Thursday, October 13, 2011

GreenMan Tech propels dual-fuel vehicles forward

By James M. Connolly

A thumbs-up ruling by the U.S. Environmental Protection Agency and some overseas customer deals have helped to get GreenMan Technologies Inc. of Lynnfield rolling with its offering of conversion kits that allow diesel engines to burn natural gas as a second fuel.

The company (OTCQB: GMTI), which operated as a used tire recycler before selling off that business, is offering the $20,000 conversion kits through its subsidiary American Power Group Inc.

The EPA has approved the first in what is expected to be a series of GreenMan submissions for converting various types of diesel engines to dual fuel engines, in this case the Caterpillar C-15 family of engines. The submissions are required for vehicle conversions, although GreenMan has already sold conversion kits for applications such as electrical generators.

According to GreenMan Technologies, the addition of gas — liquid natural gas, compressed natural gas, pipeline gas, well-head gas or bio-methane gas — as a second fuel can help truck or generator owners displace 40 percent to 60 percent of the normal diesel fuel consumption. The gas, which is fed into the engine’s turbocharger along with the existing diesel fuel, is less expensive and burns cleaner and more efficiently than diesel, according to GreenMan CFO Chuck Coppa.

In addition to the first approval by the EPA, which allows GreenMan to start selling in the U.S. motor vehicle market, GreenMan reported that it has signed a deal to supply conversion kits to a fleet of 85 vehicles run by a Seven-Up bottler in Africa and another deal to distribute conversion kits through Westfarmers LNG in Australia.

“We have software and an electronic control unit that is constantly monitoring the amount of gas going into the engine. When we acquired American Power Group, the control unit was just analog. We have spent $1.5 million to go from analog to digital, and the controller can fit in the palm of your hand,” said Coppa.

In addition to the control unit and gas tank, the conversion kit includes a regulator and a valve to control the flow of gas.

Coppa said an all-gas engine conversion provided by competitors costs more than $60,000, but that all-gas means that drivers have to be aware of gas refilling locations. He said that a key selling point for the dual fuel approach is that if a vehicle runs out of gas it can switch back to all-diesel.

Coppa said that businesses that have converted diesel generators to dual fuel have saved $300,000 to $500,000 per year, and that a new market opportunity is to retrofit the generators that oil companies use at their wellheads, where gas can be sourced at the wellhead.

While the company is focused on retrofits of existing engines today, the longer term strategy is to sell into the new vehicle market through original equipment manufacturers.