You have heard of the iPod and the iPad. Now get ready for the 'imop'.
This is not some 21st-century floor-cleaning device, but a smart little electrical component that could cut your electricity bill by up to 25% and transform the fortunes of one penny share company.
The company behind the imop is Advanced Power Components (LSE: APC), a distributor of specialist electronic components.
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The company has been hit hard over the last three years by two ill-timed acquisitions and the recessionary downturn. But, as chief executive Mark Robinson told me when I spoke to him last week, APC is now on the recovery trail.
Robinson believes that he can grow its tiny £2.2m stock market value at least back to the £8m that it enjoyed back in 2007. BUT, if the imop device takes off, then APC could do a whole lot better.
APC has a 19% stake in minimize Ltd, the company formed to exploit the imop. The device is already used in the United States and has been adapted by APC for the UK and other overseas markets.
About the size of a briefcase, the imop can cut the electricity consumption of heaters, motors, some fluorescent lighting, or any other 'inductive load' in other words, any piece of equipment that relies on a magnetic field for operation...
The unique device that could slash the nation's energy usage
Key to the imop's economic viability is a unique 'sizing kit' that instantly selects the right size of imop required to make the inductive load work at maximum efficiency. This has taken five years of development and is the reason why the imop has no competitors.
The basic science is this. Electrical power is made up of two components: active power and reactive power. Active power is the working energy source which enables the electrical equipment to perform its function.
Reactive power does not perform any 'useful' work. Instead its only function is to develop the electromagnetic fields in order to grind the induction windings of the motor. When attached to the motor, the imop reclaims and stores this reactive power before returning it to drive the motor.
And here's the kicker. Because the imop recycles this reactive power, the electrical device does not need to draw any electricity from the national grid.
The result is energy savings which, according to minimize Ltd, can cut electricity bills for industrial users by up to 25%, for offices and shops by up to 17% and for homes by up to 10%.
Backing this up is a case study from the packaging company Nampak, which tested the imop on its 16-hours-a-day, five-days-a-week printing line. It found that it could save 44,928 KWh per annum of electricity equivalent to a 16% reduction in the cost of running the equipment. This is sufficient to give a return on the initial investment in just 11 months.
Why this pioneering penny share is one to watch
With this scale of financial return and the strong focus of all consumers to use less power and reduce carbon emissions, the imop sounds like a winner. It should certainly have government support, which is offering interest-free loans via the Carbon Trust. And if widely adopted it could significantly reduce the nation's energy usage.
According to the European Union, 65% of total industry power consumption is attributable to motor-driven systems such as pumps, compressors and ventilation. These are responsible for 10-20% of the loss of electricity that occurs in the process of converting electrical energy into mechanical energy.
It is also a known fact that an extra 10C in a motor's temperature will reduce its life by half. By ensuring that the running temperature of a motor is reduced, the imop increases the lifespan of the motor.
Despite all of this, the imop has been slow to take off, and APC has not been shouting about it in the City. But demonstrations and trials have been satisfactorily conducted. I also understand that a big London property landlord is about to install the imop in one of its buildings.
So this is one to keep an eye on, especially in view of the returns that investors have made from comparable companies.
Cinpart (LSE: CINP) , which sells the VoltageMaster energy saving device, saw its shares soar from 2.1p to 16p in 2009. And Sabien Technology (LSE: SNT), which sells a device that improves the efficiency of boilers, has done even better. Its shares were at 1.75p in February 2009 today they are at 60p!
Clearly innovations such as these save money for their customers but they can also make quick money for their investors.
This article was first published in the twice-weekly free investment email The Penny Sleuth on 20 May 2010.
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