A transparent energy conversation
Nils Söderström of Renbloc, and the importance of bringing sustainability and renewables visibility to customers in the power market
Hola muchachos,
Bienvenidos to a new interview with a Decarbonisation leader. Nils Söderström is the CEO of Renbloc, a company bringing radical transparency to the energy market from Stockholm.
If you are either a climate investor or a musicophile, just go to Sweden, they have a burgeoning Climate Tech ecosystem, and true fact: Sweden it’s the third largest exporter of pop music! Abba, Ace of Base & Spotify are definitely not a coincidence 🎸🎵🎼
Abba never gets old. Neither Swedish innovation
Anyway, we are digressing… Have you ever thought about the source of the electricity you are consuming? This seems to be quite trivial in underdeveloped countries where electricity production and distribution is quite monopolized. But more decentralized and wealthier regions, and especially those who are investing heavily in renewables have a wider pool of energy sources and therefore providers. Understanding that with clarity is actually more difficult that what you might think, and to solve that we brought Nils to the pod.
Enjoy our conversation with Nils!
(This interview has been edited for clarity and length purposes).
Explorationists: Could you briefly describe what Renbloc does? and then we'll deep dive a bit into your own experience and how you got into your current role as CEO
Nils: Renbloc was started about three years ago in 2018. Both me and my co-founder have a standing history within the energy industry. We've worked with several different parts of the industry, both large scale and small scale, off grid stuff. We realised a few years ago that there's no actual way for consumers to really tell where their energy is coming from. As you can tell the provenance of a lot of your other products that you buy, like, you will know exactly where the cotton in your shirt comes from, or where your coffee is from, and then meats and all of those other products. There's really nothing out there in the market that tells you how much wind, solar, coal, nuclear, hydro energy that you consume. So we set out to solve that, to build a small prototype, and to find our market niche. We call it energy transparency.
Interesting. I want to go back to your own background first. You have a strong background in terms of business development and innovation, entrepreneurship. Can you describe quickly your route from innovation, creating companies, being really active in the startup scene, and having worked in consulting (Accenture)? Walk us through that journey all the way into the aha! moment when you said, Hey, we need to bring this energy transparency into the power of your clients.
It sounds cheesy and stupid but it starts from a curious mindset. I've always wanted to try stuff and been sort of adventurous in that sense. I've travelled a lot. I've seen a lot of different places. I've tried new things. I started a few companies with a couple of friends, a few of them failed, naturally crashed and burned, as you do in the startup world, but then a few of them actually succeeded; and one of them is still active today. That's pretty cool. It's called Coursio, we did online e-learning back in the days prior to YouTube. We put up free courses targeted to people with special hobbies and interests first, so if you wanted to learn how to play guitar, or maybe you wanted to do a theoretical course in navigation, or whatever, and then help people sell those courses and profit out of that. And we took a small share out of that company. Since then it sort of pivoted and they are now doing bespoke courses for corporates. But anyway, when I finished my studies at university, I wanted to try my hand at big scale companies; so I went to management consulting and I did that for a couple of years. That taught me a lot. I mean, if there's one thing that management consultants are really good at is finding and managing processes. There's a lot of stuff that I learned from that, and which I then could, in hindsight, look back at my startup years, and be like: ‘Oh, I should have done that, at that point. Why didn’t we do that?’ There's a lot of those things where you kind of go back and forth, and learn through hindsight.
I was in management consulting for quite a few years. And as you do you move around between different companies, you really don't know where you want to go, where you will fit, and I just sort of ended up in our resources and energy group. I worked with one of Sweden's biggest energy companies, Vattenfall, for a long, long time setting up their portfolio of projects, management systems, things like that. So, I got a good view and I helped them on how they manage their portfolio, and on how to work with power purchase agreements (PPAs) and energy sales and anything that has to do with energy. As it turns out, I got offered an interim position in a Swedish subsidiary as part of the efforts of a small solar company from Indonesia to get localised within Europe. They sold small off grid solar panel solutions to people who are completely off grid and in remote places like Africa, Malaysia, etc and to provide small solar panel solutions.
This really helped people sort of elongate their days so all of a sudden they could have lights to work with for another two or three hours per day. This is access to electricity. So basically what is really interesting is that I came from this massive big scale energy stuff to go into the opposite side of the spectrum and to do complete offgrid stuff. I found that really interesting, that dichotomy.
Because they are two different worlds right, from energy efficiency all the way to energy access.
Exactly. That sort of got me thinking about how energy works and energy economics. If you want margins in the energy business, at least here in Europe, as you know, and in the Nordics, especially, margins are pretty low, you're not making money off kilowatt hours. So you need to find a way of making money in an energy business. Costs are pretty high as well, at this point, and now we're sort of getting ahead of ourselves. But people today don't know what they're paying for when they're paying their energy bill. They've no idea of how much of that goes to the arm grid cost, and how much is actually for the energy consumed.
Definitely, here in the West we take it for granted. So let me jump in on that one, then. What happened then in 2017/18, when you started having these discussions with your co-founder, what was the striking moment when you said, ‘hey, the world is changing? Look at the rapid move into more renewables that was taking place already in Europe at the time? Or was it more of, ‘Hey, we need to take action here’. Do you think that the consumer was ready to actually request that sort of transparency that you're bringing to the market?
There's really a few different things for consumers, they already want to consume renewables, we know that, we see that. I mean, people want to know that the energy they're getting is from renewable sources. That's also where we see companies investing in renewables companies, big companies like Google, ABB, and Siemens and others like Volvo, Scania, etc that are investing in renewables, because they want to be able to tell their consumers down the line that they've invested in the renewable future. So there's a demand for renewable energy out there.
However, the way we currently measure renewable energy is sort of disconnected from what's actually being consumed. The way we sell renewable energy today is through a system where you sort of account for how much energy you've consumed in the year, and then you make sure that that same amount of energy has been produced by renewable sources somewhere in Europe over the year. It's a good incentive to sort of build out your renewable resources. That is starting to fade now, but it's what it is, it's that it's disconnected from the actual renewables you consume. So there's really no classic supply and demand market, which is out there. If there's five apples left in the store and six people want it, then you want to be one of the first five people in that store. That sort of supply and demand thinking is not present with energy because you have no idea how much supply there is at this very moment. The consumer has no idea how much (energy) there is in the given location, or how much hydro it is, you can only look, the way we measure today is that you look back in hindsight and you say, okay, over this year, there's been that much hydro. And that sort of disconnects, it makes it impossible to accurately measure the supply and demand. That is one thing that we wanted to help people with, because this is a pan-European market that we're dealing with.
That is one thing that we wanted to help people with, because this is a pan-European market that we're dealing with.
The issue is that some countries in Europe are very high in their renewable maturity, as in Sweden. The country consumes on paper almost 100% renewables, which is interesting, because because you know, 50% of our power comes from nuclear, which in this country is not counted as renewable source. Whereas other countries, on paper, do not consume renewable energy at all. You don't have to move far. You just go to Norway, they don't consume any renewables on paper, because they sell all of their paper credits to us as a suite. In that sense, the different sorts of powers that influence this market haven't really come to alignment, if you may. There's not one fully functioning pan-European demand.
In terms of solutions, what technologies and what sort of tech stack are you putting in place? Where are you plugging it in to get that accurate information?
Yeah, so all of this comes down to data, right? I mean, this is always interesting. Every company today seems to be moving its data. And outside, we were completely a software company, we don't have any hardware, we sort of rely on our clients having smart metres that we can tap into, because we still need to read their consumption. We still need to read how much they're consuming. If they have onsite generation, how much they're generating at any given point. So far, we haven't encountered any issues with that assumption. What we do is that we measure the local energy, that is at your place of location and, we look at the energy sources that come from that. So if you're in, let's say your building, or the house that you live in, is supplied by solar panels on your rooftop, and those solar panels are directly supplying your house first, if your house is consuming 100 kilowatts, and your solar panels are producing 50 kilowatts, then you're 50% supplied by your solar panels. So that is what we're looking at, in essence. Once we know that, then we can say ‘well, okay, so the rest of the 50% must come from your grid’, then we look at what's in your immediate surroundings, do you have any wind, any other solar, any other power plants in the immediate surrounding that is supplying you with that power? Using naturally the topography of the grid and all of those things. We calculate in real time, what's your local grid mix. This is sort of what I want to describe as the energy pyramid. The traditional energy pyramid has been that you have one power plant on the very top of the energy pyramid, you have one strong power plant, and that power plant is producing so much energy that it gets pushed all the way out into every single node, into the entire base of that pyramid. That has been the traditional model of energy sourcing in every country. In Sweden, we had a lot of nuclear and hydro plants that did that. Then you sort of relied on the grid to transfer all of that energy out to our very remote nodes in some parts of this country, which then naturally, caused a lot of problems, you had a lot of transmission losses, you had a lot of losses in overproduction, the entire load balancing issue that everybody keeps talking about today comes from this sort of way of looking at it. Well, what we want to do at Renbloc is sort of flip that pyramid upside down, we look at that very single node first, your house again, so this house is supplied 50% with its own on site solar, then what happens? And then you sort of look outwards. And then that sounds, I think we have a much closer to reality, sort of expectation of how energy actually works.
You move little by little towards the upstream part to see all those nodes, what's the feeding in energy in each one?
In theory but in all transparency, we haven't covered nearly any nodes yet. So we have a lot of the nodes, but in order for our model to work completely and fully, we need to cover every single node on the entire planet except for Iceland and Australia that are disconnected, but that’s how the energy system works: Everything is interconnected. It's interesting, people keep talking about the energy system in Sweden, or the energy system in Germany, or the energy system in Poland. The connection, the imports and exports, all of the reliance you have on neighbouring countries and stuff like that. There's a lot of issues that stem from that traditional model of looking at energy and energy distribution. I think that we need to - I'm not saying that our model is the correct one - But we need to be able to at least influence the traditional model with new ways of looking at it.
So that brings me to the question then. So what markets are you serving now? Are you trying to expand? Are you trying to raise money to grow the team? I mean, can you give us a bit of a brief description of where Renbloc is heading in 2021 and beyond?
As a startup, you're always expanding, you're always raising money. Getting more people to join your team and join your cause. So we've found ourselves in a very special situation with COVID as well, because we work in a very traditional business; I mean, energy is not the sexiest, it's not the fastest moving, it's not the most modern or trendiest business there is. So, in that sense, it's an interesting field to be in because there's a lot of room for innovation. In terms of what happened with COVID, is that this is a business traditionally where you meet with 15, 20 people in a room and decide upon a project. Now, you obviously couldn't do that. That sort of crippled the entire field . In March of last year, I don't think anybody in the energy business knew what to do. Everything just stopped for six months. But then in October, September of last year, things started picking up and people started realising that ‘hey we have to keep our business going, we have to move forward and push for new stuff’. So. And in that sense, people also started realising that we can sign deals online, it's not a big deal, which, in turn, opened up the entire world for us, all of a sudden, we're running projects in Italy, and in Poland, in Germany, in Australia, Sweden naturally also, but I don't know if we would have gotten out into Europe that quickly had we not been forced by COVID.
Interesting! So expand on that a bit more, on the customer. In all these countries where you're now reaching out; are they direct clients, or you use a B2C model where? Or are you partnering with corporates that are looking at this sort of service as a step towards net-zero decarbonisation?
Our initial idea was a direct to consumer product, at that point, we were the consumers realising that we weren't getting the energy we were actually paying for. So you know, 2017, we were a bit pissed off at that point. When we started formulating the ideas, and started formulating the model, we quickly realised and when we actually found around back into 2018, that servicing a lot of private customers was very admin intensive. So, at that point, we pivoted a bit and focused our business model towards bigger customers, corporates and industry groups. In that sense, the end consumer is still there in our thinking. We are in that sort of B2B2C model where we service our clients so that they can serve their customers better. A lot of our clients already have energy management systems in place, they will help their customers in turn with what's optimising towards lower price points, optimising towards less strenuous consumption or optimising towards better load balancing. Those are the traditional three ways of optimising energy, we just want to say that we come in with a 4th dimension where we help clients optimise towards sustainability and renewables. In that sense, we sort of jack into those existing models and just tag along with all the existing energy optimization stuff.
Those are the traditional three ways of optimising energy, we just want to say that we come in with a 4th dimension where we help clients optimise towards sustainability and renewables.
So in that regard, in all those different countries, what sort of industries and clients are you pursuing?
Our clients are mostly in the real estate and manufacturing industry. We're working quite a lot with ABB for instance, with helping them get a better understanding of how and where they consume their energy. For real estate companies, energy is a major expense. It's also an expense, which they've been focused on quite intensely for a long time. So they're very mature in their energy thinking, as are manufacturing companies where energy is and can be a big expense. In this, we're not saving them money on their energy bills, that's for other optimization companies to do, what we do is that we can give them a better understanding of where their energy comes from, in real time, and how they can then move toward some more renewable consumption. This is extremely important for them. Again, not for a marginalised cost thing, but when you look at their clients, and at certain points, also their investors, they want to be able to show that they are renewable, that they're working sustainably and that they're working with us. And to take it another step, we're allowing for that insight on that knowledge, which is extremely valuable to them.
Absolutely, and this correlates quite well with the current context with which every single industry is now facing the pressure from the investors to show how they're dealing with the whole ESG and sustainable development goals and ultimately demonstrating (to clients and investors alike) how they're reducing their carbon footprint, right?
Indeed. Google did an amazing job with us recently, to set their (decarbonisation) targets for 2030, and how they're going to go carbon neutral, their insights in matching energy consumption and to identify where they can push their loads. It is extremely interesting.
Microsoft, also pledged to be carbon negative, not even carbon neutral. It's quite an exciting space. So I would like to wrap up with maybe some optimistic views from you, how are you seeing this space in the next few years? Do you think that you have some good tailwinds to help Renbloc scale?
There's a lot of stuff happening. And then as I said, it's pretty much an open goal frame for anyone who wants to come in and innovate. To anybody listening out there, move into the energy business, because it's very interesting. There's a ton of stuff happening, both on the customer side, but also on the regulation side, we're seeing stuff like the taxonomy director from the EU coming in. We've seen stuff in the Paris Agreement, and then according to what they call scope 2 and energy related emissions. There's a lot of stuff from the regulation side coming in and trying to sort a lot of this mess out, because honestly, it is sort of a mess currently, but they're trying, they're trying to stitch it all together. which, which is, what emissions are going to count to what? and who's going to be paying for that? and who's going to be responsible for that?
Over the last couple of years, I've seen a major move towards sustainability within the energy field, because honestly, it was kind of forgotten up until just recently. I'm thinking we're gonna see more of that. We're also seeing regular consumers like you and I, people who are not necessarily energy invested, are understanding energy more, so people are starting to ask those questions, which should then in turn, push the market forward. I think we're gonna see a lot of new thinking within the energy business and a lot of innovation in terms of sustainability in just the upcoming few years. So, and hopefully Renbloc is going to be part of that, we do have some good sales currently. And hopefully we can contribute to that sustainable change.
Yeah! I just have to echo those words like that interconnection between regulation, and customer experience and the customer customer needs. I think they really push to create this market. So yeah, I really wish you the best in that Renbloc, and we will follow your journey quite closely. So thank you Nils for joining us today.
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If you want to send us an idea or a tip, a #ClimateTech company that we should have a look at, or if you have any questions, please reach us at: davidcongeof@gmail.com or arraiz.p.daniel@gmail.com.
Some of the music we’ve been listening:
If you follow the YT music movement you may know who Lewis Shawcross is. It is so cool to see our home country band Rawayana featuring al Tio Lucho in one of their videos.