"If energy efficiency technology saves you so much money - then why doesn’t it pay for itself?"
This is the question which was asked when we three friends (and later co-founders) sat down together for a quiet pint one long winter evening in 2014. We asked a lot of questions - but that was the one which stuck in our heads for months afterwards. Sometimes the simplest questions are the most difficult to answer.
From a customer's perspective, what we saw was a disjointed, noisy market with lots of participants offering all sorts of energy efficiency technology and consultancy services. But there was one common thread - everybody wanted to be paid before the client experienced any savings. This old-fashioned approach to business was clearly the barrier to the widespread adoption of technology which would reduce energy consumption.
And like many companies, we were fed up with energy charlatans who were letting their clients down. Others were promising outlandish savings and were long gone with their client's money when it became evident that the savings weren’t being realised.
The technology which kept cropping up in our initial conversation was LED lighting. It was a given that LED lights delivered better light quality, lower energy consumption, and lower running costs. But quality LED lights were still prohibitively expensive.
So we decided to do something about it.
After all, most businesses just want it not to be dark, so why invest an inordinate amount of time, energy (pardon the pun) and money in LED lighting when all you really need is light?
Behind every environmental problem there is a faulty business model
So we started looking at how we could fix a business model which has been around since Edison invented the lightbulb in 1879 - and which hasn’t been improved upon since.
We asked ourselves: Why was the technology still being sold as a product?
At UrbanVolt we believe that there can be no widespread adoption of sustainable energy without first creating a sustainable financial model, and our thesis is pretty simple:
LED lighting saves 75%+ in energy costs - creating immediate & long term cash flows
Long-term cash flows underpin the world’s most successful companies - so why not ours
The savings from LED lighting are so big that they can provide a return for both end users AND investors
After reducing consumption via LEDs, it then makes sense to start looking at renewable energy
So how could we build a platform to deliver LED lighting for no upfront cost? And then add on other energy efficiency services?
From that foundation and from our original base at DCU Alpha, the university’s innovation campus, we began to construct UrbanVolt’s ‘as a service’ business model.
But while the questions may have been simple, building the solution for our clients wasn’t easy.
It took a year – fuelled by many late nights, gallons of coffee, and debates with lawyers and accountants – to build a world class financial platform which would deliver LED lighting to businesses for no upfront cost. And once constructed, tested and proven, it could then be applied to other energy efficiency technologies.
So how were three friends who had no background in the lighting industry able to do this? Well, it was exactly because we had no background in lighting. Instead of looking at the problem the same way as everyone else in the industry, we took a step back and took an alternative view.
We can not solve our problems with the same level of thinking that created them- Albert Einstein
Combining our skills from corporate finance (Kevin Maughan CEO), property management (Declan Barrett CCO) and logistics (Graham Deane COO), we ignored what everyone else was doing (selling a product) and set about building a financial platform which would underpin the business and deliver LED lighting and other energy efficiency technologies for no upfront cost.
And by no upfront cost, we actually mean no upfront cost. We don't offer financed or leased lighting, nor do we add interest charges to our offer.
While others in the energy efficiency industry were fixating on the technology were drowning their clients in technical information while chasing a ‘sale’, we looked instead at the cash savings which could be delivered to clients. LED lighting was the first logical step because LED technology has matured and the drop in energy usage is proven. So we looked at the 75+% in savings and used that as the key for delivering these savings to everyone from day one.
Bringing Wall Street to Main Street
Our clients are smart - the UrbanVolters want to use their cash to grow their business, not chase savings. And our investment partners love long-term and predictable cash flows from energy projects like the UrbanVolters, but it is expensive for them to interact directly with businesses of varying size, location and industry. Enter UrbanVolt and our unique business model.
Instead of ‘selling’ lights or solar PV, we make sustainable easy by bundling our client projects into one growing and diversified ‘investment grade’ portfolio of energy efficient projects. This diversifies the financial risk and reduces the transaction costs of the projects for our institutional investors. They love the simplicity of our award winning model and our one-page agreement makes it easy for everyone.
The more projects we do, the more we drive down costs for everyone. This in turn accelerates the adoption of even more projects, driving overall costs down further for everyone. Now that's what we call a sustainable business model.
The only truly sustainable energy is energy which has never been consumed- Kevin Maughan, CEO of UrbanVolt
Fast forward a few short years from that original conversation, and we have achieved what we set out to do - create an easy way for clients to access savings via LED lighting retrofits.
And now we are bringing our clients through to the next stage of the UrbanVolt Energy Technology Roadmap - Solar as a Service (SOLaaS). Soon we will be taking some of our clients off the grid altogether.
Along the way we have outgrown our office (twice), been awarded for our innovative business model (Deloitte Finance for the Future, Environmental Finance Deal of the Year and Bank of Ireland Startup of the Year), signed a deal with Bord Gáis Energy to become their exclusive lighting partner to their 30,000+ commercial clients, underwritten our products with Munich Re (one of the biggest reinsurance companies in the world), and we have begun our international expansion.
In our first year of operation we signed 100 Irish businesses to our Light as a Service and we will deliver them €20 million savings during our 5 year partnership.
Now, we’re looking forward to saving hundreds of millions for businesses around the world via LED lighting and Solar PV - without ever asking for a penny upfront.