When it became commercially available two decades ago, outdoor solar lighting was prohibitively expensive, used mainly for locations far from existing electrical grids. In the past, deep-pocketed buyers typically had very specific needs, such as illuminating ammunition depots at which electrical sparks could cause explosions or lighting remote military bases.
Recently, solar lighting material costs have decreased and efficiency has increased. Michael Sonnenfeldt, 55, president and CEO of SOL, a Palm City, Fla., manufacturer that specializes in building systems for such commercial applications as parking lots and pathways, says the 45-employee company is well- positioned to benefit. Lighting and consumer products behemoth Philips (PHG) estimates the global market for solar lighting at $1 billion within a decade.
Sonnenfeldt, who founded peer-to-peer investment group Tiger 21, invested $5 million in SOL since its 1990 inception. He took over daily operations four years ago and used the $20 million company’s profits to install systems in disaster zones. Sonnenfeldt spoke recently with Bloomberg.com contributor Karen E. Klein for this as-told-to Entrepreneur’s Journal:
For the first time ever, solar outdoor lighting has achieved grid parity and we can compete with the best lighting products in the world. Because of this, we expect our business to grow a hundredfold over the next 10 years. We have 50,000 systems in 60 countries around the world and we recently opened an office in Geneva.
Right now, we capture about 35 percent of the market share in North America, where about one half of 1 percent of outdoor lighting is solar lighting. It’s been estimated that within the next decade, 20 percent to 30 percent of outdoor lighting will be solar-powered.
I got involved in SOL about six months after it was founded in 1990. The founder, Alan Hurst, now heads our international sales. He needed an investor to provide some capital, so I put up $50,000 and bought 5 percent of the company. I was fascinated by the magic of digging a hole in the ground, sticking a pole in the hole, and watching the light go on.
The technology then was in its infancy, but only by comparison to where it is today. Over the past 20 years, we’ve become the largest supplier of solar-powered outdoor lighting to the U.S. military. We have always been a high-quality manufacturer but along the way we’ve found ways to improve.
When we started the company, the light source was generally a fluorescent light like a neon tube. The best lights you could get then would produce 20-to-30 lumens per watt, which is the general measure of light output. Back then, solar panels cost $5 per watt. Today, solar panels run $1.50 per watt.
Over the last four years, we’ve converted to digital LED lights. Those are so efficient that today, state-of-the-art LEDs produce 100-to-120 lumens per watt. So unlike other forms of energy, which keep getting more expensive, we can produce three-to-four times more light now at 30 percent of the cost.
Our new family of lights are the most sophisticated parking-lot lights in the world. And they are so inexpensive that when you’re building a new parking lot anywhere in the U.S. -- whether it’s for a local deli, or a bank, or an office building where the average light is 25 feet high or less -- it’s the same cost or cheaper to put in solar. What you save in not trenching (putting in underground cables and installing wiring) is more than the extra cost of the solar. And of course, the energy is free.
Why does somebody spend 20 years supporting a company? Over the years, I have underwritten losses, provided capital for growth, and invested in R&D at SOL. I did it because of a fundamental belief that the day would come where the cost of electricity and the environmental issues would make solar more and more applicable. I couldn’t have predicted 20 years ago that we’d sit here today, worried about global warming and terrorism.
In 1980, I converted an old, industrial warehouse directly across the Hudson River from Wall Street into the Harborside Financial Center in Jersey City, N.J. It was the largest commercial renovation in the country. The building was owned by my wife’s family and it had been the northeast distribution center of the Pennsylvania Railroad. In 1929, it was the largest building in the United States.
I was lucky enough to find a partner and buy it. I had the vision to convert it into a back office and computer center for Wall Street. I sold it in 1987 for $123 million to the U.S. West pension fund.
At that time I was 31. I had done my undergraduate and graduate work at MIT. I went to the Sloan Business School and afterward took a job for a year at Goldman Sachs, in the mergers-and-real- estate department. I left when this project came along.
After I sold Harborside, I created a foundation called Foundation Emmes to do peacekeeping work in places like Cambodia, Syria, Cypress, and Eritrea. Emmes is a Hebrew word that means “truth.” [The foundation is active today as the Humpty Dumpty Institute.] I had been on the board of Business Executives for National Security. In the 1990s, I led 10 inspection teams to 28 war zones around the world, negotiating ends to conflicts and inspecting the mechanisms of international peacekeeping forces.
In 1991, at the nadir of the savings and loan crisis, I began Emmes & Company to buy distressed real estate around the country. We were buying packages of 100 buildings at a time. By the time I sold that business to my partners in 1998, it had about $1 billion in real estate holdings. We owned 200 commercial buildings -- apartments, industrial buildings, and retail -- in six or seven states.
About four years ago, I was building a private-equity business and my partner and I had a shop filled with young associates. One of them was handling SOL and spending time on it. My partner said to me: It’s time to fix it, kill it, or sell it. I had not been involved personally with the company because I was growing other businesses and involved in nonprofit organizations. I was a serial entrepreneur but I had never used any of my personal skills in trying to build SOL. I was supporting what I used to call my fifth child.
At that time, I realized in my heart and gut that what I really wanted to do was fix it. I was diagnosed with cancer around that time and while I was undergoing treatment, I thought about what was important in the world. I’d been doing philanthropic stuff with my resources, but my business was never connected to my philanthropy.
I decided that SOL was an opportunity to do both: to have a driven workforce, but take some or all of our profits and make lights available where they could save lives. Since that time we have sent solar lights into disaster areas -- Hurricane Katrina, the earthquake in Peru, and we did a massive job in Haiti.
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