Commercial feasibility study results.
To better define our strategy we have conducted a deep market analysis, segmented the potential customers and learned on countries’ growth potential and regulation. The most promising market segment, as we assumed before, are hotels, mainly in Spain. That’s because they are working 24/7, providing relatively high energy consumption per square meter and are arranged in large chains, giving easier access to chain members once the system was proved in one of them. Spain was chosen as the most important geographical area due its southern, relatively warm climate, relatively high electricity tariff, the largest number of hotel rooms in Europe and supporting government policy. Farther areas to be target are Italy and France, with similar characteristic.
As for now our pricing model is saving sharing, but once we built confidence in our system and in our brand we will move to subscription model with an up-front payment followed by monthly payments, providing lower revenues but securing long-term stable income. The distribution In Israel will be B2B, contacting directly potential customers. Until now we signed a contract with Isrotel, the largest hotel chain in Israel, and started dialog with two other. In Europe we will engage with local partners and distributors having currently discussions in France and Italy and started to search for the right partners in Spain.
Technical feasibility study results. The main conclusion here, based on our experience and talks with the hotel personnel, is that we in general the personnel would like to have more control over the system causing probably less saving but giving more confidence. Because hotels host quite often multi participant events, requiring quick cooling of large halls, there is a need to allow scheduling of such events causing water cooling before the event starts. Hotel chains require also grouping of buildings into clusters belonging to the same chain. The partnership with HVAC industries, after meetings with two of them, seems to be challenging as it may limit us to exclusively work with them. Hence, we concluded that at this stage we should look for other strategic partners. Regarding interface definition to the leading energy management solutions we found that the direction of the market are open communication standards such as BACnet to enable chillers control by various providers and Open Platform Communication (OPC) protocols for communication between various SCADA (Supervisory Control and Data Acquisition) systems such as various BMSs or EMSs. ELENCon had implemented some of the protocols to communicate with them. We believe that partnerships are key in our way forward to scale up. We started discussions with green building and energy efficiency advisors e.g. Alfa Sustainable Projects in Israel, Enerlis in France and ELLEMME in Italy to create a partnership.
Exploitation and Dissemination- Our feasibility study leads us to a conclusion that we are facing a huge, over € 100 bn, fast growing market and shall continue our efforts with more POCs installation and more marketing efforts. We are in advanced discussions with several earlier mentioned entities in Israel, Italy and France that are advancing our route to build a strong brand in these countries.
Farther, ELENCon aligned with its strategy, will initially focus on the European market and participate in panels to reach as wide audience as possible. We will invest in creating online and available content and publish it through most relevant channels such as industry professional online magazines and LinkedIn. By doing that we will place our team as industry’s respected professionals to strength ELENCon’s value proposition and perception among customers.
