- Kontrol Energy is entering the cannabis vertical sector, as legalization of recreational cannabis in Canada opens up C$6 billion market
- Company’s smart energy solutions, utilizing IoT, cloud and SaaS technologies, could significantly cut costs
- As competition intensifies, production efficiency is set to become a differentiating success factor
The legalization of recreational cannabis on October 17, 2018, in Canada has opened a market, estimated at just under C$6 billion, to competitive forces. Now, market pressure will, undoubtedly, drive the search for more efficient production methods. One big-ticket item set to garner attention is the cost of energy, which makes up around 30 percent of direct grow expenses. This is all very well and good for Kontrol Energy Corp. (CSE: KNR) (FSE: 1K8). The Ontario-based tech company specializes in the integration of smart energy technologies and solutions for commercial and industrial property owners and operators aimed at helping them benefit from energy cost savings and minimize greenhouse gas emissions. Voted the seventh-fastest growing startup in 2018, Kontrol aims to be a leader in the energy efficiency sector through the implementation of IoT, cloud and SaaS technologies.
With the passage of its Cannabis Act in June 2018, Canada became the first G7 country and the second nation state (Uruguay was the first) to legalize the use of marijuana for general adult use. The large black market is now about to change color as it opens up to licensed producers and retailers. In 2017, the latest year for which complete data is available, 4.9 million Canadians used cannabis, according to Statistics Canada (http://nnw.fm/Op2td). They spent C$5.7 billion ($4.17 billion) to do so, of which 90 percent was through the black market – a nice chunk of change, if you can get it. The quest to do exactly that is intensifying. Back in August 2018, Marijuana Business Daily reported the number of licensed producers (LPs) at 115, with another 588 applications awaiting process by Health Canada (http://nnw.fm/Yj0wf). As competition heats up, the focus on costs will, indisputably, increase.
Energy costs are a big part of the equation. Using traditional growing methods, it takes about 2,000 kilowatt-hours (kWh) of electricity to produce a pound of cannabis product. That’s roughly the same energy consumption as an average household over a period of two to three months. To produce 1,000 pounds per annum would cost C$188,000 at the current mid-peak price of 9.4¢ per kWh – much, much more (C$264,000) at the on-peak price of 13.2¢ per kWh (http://nnw.fm/KQ9Hf).
However, Kontrol Energy is offering ways to cut those costs. In July 2018, the company announced that it was entering the North American cannabis market as a supplier of integrated energy efficiency solutions and technologies (http://nnw.fm/zMM9i). Through its operating subsidiaries and its most recent energy technology acquisition, Kontrol is focused on assisting cannabis growers reduce their costs of energy.
“As the North American cannabis industry begins to enter a consolidation phase there is a growing demand for energy solutions which will assist in the drive to the lowest cost of production,” Paul Ghezzi, CEO of Kontrol Energy, stated in a news release. “Further as cannabis moves to become a global commodity the ability to source lower costs of energy with real-time analytics and management is increasingly important.”
Kontrol, based in Mississauga, Ontario, currently operates through four divisions. Kontrol Technologies Inc. runs the turn-key energy retrofit business; Kontrol Energy Group manages the energy management system (EMS) unit; ORTECH Consulting Inc. oversees the greenhouse gas verification and testing business; and the engineering analysis, energy audits, electrical and mechanical design service business is handled by Efficiency Engineering Inc.
The company’s management has more than 40 years of combined clean energy experience. The team has been involved in over $500 million in solar energy projects connected to the Ontario electricity grid, over $850 million in renewable projects globally and more than 400 energy efficiency retrofits in Ontario. Now, it’s bringing its expertise to the billion dollar cannabis industry, providing smart solutions to cut costs and emissions.
For more information, visit the company’s website at www.KontrolEnergy.com
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