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Start-up-interview: “Everything changed in 2019 and demand skyrocketed”

Dr. Ernesto Garnier, Einhundert Energie

Dr. Ernesto Garnier, Einhundert Energie

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Einhundert Energie wants to help drive the energy transition with tenant power systems. The Cologne-based start-up plans, installs and operates PV systems, supplies the tenants on-site with electricity, and bills them for it. The company, which was founded in 2017, can even finance the solar installations on request. It has created standardized digital planning and billing processes that allow it to turn a profit even in relatively small apartment buildings. In this interview, founder and CEO Dr. Ernesto Garnier explains his business model.

 

The new German Landlord-to-Tenant Electricity Act, which provides subsidies for solar systems installed on multi-family dwellings, entered into force in summer 2017. You founded your company Einhundert Energie in the same year. What gap did you see in the market?

I had previously spent six years working for a consultancy firm, predominantly for larger companies within the German energy industry. Their strategies as well as their IT architecture were not designed to quickly implement a decentralized energy generation system with a fully digital management solution in multi-occupancy buildings. But it was clear that the Landlord-to-Tenant Electricity Act and the smart meter rollout were on their way. We were motivated by the desire to lead this market with a software solution developed from the ground up especially for this purpose.

How did you grow your business?

It was clear to us that landlords would only invest in a tenant power system if doing so was straightforward and didn’t require them to get too involved, especially in terms of billing. For tenant power to really take off, the entire process needs to work at the touch of a button. This is why we created a digital operator platform based around the smart meter. It all started in 2017 when we connected our first tenant power system to the grid in Bremen and then another in Cologne for a large property owner. We used these properties to automate our platform and make it more professional.

What are the benefits for building owners, property managers and project developers?

Our service allows users to generate power for their tenants without having to actively think about it. Billing for tenant power is particularly complex. You have to enter the buildings to read the meters, take electricity tax and the EEG levy into account, and identify how much electricity has been consumed by tenants who are not being supplied in this way. This amounts to masses of data and information that have to be compared. Our service takes care of all this for property owners and allows them to invest in renewable energy, cut operating costs, provide added value for their tenants, and even earn money in the process.

You offer a complete package called 100.solarhaus. What does a tenant power project like this typically involve?

Large property owners send us a list of buildings – sometimes just ten, sometimes 400 or more. We have developed our own proprietary tool which we use to process the addresses along with satellite images and other building data provided by landlords. The tool calculates how many solar panels can be mounted on the building’s roof, how much solar power the system will generate, and what measurement technology needs to be installed in order to process electricity use digitally. We send the property owner a quote detailing how much the technology will cost and the projected rate of return. In 90 percent of cases, the property owner is the investor, which means that they purchase the rooftop PV systems and the measurement technology from us and we lease it all back from them. This gives us the exclusive right of use and allows us to supply the building’s tenants with electricity at an affordable rate.

Do the tenants have to purchase your electricity?

No, not at all. Tenants who wish to purchase their electricity from us register with us like they would with any other energy supplier. We will then install our meter in place of the existing one. Tenants can download our app onto their smartphone or tablet so they can view their consumption in real time. Instead of paying estimated monthly bills, they will only pay for the electricity that they have actually used. The smart meters and our software allow all this to take place digitally without anyone having to enter the apartment to read the meter.

What lease fee can landlords expect to receive?

The rates of return are between three and seven percent. Various factors are used to calculate the lease fee, such as the size of the solar installation, the type of tenants, or whether the building has a heat pump that would consume additional electricity.

How long are the lease agreements?

The agreements with property owners generally have a minimum term of eight years. However, both parties normally intend to continue the agreement for the entire lifetime of the solar installation, i.e. for a period of 20 to 25 years.

You offer a second model for 100.solarhaus in which you also finance the technical equipment, is that right?

Yes, that’s right. This option is ideal for property owners who love the idea behind what we do but don’t want to invest any money themselves. We finance the installation of the solar system and pay the landlord a small lease fee in return for the use of their roof. When we started out, we thought that the real estate industry would be reluctant to invest and that this model would be the most popular. At present, however, it’s only chosen on rare occasions. Virtually all property owners like the idea of investing themselves and having a direct share in the tenant power system.

What is the smallest type of building for which 100.solarhaus is available?

Since we use a relatively automated system for these projects, our absolute minimum for existing buildings is eight residential units. The typical number is 15 to 30. This sets us apart from other providers of tenant power – we don’t just focus on very large properties, we concentrate on the segment where you can only make a profit by using a standardized approach rather than adapting it to each individual project. This is our area of expertise. In the new-build sector, we also have projects with just four or five residential units. The majority of these buildings meet the KfW 40 or 40 plus energy-efficiency standard and have a solar system and heat pump, meaning that the project pays off earlier for us thanks to the power consumed by the pump.

Can you also integrate other building technology, such as charging stations, into your portal?

Yes, new KfW 40 apartment buildings are increasingly being equipped with one or two charging stations. In buildings like this, we can take care of billing for all of the electricity usage on-site. The solar installation generates electricity that can be stored in a battery if required. We supply the tenants with electricity and also deliver power to the heat pump and charging station. Our meter infrastructure and online platform allow us to bill tenants for all their heat, water and electricity consumption. We are currently working with various e-mobility providers to explore integration options that will allow us to bill tenants via our app for each individual use of the charging station.

Who supplies and installs the hardware for your projects?

We generally procure our PV systems from specialist installation partners. We have built up networks of suppliers and enjoy working with them. However, it goes without saying that demand is now growing, and we are always on the lookout for new solar companies operating regionally and across Germany. It’s important that our partners follow our established processes, because of course we have to do more than simply installing the PV systems – we’re also responsible for things like reporting disused meters and registering our clients’ systems. The registration processes and procedures are just somewhat more complex than the norm. For the metering points, we work with Discovergy. Theoretically, however, we can connect any digital metering point operator to our platform.

How many 100.solarhaus projects have you already completed?

In total, around 140 buildings with tenant power systems are connected to our platform. To date, however, only 15 of these actually have a PV installation on their roof. We are planning to add another 20 to this list during the first quarter of the year, and by the end of 2020 we hope to have equipped around 100 buildings with PV systems and measurement technology. CHP units supply the tenant power in the other buildings we manage. Overall, the number of consumers we have under contract is in the thousands.

Have developments on the climate protection front over the last year brought a queue of people to your door or do you have to approach property owners yourself?

Everything changed in 2019 and demand skyrocketed. This is undoubtedly down to the Fridays for Future movement, as well as the German government’s climate protection package, even though that is unlikely to bring about many regulatory changes at first. On top of this, the major real estate companies on the stock exchange are becoming increasingly aware of how important it is to take action on sustainability and prepare for the new statutory requirements. And all the more so since leading capital market investors like BlackRock have declared sustainability a priority. Having said this, it always takes prospective clients a few months after their initial inquiry to decide whether to take up our offer.

Do your installations support grid stability by including an energy management system that allows you to store electricity in the grid or feed it in according to demand?

No, not at the moment. We just let the systems run. But we are, for example, looking closely at how our heat pumps operate to see how we could move in this direction in the future. We also often have large buffer storage tanks that we could theoretically heat using excess electricity. On the other hand, we’ve only installed batteries in a very small number of properties so far, aside from KfW-standard buildings where they’re a requirement – otherwise it’s not currently worth the investment. But we’re definitely keeping our ear to the ground and I think there will be lots of new developments in this area over the next year or two. The extensive database that we’ve built up with our digital electricity meters is sure to help us a lot.

You’re not the only company to offer tenant power. What makes you stand out?

What makes us unique is our software-based approach, from the building scans to the management of the installation process to the automated operation. To the best of our knowledge, we are the only energy supplier to generate and distribute its own tenant power while also developing the software in the background. In the complex tenant power market, this connection between user and developer ensures that the software really does deliver what’s needed so that we can standardize all processes. This allows us to serve the types of property in which the majority of Germans live and work, namely smaller multi-occupancy buildings.

This year marks your company’s third anniversary. What are your plans for the next three years?

We have set ourselves the ambitious goal of becoming a category leader. Like Kleenex or Pampers in their respective segments, we want to be the go-to name for members of the real estate industry who are looking for on-site electricity solutions. We want to achieve this within the next one or two years in Germany in particular. Of course, we will also be paying very close attention to the market in other European countries. Tenant power projects have become increasingly attractive thanks to the EU’s Clean Energy Package, which was adopted in 2018. Spain and France, for instance, have already changed their laws in line with this package, making them extremely exciting markets for us.

This interview was conducted by Simone Pabst.

 

Further information: Einhundert Energie (only in German)

 

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