The market
The global market for insulation materials reached just under $37 billion in 2009. Demand is projected to grow by 4.6% annually through 2014. The Chinese market is growing at the fastest rate of all countries, with sales increasing by 8.2% annually, reaching 24 billion yuan, or $3.6 billion, in 2010. The US market continues to expand, with healthy revenue growth of 7.4%, reaching $7.1 billion in the same year. The European market, which had already invested heavily in insulation through government tax incentive programs over the past few decades, is relatively flat. The two main insulation products on the market, plastic foams and fiberglass, account for 75% of global sales. However, the fastest-growing new product is cellulose-based insulation. Many startups, such as Termoträ in Sweden, began over twenty years ago to recycle cellulose waste from the pulp and paper industry, transforming short fibers that don't meet the minimum dimensions for papermaking into a natural, dry, and easy-to-install insulation. While production costs and the cost of the insulation materials remain key factors influencing its competitive position in the market, the final price is determined by the installation cost. The industry is investing in labor reduction and increasingly opting for prefabricated insulation. The insulation value of the materials varies considerably. Thermal resistance is measured as the R-value, expressed as the material's thickness divided by its thermal conductivity. The most effective insulation on the market is Barrier Ultra R, produced by Glacier Bay, which, at R-50, has ten times the insulation value of polyurethane foam. It is made of aerogel, a gel in which the liquid has been replaced by a gas. In fact, the performance is so well documented and convincing that the manufacturers offer a full 25-year warranty.
Innovation
The search for new, healthy, and sustainable insulation materials has recently brought many innovations to the market. Since fiberglass allows mold to grow and spray foams can release chemical gases for years, the search for new materials has even brought recycled denim insulation to market: cotton slivers from old jeans perform as well as fiberglass. Fire-retardant products used in insulation are a key element (see Case 16) in steering the industry toward health and sustainability. However, the main challenge facing insulation materials of all types is their bulk. The material requires large volumes of space, which limits its applicability. Tatsujiro Ishiko, president of Nissin Sangyo Corporation, observed the development of highly efficient silica-based (ceramic) insulation materials by the Japan Aerospace Exploration Agency (JAXA), the Japanese equivalent of NASA. Scientists mix different shapes of micron-sized silica beads (80%) with traditional paint (20%), make them float, and create a groundbreaking innovation at competitive material and labor costs. Painting both the interior and exterior with this "bead paint" improves insulation. The exterior reflects solar heat, and the interior prevents the loss of cool air. In winter, the opposite occurs: these silica beads, spread as paint, prevent cold from penetrating the interior while preventing heat loss to the outside. Ishiko-san obtained a license from JAXA to commercialize the technology beyond the aerospace industry and created the Gaina brand. Ishiko-san noted that the cool air generated by air conditioning quickly creates a cold blanket over the entire painted surface on the inside, improving the perceived temperature, which is calculated as the temperature on the wall minus half the air temperature. We often overlook the fact that energy is primarily consumed due to heat exchange with the walls. If the perceived temperature could decrease by one degree in summer or increase by one degree in winter, according to scientific research by the Tokyo Electric Power Corporation (TEPCO), a one-degree temperature difference equates to a 10% energy saving. This innovation, based on simple physics, transforms paint into an easy-to-apply insulating material, making it a multifunctional product. This is one of the fundamental principles of the blue economy.
The first cash flow
The first successful application is in the housing and construction industry. This double-layered system saves 30% on energy costs in summer and 20% in winter, eliminating the need for additional insulation. It all comes down to choosing the right type of paint. While the paint, originally manufactured in Japan, was more expensive than the market standard, a new production facility soon to be operational will lower production costs and offer a unique selling proposition to homeowners who essentially get their insulation done while they paint their house.
The opportunity
One of the breakthroughs of this innovation is that a thin layer of paint applied by brush or spray gun competes with centimeters of insulating material. This opens up numerous energy-saving opportunities in sectors where space has been a limiting factor. Major shipping companies have applied the innovative paint to their decks. Because the beads are made of silica, it is resistant to ultraviolet (UV) rays, which increases the effectiveness of both the paint and the insulation. The energy efficiency of cars and buses is improved thanks to the application of GAINA©, the new branded insulating paint that reduces heat buildup in summer. Perhaps the most significant savings are achieved in refrigerated containers and trucks. The immediate distribution of heating or cooling through the layer of tiny beads also prevents condensation, a major cause of mold growth. Todaiji Temple, one of Japan's prized UNESCO World Heritage sites, uses paint to conserve energy and protect its treasures from mold. While its durability has only been proven for up to ten years, the advent of multifunctional products that save energy, resist UV rays, prevent dew, insulate sound, and absorb odors makes it a competitive product. After all, this water-based coating also serves as paint, providing 52 different colors to brighten our living spaces. This portfolio of multiple benefits creates a new opportunity for entrepreneurs who may have wondered how to take on the market leaders in the paint and insulation industry. Entrepreneurs with access to these markets can now compete with industry leaders in both sectors simultaneously. David can not just take on Goliath, he can take on two Goliaths at once. An opportunity that is not often viable in a market economy for aspiring entrepreneurs.
