(The following article by Peter Kennedy was posted on the Globe and Mail website on March 15.)
VANCOUVER — RailPower Technologies Corp., a maker of environmentally friendly hybrid locomotives called Green Goats, has won a major endorsement from one of Canada’s largest rail carriers.
Canadian Pacific Railway Ltd. has agreed to acquire 35 of RailPower’s yard switching locomotives over the next four years, in a deal analysts believe is worth about $30-million. CPR is believed to be paying about $940,000 each for the locomotives.
“This gives us a lot of credibility,” said Simon Clarke, executive vice-present at Railpower, a company that is quickly leveraging its connections in the railway sector to meet global demand for energy efficient locomotives.
Yard engines are used to assemble and disassemble trains in switching yards. Railpower’s new locomotives are converted from conventional ones, replacing the large diesel engines and older controls with smaller, diesel engines, a large battery pack and a computerized control module.
The term Green Goat is used because low horsepower, yard locomotives are known in the trade as “goats.”
RailPower, which is headed by former Bombardier Inc. executive Jim Maier, sees big potential in a North American market with 10,000 diesel electric yard engines at work, most of which are decades old. Having recently raised $42-million by issuing eight million shares to investors, the company is also eyeing new markets in Australia and Europe.
Under the agreement, CPR will initially convert seven locomotives in Calgary.
If the locomotives meet stringent cold weather performance tests in Calgary, CPR said it will convert another 28 units in the next three years.
Analysts say the agreement is significant for RailPower because the deal involves a major North American railway company.
“Since CPR tends to be tough on performance and price, a lot of other companies will follow them,” said MacMurray Whale, a technology analyst at Sprott Securities Ltd. in Toronto.
RailPower shares rose 65 cents or 13 per cent to close at $5.65 on the Toronto Stock Exchange yesterday.
Mr. Whale attributed the rise to expectations that the company will be able to boost its unit sales to more than 100 units in 2006. He estimates that the existing global market for the engines is about 3,000 units annually, including about 1,000 in North America.
The company has already delivered demonstration locomotives to most of the large railway operators in the United States, including one that will be shown to the media today in Los Angeles by Union Pacific Corp.
Equipped with a manufacturing base in Boise, Idaho, RailPower is also developing its technology for the U.S. military for use at ocean terminals for moving munitions.
In an interview, CPR senior vice-president Neal Foot said the company is adopting the technology as part of a corporate policy to be environmentally friendly. However, analysts say its bigger goal is fuel efficiency.
Green Goat in the yard
Recognizing that North America’s nearly 10,000 yard or switching locomotives (known as ‘goats’) are nearing the end of their service lives, RailPower Technologies Corp. of North Vancouver has developed a high-tech, fuel-efficient, green solution.
The problem
Inefficient stop-and-go use of aging conventional diesel-electric yard switching locomotives. They require high-maintenance, are fuel-thirsty and cause significant air, ground and noise pollution.
The solution
The Green Goat, a battery-dominant hybrid remanufactured from conventional diesel-electric locomotives by replacing the large diesel engine, generator, controls and cab.
Advantages
Fuel consumption savings of 40% to 60%.
Greenhouse gas emission and particulate reductions of 80% to 90%.
Low maintenance.
Quieter (important in urban areas).
Uses less existing fuel infrastructure.
Less ground oil pollution.
Estimated savings
According to RailPower, replacing a fleet of 150 conventional goats would reduce fuel costs by $23,000 a day or more than $8.5-million a year.
Cost
About $700,000 (U.S.) for a completely reconditioned GP-9 locomotive.
In the pipeline
A short-line, or transit, switching locomotive (100-kilometre range).
A microturbine natural gas locomotive.