This week, the German government agreed on new legislation to drive the adoption of more energy-efficient heating systems for buildings.
Germany has a stock of 20 million residential buildings, plus millions of commercial buildings.
While the initiative has its merits, and is commendable from a carbon reduction perspective – it leaves many building owners in Germany (B2C and B2B) with a lot of uncertainty what it might mean for them.
On top of which, many commercial owners of buildings are already dealing with complexity from the EU’s taxonomy to reduce their buildings carbon footprint.
This uncertainty for building owners is best met with facts about their building’s real substance and thermal footprint.
That’s exactly what building energy audits do, and why they are growing like crazy in Germany (and Europe).
Think of the building energy upgrade cycle in terms of 3 eternally-repeating phases:
Today, the installation phase is severely bottlenecked by a lack of tens of thousands of skilled workforce to carry out the upgrades, such as retrofitting insulation, windows, heat pumps or rooftop solar. The good news in this phase is, though, that a bunch of players have recognized this demand overhang opportunity. Lots of players have raised capital to build asset financing companies for solar (eg. Enpal), for gas boilers and more recently heat pumps (eg. Thermondo), or to bring efficiency to retrofit insulation (eg. Varm – highly recommended to put on your watchlist) or even for generic installation workforce serving the above mentioned players B2B (eg. Installion). Also, OEMs of boilers and heat pumps try to play a big role in this phase.
So, fortunately, the installation bottleneck is getting solved.
However: The problem with players in the installation phase is that they need to put their workforce into work. They need utilisation. And they know their own product, their one solution. Which means: they are not credible in providing the right merit order of upgrades that is specific to an owner’s building.
Should it be solar first? Well, if you ask the solar players, of course !
Should it be heat pump first? According to heat pump players, you bet !
(in reality, in many instances it should be insulation or windows or something else first, so you see the problem)
In the operating phase, we have utilities, meter operators, building management systems and price comparison portals who all have a role to play to manage the building’s power consumption. However, it’s limited. For one, their help with heat consumption is not on par. Secondly, the monitoring of power consumption is spotty, at best. Smart meters are still not widely adopted in Germany and larger parts of Europe (I researched and wrote about smart meters almost twenty years ago …). And finally, even if you monitor the level of power consumption, IT DOES NOT TELL YOU ABOUT THE BUILDING SUBSTANCE and why the losses PHYSICALLY occur.
That’s why there is the assessment phase. It covers the things an owner needs to know about the physical substance and ongoings in her or his building. Unfortunately, the assessment phase is equally (if not more) plagued by skilled workforce shortage. Today, Germany has ca. 7’000 – 8’000 people trained, certified and active to conduct a building energy audit and create the roadmap for upgrade measures, of which many only do this part-time. These highly trained people are called “energy consultants / Energieberater”. They often come from a first life as an architect or engineer, and take on tens of hours of additional training to be certified as energy consultant and be allowed to create the audit documents.
The audit documents are no slouch. They contain 20-40 pages with the building’s specific physical substance, followed by complex normed calculations, followed by an individual upgrade roadmap (what I call the merit-order of upgrades). The merit order tells the building owner what is the most efficient upgrade to do now, to do after, to do later.
And apart from being just really insanely useful – the audit documentation also serves as a purpose to access grants/subsidies and bank financing.
That’s why the building energy audit is really awesome, but complex.
And unfortunately, that’s why a lot of owners want it. If you are a consumer, and you want your single family home audited, it’s quite normal that you wait 6-9 months for your building energy audit.
Now imagine, you are the owner of ten buildings, or hundreds, or thousands. You need a scalable solution – a one-stop shop that uses technology.
Enter has established itself as the leading building energy audit provider in Germany, with more than 3’000 projects completed as I write this. They grew in 600% in the last months. Their secret to achieving such scale recently is that they built a suite of proprietary technologies that allows them to capture building data from owners extremely hands-off, and run the audit calculations and merit-order supported by technology. In the end, it even helps the owners access grants/subsidies by running the process for them. Thx, technology !
What’s equally important to succeed in this market, though, is the positioning and model.
Enter has no workforce to utilize. It is not an installer. As I wrote above, there’s plenty out there that Enter partners with and there’s great synergy. But because Enter doesn’t have to put their own workforce into work, it has no conflict of interest. Enter is in the position to freely recommend any upgrade measure in the order that’s best for the building owner.
Because Enter has a 360° view of the physical substance of the building, its recommendations are based on facts specific to the building. Not beliefs that maybe solar is always best…
And all of this allows Enter to be the preferred partner to owners as well as lenders, since they look to Enter to underwrite the upgrade measures for financing and the actual execution of those measures in the end.
Announced today, Enter has raised its third round in 10 months, and from some of the world’s best investors, incl. Coatue, Foundamental, Target Global, Partech and A/O Proptech, as well as amazing angels such as the co-founders of Flink, Mayd, McMakler, Taxfix and many others.
I am convinced that with this round, Enter is scaling not just to a huge financial success – more importantly, Enter is now scaling to decarbonize 20M homes in Germany as fast as possible because owners now finally know what their building’s physical substance is, and what’s the right merit-order of thermal upgrade measures.