Singapore’s recent Budget 2020 welcomed the commercialisation of innovative solutions that aim to turn the constraints of the nation into strengths, especially the energy sector.
Senior Minister Teo Chee Hean said in his budget speech that Singapore aims to halve its 2030 peak greenhouse gas emissions by 2050, and to achieve net-zero emissions “as soon as viable” in the second half of the century.
For e27, there was no better time to speak with CEO of Electrify, Martin Lim, to get a lowdown on how the clean energy space is evolving and his visions of a “Solar Singapore”.
Electrify, which operates Singapore’s first retail electricity marketplace, calls itself the answer to innovation in energy. Under Lim’s leadership, the firm developed a pioneering solution, called Synergy, to enable peer-to-peer energy transfers across the main grid.
Singapore’s commercial trial for Synergy is slated to launch in Q3 2020, with other pilots in Southeast Asia slated for early 2020. In addition to Singapore, Electrify is also working with Malaysia’s electricity utility company Tenaga Nasional Berhad (TNB) and others in markets such as Japan and Thailand.
What makes Electrify a pioneer in the energy marketplace? And how will your P2P trading platform boost cleaner energy adoption?
Back in 2017, we started as a marketplace and then within the same year started finding ways to deploy energy. And found that P2P was the most sustainable form of it all. P2P addressed one very significant need — most users want green energy, but demanding it and getting are two different things.
The government has a huge role to play here. For governments, the challenge always lies between balancing subsidies and tariffs when it comes to cleaner sources of energy. In fact, Europe and Japan have been struggling with this problem for a while now and Japan has even started winding down the feeding tariff system.
So we pushed for innovation and decided to come up with a model where people would have an economic power to produce more power than they need and then be able to sell this excess to someone who needs it.
Most power grids and companies have buyback solutions but they do so usually at wholesale prices. But creating a transactional layer what we are doing is essentially allowing users to sell excess power at a preferred price as close as the retail price.
This encourages users in turn to produce more sustainable energy, for example, via solar power on their rooftops. In 2018, we tested the first pilot with 15 households with TEPCO as an observer who then became our first investor.
So what we are essentially telling power companies is that if we can bring you more sources of green energy at no additional cost and maybe even earn revenue, would you not be interested in implementing it?
Now we are looking to do more such pilots in Singapore and overseas. In Malaysia, we are working with TNB to run a P2P pilot and also exploring running two pilots in Thailand.
The energy sector is highly regulated and not the easiest to earn revenues. So what motivated you to start this?
We always wanted to bring in more transparency in the energy space and make it more dynamic. Singapore deregulated energy sector in 2001 but there were very little understanding and interest in its potential.
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The environment for energy everywhere in the world is changing drastically. The proliferation of DER’s (distributed energy resources) like bio-waste energy, solar panels, micro wind turbines etc. are growing. And this is going to be the grid design of the future.
But in Singapore, according to Environmental Agency (EMA), we have installed solar panels on only about 1,000 households while the market size is 65,000 households. So the potential to make it a more engaging sector drew us to it.
What were your initial challenges? And how does it influence your funding goals?
The most difficult thing was to get buy-in from utility service providers. Utility service providers have a more intimate relationship with the users. And we plan to go via them to save on large user acquisition costs.
Plus, every market in SEA has got its own unique set of rules. Moreover, energy as a sector is heavily regulated in most countries.
Energy businesses measure their horizon in years or decades because they are asset-heavy. When we approached them, we realised that these companies know they are being disrupted but on many fronts and they don’t know where to start.
In Malaysia, for instance, it took us a year and a half to just convince them to carry out a pilot. Thailand too took seven months of lobbying.
But once we do prove a point, there will be good and stable revenue for the next five to 10 years. Thus we have to be prepared to go to market without expecting revenue in the short term. And that is something we keep in mind even while looking for investors.
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The traditional investors looking to grow and earn fast will not work for us. We need partners who can understand the long term journey.
Is user acquisition different for you?
Yes, that is a very big challenge for us as we have to shift the consumer mind from apathy to consideration. We aim to use user education for the same but it is going to be an uphill task. To make it easier, we have demystified the user experience and made it a lot simpler to gain the users’ trust when they use the P2P trading platform.
Our key strategy is to go en masse together with utility services. Much similar to how a vaccine is sold to a market. The national health services buy and give it to the public for free.
You are already spreading wings in the region even with the challenges above. Why are you eager to expand?
We realised that only Singapore will be a very small market size, so we moved around in SEA and always marketed ourselves as an Asian brand. Hence, we started working on doing pilots closer home but larger than Singapore in size.
We are also looking at Japan because of the TEPCO involvement, but it has been relatively slow. We are also looking at Australia since its closer home. We working with a home-grown Singapore brand to take us to Europe.
Where do you see Electrify in five years?
Honestly, I want to see Electrify go global in five years. Once the pilots start running and we go into operation mode in SEA, we will be looking to Europe and the West.
We will deploy it in limited fashion initially but whether the governments will embrace it and deploy it fully locally, remains to be seen.
On a 10-year horizon, I would ideally like to see the P2P energy trading to work like how credit cards work today. Consumers don’t need to fully know how the transaction happens but it just works and benefits everyone. Electrify, infact, also brings in economic gains (think redeemable credit card points), although that should not be the primary lure.
The key motivation should be to take power in our hands to develop cleaner sources of energy and use more green energy instead of waiting for the governments to do it.
One word for aspiring founders
Just keep hustling, there are no two ways about this!
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Image credit: American Public Power Association on Unsplash
The post ‘We want to make the clean energy space more dynamic’: Electrify CEO Martin Lim appeared first on e27.
