Success could mean up to 200 local production jobs
Story and photos by Jeff Keeling
Their blue-clad components in various states of exposure, Michael Garrabrant’s “babies” receive some last-minute testing and adjustment in a Johnson City shop. A handful of engineers and technicians tweak and monitor the four gas heat pumps connected to 80-gallon water heaters before their big debut in Pacific Northwest test sites.
“We’ve been building these for three months. We’re up against our ship date and they’re like little babies to us to some extent,” Garrabrant says of the heat pumps that utilize an absorption technology unlike anything else in use nationwide.
If the “babies” are a hit and the stars align in other ways, Garrabrant is hopeful his Stone Mountain Technologies Inc. (SMTI) can break into both water and space heating markets such that the metro area could see the creation of more than 200 production jobs within several years. Original Equipment Manufacturers (OEMs) of residential and commercial gas water heaters, and home heating units, would be the customers for the high-efficiency, low-emission heat pumps the mechanical engineer has been developing for six years.
“As soon as these units go out the door a lot of my focus is going to be back onto starting the private capital raising process in earnest, because we’ve got to have that in place before the end of the year (2015),” Garrabrant says.
A mechanical engineer and former A.O. Smith employee, Garrabrant believes 2015 can bring confirmation that major markets exist for the heat pumps, which deliver energy costs half that of standard gas water heaters and one-fourth that of standard electric units. Similar units are under development for home space heating and should be particularly attractive in colder climates.
With the help of more than $4 million in grant money, Garrabrant has been developing the units for six years, based on an absorption technology he worked with in Ohio in the 1990s. Used as a component in water heaters, SMTI’s “sorption heat pumps” yield low operating costs, so the payback eventually comes for consumers, but challenges include a tough market to penetrate with new technologies, and lower upfront cost for the less efficient models against which the technology must compete.
“Once it gets traction there is a very viable business here,” Garrabrant says of the water heater market. “But that’s where we’re looking for help from the other, larger products that will probably gain traction a lot quicker and have higher margins than the water heaters, to help launch the company.”
It’s the real deal, and the calm, quiet Garrabrant has brought in $4.5 million since 2009, mostly in public funding. The Gas Technology Institute (GTI), the Army, the Department of Energy, Oak Ridge National Labs and some OEM equipment manufacturers have helped fund the R and D so far.
From not so cool to pretty hot
Garrabrant was a graduate student at Ohio State University in the 1990s when he first had the chance to work on sorption technology. Back then, the GTI, then called the Gas Research Institute, was studying its potential uses in cooling on behalf of big utilities. Market factors contributed to an early end to the research. Garrabrant never lost interest, and when 2008 rolled around, gas was cheap, and efficiency and emissions were at the forefront of people’s minds.
“I always in the back of my mind thought I’d try to make a go of it with the right market,” Garrabrant says.
“It’s the ultimate engineering challenge. It’s got everything involved in the technology, it’s got a little bit of black art. Once it gets in your blood you always want to keep working on it.”
Garrabrant, who says entrepreneurism is in his blood, quit his job and spent a year at home creating grant proposals. A 2009 Army grant for development of a diesel engine waste heat driven heat pump helped him set up a 3,200-square-foot workshop in Erwin and hire CAD designer David Firestine. The success has built from there, and the company moved into its 11,000-square-foot Johnson City building in October.
The sorption technology uses a typical heat pump evaporator coil to draw heat from the ambient air, helping raise water temperature in the closed loop system. Added to that basic method are several intricate heat recapturing methods within the units designed to max out the efficiency. It’s all done using a naturally occurring refrigerant, negating any pollution concerns.
In the shop’s “breadbox room,” a home heat pump prototype sits on the ground. An array of testing equipment on the wall behind it allows SMTI engineers to wring the highest level of efficiency out of each project. Those engineers include Roger Stout, a former Ohio colleague who Garrabrant convinced to join the company in 2010, after the first DOE grant came through. The Ohio guys work closely with Paul Glanville, an engineer with GTI, who is their main contact as the institute partners on most of the grants.
“They went out and gave the gas utilities the recruiting talk about our products, and they’ve also helped arrange our cost-sharing with OEMs,” Garrabrant says.
If any of those OEMs are going to take a flyer on a large contract, the state of California may come in handy for SMTI. About 80 percent of homes there have gas water heaters. Environmental regulations are strict, including the most stringent NOx emissions law in the country (“we easily meet those and a lot of competitors struggle to”). Green emphasis extends to building codes as well, making bonus points for use of technologies like SMTI’s likely. And finally, because California is in a warm climate zone, the secondary benefit of small air cooling around the units is helpful. A fifth test unit will ship out to California in a month or two.
While the water heater units are slightly more cost effective in warmer climates because of the off-cooling, Garrabrant says the home heat pumps are ideal for colder climates, and the colder the better. Electric heat pumps are ineffective at temperatures much below 30, and in very cold areas, less efficient standard gas furnaces carry high energy costs.
“The colder the winters, the quicker the payback,” Garrabrant says.
While he’s convinced his venture could have worked with private capital, Garrabrant says the grant money has brought the process further along without the need to pitch an idea in its earlier stages.
“We’ve got hardware they can come touch and see, we’ve got third-party data on the performance of units in the field. We’ve managed to get very far along in the process, so that should give us a strong case when we do go out and pitch. We’ve taken as much risk as we possibly can out of it. The last brick to fall as far as the risk goes would be an OEM signing up for a long-term deal.”
That would allow SMTI to create jobs as it began producing the heat pump units for OEMs, who would simply install them on what would presumably be a new line of water and space heating products.
“Our plan is to manufacture the sealed systems, the working fundamental part of these heat pumps, here in the Tri-Cities area. We’ll need 40 to 50,000 square feet and eventually be up over a couple hundred employees.”
Garrabrant anticipates that angel investors will be the primary source of early capital, but he’s not picky.
“All options are on the table all the time. There are certainly preferences of how I’d like to see it go, but my main goal is to see it go.”