition. It’s a good deal for all involved parties.”
Saving money and the environment
In early 2019 Loudspring accessed the NEFCO convertible loan facility to finance Enersize’s growth in China.
“This loan was really essential for us to breakthrough in the Chinese market,” says Sjögren. “The NEFCO funding helped us to get a strategically important partnership and hire an employee in Shanghai. It provided the capital and flexibility we needed when previously so much money was tied up in installed equipment.”
“This loan was really essential for us to breakthrough in the Chinese market,” says Anders Sjögren, CEO of Enersize. “The NEFCO funding provided the capital and flexibility we needed when previously so much money was tied up in installed equipment.”
A great success story is how Enersize helped the Hankook factory in Jiaxing, China, repairing over 1,500 leaks and saving Hankook over EUR 660,000 and 6,000 tonnes of CO2 annually. The efficiency improvement was so drastic that the factory saved enough to pay for their investment in only two months.
“Producing electricity is CO2-intensive, particularly in China,” Sjögren explains. “In Sweden, generating one kWh results in 14 grams of carbon dioxide. However, in China you might release 50 to 100 times as much CO2 for one kWh. From a sustainability point of view, we have a great business case in Sweden, but an amazing one in China.”
Having a good business case is something Loudspring also stresses. Their investments intentionally aim to achieve both financial profits and a positive environmental impact.
“Our team has been doing this type of investing and business development for a long time, so we’re pioneers in helping early stage greentech companies,” Noponen says. “Now the climate challenge is obvious and mainstream, so we have been right to focus on it.”
“I am very optimistic of the impact we can have in China,” says Sjögren. “Compressed air is such a huge part of total electricity consumption, and we can potentially save 30-50 per cent with a payback time of less than six months. You can’t find a better way to save an enormous amount of money and CO2 emissions than improving compressed air systems.”
Photos: Enersize and text written by: David J. Cord