My friend Mac Whale at Sprott Securities issued an interesting research brief this morning on what the GE announcement yesterday means for Vancouver-based Railpower Technologies Corp.

Railpower makes hybrid-electric locomotives for the railway yard market. It scored a huge coup in March when Canadian Pacific Railways announced its planned purchase of 35 Railpower “Green Goat” locomotives over the next four years. CPR said at the time the 35 cars would save the company $4 million annually in fuel, with lower emissions an obvious benefit. Railpower has more than 80 Green Goats on the order books and momentum continues to build.

Part of GE’s “ecomagination” announcement yesterday is that it would significantly ramp up sales and R&D for cleantech products (see post below), including a new hybrid locomotive for the mainline market. Mainline locomotives are long-haul trains, whereas yard locomotives are the workhorses that move and switch around train cars in a switching yard.

Whale said GE’s focus on the mainline market is understandable given it would likely be going after orders of 100 cars or more, versus the relatively lower-order business of selling yard cars. In this sense, GE’s announcement should not be viewed as a threat to Railpower, which has built itself a comfortable niche.

On a positive note, Whale said GE’s announcement validates Railpower’s business plan and demonstrates that Railpower has a technological head start on GE. He said if Railpower chose to enter the mainline market, as it has indicated in the past, it would have a 2-year head start on its massive rival. In the meantime, GE’s stated interest in hybrid locomotives will bring more public (and investor) exposure to the market, and hence Railpower. The company already got a high-profile mention today in a New York Times story that details the GE announcement.

“Given Railpower’s patent portfolio on hardware and software technology related to microprocessor power control, battery management, traction control and common-bus power architectures, we believe GE could face significant difficulty in working around Railpower’s accomplishments while making a viable competing product,” wrote Whale.

He said it would be reasonable for GE to pursue a license of Railpower’s technology for use in mainline locomotives, “or acquire the company outright.”

I always like to point out that Railpower isn’t limiting its vision to yard cars and mainline industrial locomotives. It has also been looking at developing Green Goats for the transit and commuter market, where authorities have expressed a strong interest. The batteries would provide better acceleration off the blocks, and less pollution in downtown cores. The trains could even be rigged with GPS gear and programmed to operate strictly on zero-emission batteries while stopping in or passing by dense, highly populated areas. The diesel companion could then be switched back on when the GPS gear detects that the train has left an urban zone. Who knows? Government regulation may require this some day. Railpower, in that regard, is ahead of the game.

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