Episode #008 - Harald Överholm
Updated: Jun 17, 2022
Episode #008 with Torsten Brammer & Harald Överholm:
On Episode #008 of The Solar Journey Podcast, we're honored to host Harald Överholm, founder (and CEO) of Swedish solar company Alight.
Founded in 2013, Alight (previously Eneo) is the leading solar Power Purchase Agreement provider in the Nordics. Alight is committed to helping large corporations save money and do good, now and in the long term, through sustainable solar technology.
Harald Överholm is based in Stockholm and has a Ph.D. from Cambridge, where he focused on market development of the US solar PPA market. He's a solar energy believer with 10+ years of experience. Building the solar corporate PPA market in the EU, helping businesses across Europe switch to solar and pay less for energy (than they pay their utility) while displacing fossil energy is his main game.
Connect with Harald on LinkedIn.
12:45 - 14:23 Harald on the real value of his PhD
18:09 - 20:25 Why Harald shifted into renewable energy
21:08- 24:00 Why is Harald working on the business side, not the technology side of solar?
[00:00:18.110] - Torsten
So welcome everybody, to a new episode of The Solar Journey. And today we have a new guest, and he's called Harald Överholm. Hello. I just learned that's the way we just pronounce it in Swedish.
[00:00:33.840] - Harald
Thank you. Thank you. First time? Yeah. That was really well done, actually.
[00:00:38.400] - Torsten
Yeah. So Harald is a Swedish citizen and he lives in the beautiful city of Stockholm, Sweden. And he's the co-founder and CEO of Alight. That's the leading PPA power purchase agreement provider in the Nordics. But before we go into that, let me just outline his CV. Yeah, when I looked at it, it starts with an odd occasion, and maybe we can switch back to that later. Just before the century changed. In 2000, he was the CTO of Fork Unstable Media in Hamburg. So he was based in Germany for some time, and that was actually, it seems, before he actually went to university. So I'll definitely come back to that. He finished a degree in Industrial Engineering of Energy Systems in 2007 at the KTH Royal Institute of Technology in Sweden, in Stockholm, I think it is. And he was also in Cambridge in the UK. He did a Ph.D. there with a focus on the market development of the US solar PPA market. So he's actually a real trained PPA specialist. So that was also interesting to see. I didn't know that the PPAs are that old that you can already do a degree in it.
[00:02:17.710] - Torsten
But maybe it all starts now with his Ph.D. work, as the first lecture book on that topic will also discover that. And then he became, after his degree, his Ph.D., he became the investment director at Sustainable Technologies Funds in Stockholm, Sweden. And he did that until 2012. That's a Nordic venture capital fund focused on cleantech investments funded with 58 million by institutional investors, mainly by the Swedish pension funds. And he was also chairman of the board of two other companies. And from 2014 until 2015, he became a chairman of the Board of Vireo Energy. That's a renewable energy utility primarily in the bioenergy area. And that's a company part of the Kinnevik Group, which is a gigantic company because it's got €5 billion in assets. So that's also interesting. I think to understand what that company does, we'll need to talk a lot about your CV before we actually come to your current position. That's also interesting. He went from the, let's say, business side of things to the, how can I put it? Institutional public sector. He became part of the Solar Energy Association of Sweden, and he also became an external associate of the Stockholm Environment Institute.
[00:04:15.140] - Torsten
He did that for six years. And the Stockholm Environment Institute, they do independent research for environmental policy. It's funded by the Swedish government and it's ranked the most influential environment think tank in the world. Got the title in 2016. So Harold did a lot of thinking there, and I'm sure was then also later on the basis for his new company.
[00:04:47.390] - Harald
All of that was actually in parallel.
[00:04:49.460] - Torsten
[00:04:51.770] - Harald
Many of those things were things that I've done just on the side while looking at okay, good.
[00:04:59.930] - Torsten
And then you're also a member and you still are a member of the IEA PVPS work group on Photovoltaics and utilities. So the IEA, that's the International Energy Agency. That's an agency funded by countries, is it?
[00:05:21.220] - Harald
OECD, no, which I think it's like a part of almost the UN system. But to be honest, I'm a little bit unsure.
[00:05:32.030] - Torsten
Many big nations are part of the IEA. They do an important job, but they're also criticized for various things. Maybe we can also touch ground on that now. We finally come to Alight. In 2013, he founded Alight and he's now the CEO of Alight. And Alight helps companies across Europe to switch to solar, save money and do good now and in the long term. And as I mentioned earlier, they provide power purchasing agreements, mainly in the Nordics, I guess a great TV, pretty interesting. You can spend a lot of time talking only about that and the experience you did. Let's see how we handle that. So thanks a lot for coming onto the show. Let's start at the beginning. I'm the CEO of a company myself and I like to look at the odd spots in the CV because maybe sometimes they tell you a lot, maybe nothing, but sometimes they do. So you were in Hamburg before you went to university, correct? Yeah. So what did you do at Fork Unstable Media?
[00:06:53.190] - Harald
You know what the crazy 90s Internet days. I started my career in high-growth Swedish Internet startups before going to university. So I was kind of I think I was 16 when I started coding HTML. In like 96. And then I ended up in Germany and Hamburg. So first working with the Swedish company, but then I switched over to an even cooler German-American company, and a good friend of mine, David Lindemann, was running it together with some German partners and they were, I think, definitely the coolest guys around. At least I thought so. My 18-year-old in me thought so. Yeah, we're just doing web pages, so it wasn't more than that. But it was a great time. I loved Hamburg, it was a fantastic city.
[00:07:53.410] - Torsten
Yeah, I managed to come to Hamburg once in a while. My parents live in that area, so Hamburg is great.
[00:08:02.830] - Harald
Of course, as an 18-year-old young internet professional, I had to live very close to the Ripper Bond in the complete red light district. It was very messy for someone from Stockholm. It was like a world I had never seen before. It actually had a really strong impression in terms of a different lifestyle.
[00:08:25.790] - Torsten
I can imagine. So that assignment and in 2000 you were part of the Internet bubble bust?
[00:08:36.530] - Harald
No, not the bust, just the bubble.
[00:08:38.700] - Torsten
[00:08:39.310] - Harald
Yeah, because I realized I had to go to university, so I kind of left the whole scene and went back to university. And then the bubble burst.
[00:08:48.620] - Torsten
Okay. Before that. Enjoyed the good time. Enjoy the good time. You didn't have to go through the downturn. So then you realize, well, I guess you need a proper degree, proper education. You went to university, even finished that phase with a Ph.D. And as I mentioned earlier so you did the Ph.D. on the PPA market in the US. I came to know about PPAs a lot later. Maybe you can sketch out the history of PPAs. I'm sure you'll cover that in your introduction.
[00:09:25.410] - Harald
Yeah, totally. Let me tell PPA it's a power purchase agreement. And I mean, it's just a way to make sure that new power is packaged really neatly, simply for actual power user. So someone is using power. I mean, that can be actually a residential household, or it can be a big company using power. It doesn't matter. Just someone is using Power and suddenly they can buy that power from a new power plant, from something new that's built for them, solar or wind as well. And it's really simple for them. So all they have to do is sign a contract and then someone else will deliver the power for good price, probably a locked-in price from this. And this is actually the concept of doing that, packaging power in that way came out of the US. It started before solar, but then before Solar, it was only done for really big things. And it kind of like grew a little bit in the, in the 90s. But then in the early 2000’s, a bunch of entrepreneurs in the US saw that this was a way to make solar happen. Because in Europe and in other places, solar was happening because the government was paying all the electricity.
[00:10:44.450] - Harald
But that wasn't the case in the US. So in the US, if you wanted to make solar happen, you have to find someone who's going to pay for the electricity. And to do that, you have to find a sophisticated business model and make it work. And that became PPA. So the first company was a company called Sun Edison, and an entrepreneur whose name is Jigar Shah, who's an important guy today. I mean, he's a very influential kind of thinker today, and he's running a bomb called Generate Capital in San Francisco. But he set up he had a very strong vision about how PPAs could become the way to make solar grow. And then he set up Sun Edison and he made that happen, and he can approve the model. And he proved it so well that 100 other companies in the US. Just took on from that point and did it for every particular customer niche you can think of, from the smallest residential to the absolutely biggest solar parks around and across the US. And that has been going on in the US since I think 2005 was when Jigar signed the first PPA for Solar with Whole Foods for State.
[00:11:55.370] - Harald
I completely remember one of those two. And from that point on, the US market has been growing super fast. So when I got there in 2010 to do my research, my Ph.D., it was already a five-year-old market with very strong growth trajectory. So there was a lot to do research on. And then, as you correctly point out, it came to Europe a lot later. So it came to Europe, like in 2016, 2017, we started seeing really the first kind of PPA trend in Europe. So it took ten years, but there are a bunch of clear reasons for why it took so long for it to move from the US to Europe.
[00:12:43.710] - Torsten
Good. Excellent. Can you outline what was the key result of your Ph.D.? What was the biggest learning?
[00:12:53.670] - Harald
Well, look, you know, like a Ph.D. on the academic side of things, it's just, like, super esoteric. You have to position yourself in this strange academic dialogue. And, I mean, I'm not going to bore you with the academic findings because they are very difficult to make lively and interesting, but I'm going to say that for me personally, the biggest finding out of the Ph.D. was that it gave me a license to go to the US and meet with that whole market and just meet all these entrepreneurs, someone like Jigar, who, to me, before I did my Ph.D., I knew about Jigar, and I thought it was amazing he was like an idol. I mean, like, people would view Elon Musk today, basically. And then suddenly I was doing this Ph.D., and I was just spending, like, 10 hours with Jigar, interviewing him in detail on exactly how we built this company. And to me, that was just like, yeah, it's just the most amazing experience. These were American super successful entrepreneurs in the business model that I thought was maybe seriously like, the most important business model that I could ever think of. And then I was just allowed to sit and interview them.
[00:14:03.850] - Harald
Much like you yourself get the chance to interview, there's a context. You have some kind of right to ask a lot of questions to someone. Yeah, and I got to do that. Over the course of two years, I just learned so much. I don't know if that was a clear finding. The finding for me was just a massive inspiration.
[00:14:24.150] - Torsten
Are you still in contact with Jigar? Did you manage to keep in touch?
[00:14:29.310] - Harald
A little bit, but there was a point after, I think in 2013 or 2014 after I was done with the Ph.D., and then he decided to set up Generate Capital. And I remember emailing him, and then I got this automated reply saying, from this point on, I'm no longer available to just have a coffee and a bit of a chat. I think he realized that he's put himself in a position where a lot of people were just asking him for a lot of advice, and then he wanted to move on and set up generate capital, and he had found them. But I've had the privilege of having other mentors from the US as well. So both someone called David Busby, who is also a part of setting up Sun Edison, and then he also set up Sunrun and Stem. He was very useful during the first years of his life in helping us out. So very grateful to him. And now these days, we've actually established, or I've established a relationship with a guy called Peter Rive, who is a part of setting up Solar City and then Tesla Energy. So Pete is actually on our webpage now as a senior advisor and someone who's regularly coaching me on.
[00:15:46.430] - Harald
Again, just bringing the experience of the PPA market that has been going on for a long time, and he's seen enormous growth in that market. And he can just help us to problem solve at the stage that we're in Europe. And we keep looking at the American market as a really important road map for where we are going here.
[00:16:13.290] - Torsten
Fascinating. Super cool that you have these outside inputs. And it seems that quite often in the US, you have business models developed a lot earlier than in Europe. For example. Right. My dad used to travel as an engineer very often, like in the automotive industry. Also back then, he always brought back the coolest toys and stuff to wear, like frisbee skateboards. Right. And he always said, whatever is developed, it takes ten to 20 years before it hits Europe. Right.
[00:16:56.490] - Harald
Well, there you go.
[00:16:58.530] - Torsten
Ten years, right. As you mentioned. And before it goes big, now it's 15 years. Right.
[00:17:03.200] - Harald
It was the coolest toy.
[00:17:09.850] - Torsten
Cool. All right. And then you went on to Sustainable Technologies funds. That was in a way, that for three years, your first proper job with a degree, the way I understand your CV, right?
[00:17:23.080] - Harald
Yeah. Just to set the timeline straightforward, actually, I went to university. I did a degree in engineering. Then I went to do work as a venture capitalist for about six years.
[00:17:33.370] - Torsten
That's imperiling. Yeah. Sorry.
[00:17:35.040] - Harald
And then I kind of took time out and went to Cambridge to do my Ph.D. in the US.
[00:17:41.810] - Torsten
[00:17:43.970] - Harald
I was a VC in the clean tech space for six years. That was an amazing experience. I just got to see so many companies and so many passionate entrepreneurs trying to solve environmental questions through entrepreneurship, and I kind of saw the good and the bad and the ugly of that. So lots of findings and I'm really excited.
[00:18:08.750] - Torsten
What did you move in the first place to move into the renewable space? You started off as a media guy designing websites. How did that change?
[00:18:20.450] - Harald
I don't think that period really reflected any deeper sense of direction. I was 16 and I actually got a job. When you're 16, you're going to have to get a job to start with.
[00:18:32.680] - Torsten
You young needed the money.
[00:18:34.550] - Harald
Yeah, exactly. I think to me, really now, I've been in renewables basically my whole career and also the university degree that I did was in renewables and it does reflect the cooling. I mean, definitely it reflects the most apparent logic is just that climate change is really stupid thing. You don't have to be political about it in any way, it's just logic, it's just such a stupid thing. And we all kind of know, I think, okay, maybe this is controversial, but we all kind of know that fossil fuels should be banned, basically. I mean, it's such an apparent insight, but we all kind of also realize that there's no way we can ban fossil fuels unless we have some kind of proper alternative because otherwise it's just crazy. We don't have any energy and that would sound like a collapse of civilization and we don't want to go down that route. When you think of it, it's just this massive and super stupid question that just has but the only logical answer is an answer. You can only get there if you develop alternatives. So when you just do that little loop in your head, you just keep ending up and well, I mean, it really makes sense to put all of your effort into helping develop the alternative that will help us stand for sale.
[00:20:05.910] - Harald
And I think that's just a little loop that's been playing in my head for a very long time and it just feels like self-evident thing to be working on. So unless the loop stops playing at some point, as far as I can tell, it's the only thing I should be doing.
[00:20:24.810] - Torsten
Yeah, you've got a degree in industrial engineering, so you could have chosen the more technical part of the business. How did they come about that you felt? Well, I'm more on the business side of things and the deal structures, PPAs, et cetera. Right, you could just develop turbines. All yeah.
[00:20:45.280] - Harald
But I think it's a really good question because I think it comes back to bottleneck thinking. I think it's just me asking myself really, if you want to change something in this market, where's the bottleneck? And for me, really early on, I realized that there was this okay, sorry, I'm going to go on a little tangent here, but there was this epiphany for me, I remember it was 2006 and I just got my first job in renewable finance and they sent me to Milan to EPBC, which is a massive but still today it's a massive conference.
[00:21:22.920] - Torsten
We could have met there. Maybe we did without Nordic.
[00:21:25.550] - Harald
Yeah, we did. We had a coffee, like 15 years ago. Yeah. And so I went to EUP the second because I came out of the Nordics, I kind of didn't know that much about PV because renewable stress was like wind and biomass. So I thought like a PB conference. I thought it was going to be kind of like futuristic, a bit fuzzy, and then I turned up a PV sake and it was like a ready-to-go industry. I mean it was a global industry of professionals and it was just there, it was just working. It was such an enormously strong impression on me that I just felt like, look, I don't know what we're waiting for. Obviously, this technology is just completely done. It's packaged, it's working, it's professional. These guys just know how to do it. First of all, I felt like I want to be a part of this because this is so modular, it's so flexible, and it's something you can deploy everywhere. But secondly, then this comes back to your original question like what's the bottleneck here? Because the bottleneck is not the technology because it's there and the bottleneck does not seem to be anything else that needs any particular kind of technical innovation at that point.
[00:22:46.150] - Harald
Does the bottleneck just seem to be how is this going to end up on every rooftop? How are we going to deploy this at this rate at the speed that we need to make an impact? And the more I thought about that, the more my conclusion was that commercial business models, that's really the rein bottleneck because there are only two ways that you can deploy solar at scale. The one way is by asking the government to subsidize it and the other way is to find a commercial use for it. So power users actually pay for it and the government way, it works. But it's always risky because then you change government and then suddenly you have nothing and you get these complete boom and bust cycles. It doesn't feel like a long-term way of doing things. Whereas commercial business models, if they work, if you really deliver value to the people who use power in this world, then as far as I could tell, it would be something that would grow over time and become just more and more important the larger it's got. Yeah, that was the thinking.
[00:24:02.330] - Torsten
Excellent. But that's real entrepreneurial thinking, right? So where's the problem here? And I want to be part of the solution. Interesting. Very good. And as we continue with our CV, so you joined two, let's say non business nonprofits, put it this way, nonprofit organizations are the Stockholm Environment Institute and the IEA. So what drove you there? So what was the thinking behind that?
[00:24:38.550] - Harald
Well, yeah, I think it comes back to having a deeper purpose or a passion for the market and the passion for the ultimate outcome of the market. So to the extent that I can be of any use outside of what we do as a company, I try to make time to do that. So I've been on the board of the Swedish Solar association just to it was in the early days, it's just really few people in the Swedish solar industry. So just helping the setup felt like if it helps the industry, it's a good thing. I don't think typically in our industry, we all just need the industry to grow. We just need the awareness of this to grow. It's not about competing with each other primarily. It's about building industry together and an ecosystem together. And I think as an entrepreneur, it's actually an important part of what you're doing is to and again, I was inspired by Jigger as well. What did he do? He built an Edison To, a great company. But then he spent hours and hours sitting with me, just telling me what he had done so that I could put that into articles and tell other people about it.
[00:25:44.440] - Harald
I mean, if someone like that considered it the priority to help teach others and teach the ecosystem, then surely that's the right thing to do. I just felt like that's a part of being an entrepreneur. If you believe in what you're doing is that you help build your industry.
[00:26:03.810] - Torsten
You're still on part of the IEA. But it's a part-time job.
[00:26:11.950] - Harald
No, I mean, it's not even a job, but the IEA thing is I'm a member of a forum and they kind of call we have like a yearly meeting and we share some information between that. And we just try to take time to educate each other on whatever we are learning about in the market. And the focus of that forum is in business models. Business model side of silver. It's not a job like it's.
[00:26:44.990] - Torsten
Good. What do you think about the IEA? There's the Dutch professor, Ana Hextar. He puts up these graphs where the IA forecasts a flat development of the future for the PV employment. And of course, the growth is actually exponential. So you wonder why the IA is so off with their prediction, it seems to me. And I try to start a conversation with them and the way they present themselves is I might sense there's a change in policy, maybe, but why was it so bad? And what do you think? How are they playing it now? Right? What's the real objective? I mean, this is the underlying criticism, right? What's the real objective here? Are they really trying to promote renewables or what is it about?
[00:27:48.570] - Harald
Yeah, right. Well, that's a good question. Actually, I have almost no insight into the IEA because I sit on this network that's organized by the IEA, but it's really like on the side of the organization. So I think I'm the wrong person to ask about that particular thing. But I have seen the graphs as well that you're talking about the extra, and I think they're amazing without knowing anything that you don't know. I just think that illustrates how linear thinking is just wrong. Typically, if you want me to just spend a few minutes on this in terms of solar because I think I have a very strong feeling here on what's happening going forward. And I think solar has been and will be increasing one of these cases of growth is driven by a lot of overlapping trends. Some of these trends are like technology trends. Some of these trends are like market and customer perception trends. But solar is driven by all of them and by the overlap of them in just the same way that it takes some simple example. Take like the iPhone. Like, why could this iPhone suddenly emerge and get really big?
[00:29:04.460] - Harald
It wasn't because one thing was done right. It was because it was like a point in time where a lot of things started to converge. That the cost of certain technologies, the quality of certain technologies, customer demand, the quality of the Internet connection, et cetera. So when a lot of things suddenly intersect in terms of trends, then suddenly you can get explosive developments. And they're never linear because linear developments, they are the product of just like one cost point slowly moving in one direction and then something is increasingly added every year. And I think that's the whole problem of trying to forecast solar. Typically when people forecast solar, they just look at one parameter, like, what's the development of LCOE over time? And then they kind of extrapolate that into a fairly linear curve. But if you look at what's actually going on in the market, it's just like ten different trends that are overlapping each other. And the effect of that just keeps being something that surprises everyone. And I think that's just going to go on. You have the exponential surprises to everyone's linear charts.
[00:30:21.140] - Torsten
Yeah. Good. So in terms of power sources, where do you see the share of all those different renewable energy sources? So we have PV, solar thermal, we have wind, we have hydro, and geothermal wave energy. All the gases are just storage means. Where do you see the forecast on a share of those different technologies? Some say it's going to be only solar and wind, and the rest will be just a single-digit percentage.
[00:31:08.690] - Harald
Yeah, I'm not going to do a forecast simply because I haven't done one. It's not my day job. So I don't sit on any kind of forecasting model. But my strong view in terms of the trend is that there are a number of things that are unique with solar that makes me think that solar is going to be the dominant power source in the fairly near future. So like the next one to two decades. And I'm just going to say like these couple of things that I always come back to, the first one being what we call bankability in our sector. But just the fact that solar is so well proven that everyone in the world is going to be willing to finance solar for almost nothing and they're willing to create everything else that you need for actual technology deployment. You know, like insurance or like you have a super long term guarantees or like product guarantees or you have people willing to do O and M over the long term. All of these things are in place for solar. They're not in place for a lot of the other technologies and that's why you're getting locked in effect and solar being very easy to deploy.
[00:32:22.070] - Harald
Secondly, obviously solar is basically the cheapest one in terms of LCD today as far as we can tell. It just keeps the economies of scale just keep pushing down that cost point so it's likely to stay in the cheapest. Thirdly, it's the most modular and most flexible. So you can do it small, you can do it big, you can do it whatever floating on a lake. You can do it pretty much anywhere you want. So I think the combination of those factors just leads to very strong kind of lock-in effect in terms of future power being like well why not just make it solar, that's the easiest. Let's just keep rolling out solar, that's always the easiest.
[00:33:04.290] - Torsten
Cool, thanks for sharing your views on that. What about storage? Where is this headed? I mean with the larger portion of generation this becomes more and more important together with PVs and all the national activities at least here in Europe. And hydrogen and lithium are everybody's looking at those two. Where do you see prices and the level of usage in the industry?
[00:33:39.450] - Harald
I mean, storage is going to be super important and that's because it's going to turn solar into more or less base load power in the end and it's going to balance the grids. So it's going to provide reliability services back to the grid in terms of frequency regulation and voltage regulation and all of these things that, I mean, ultimately the grid needs a lot of support back from renewables in order to work. So storage will do all of these things. And I think there are a number of bottlenecks at the moment of storage that are really interesting because they will change over the near term, like over the next one to three years. They're going to change really rapidly in Europe and actually again, we're seeing that happening in the US. I think the two important bottle eggs in storage are, the first one is digital. It's about market automating kind of market participation of storage. I'm not talking about the battery management system which is like digital and tells the battery exactly what to do. I'm talking about how the battery takes part in market transactions, just teaching the batteries to participate in markets, to trade frequency regulation, to trade kilowatt-hours, to trade together with the inverter actually together with inverter trade voltage.
[00:35:04.050] - Harald
So this is just about making sure that the batteries is an automated kind of participant in market super important and it's kind of difficult to get that right. And there's not that many platforms out there to do its day. So it's something where you need to put in a lot of digital development to make it work. The other side of that, the other big development that's happening, but it's going to make a big impact, is to open up marketplaces for storage. Because again, storage can provide a lot of other things than just kilowatt-hours. It can provide frequency regulation, for example. But you need marketplaces that puts the price tag on those services. And you need those marketplaces to become kind of sophisticated. You need liquidity, which means just like you just need a lot of people to be trading on the marketplaces. You probably need some contract functions, you can do long-term contracting, etcetera. All of this is happening. I mean, it's opening up across Europe. The grid operators are opening up marketplaces for this. And the better those marketplaces become and the better we get at digitally automating the participation of storage in that, the more this is going to just be a no-brainer and something that we deploy everywhere.
[00:36:25.710] - Torsten
So I understand that correctly. So basically, storage doesn't just create value from providing energy, but for example, the frequency stabilization is a value of its own. So you could put a price tag on that for example, as well.
[00:36:41.430] - Harald
Yeah, totally. And I think when you look in the long term what's going to happen with the grids and what will need to happen in order to move to a very highly renewable energy system, then these services are going to get so much more valuable. So even if the price tag on frequency regulations might be low today, or it might be difficult to actually reach but actually find the right price point, I think we can be more or less certain that that's going to be a very economically valuable thing to provide just a few years from now. So it's like as a parallel value stream from solar and storage that's just going to become really important going forward.
[00:37:24.930] - Torsten
Interesting. Any other extra value. So it's the power itself, it's the frequency. Any other new feature of electricity?
[00:37:36.450] - Harald
Yeah, I mean, there's lots of features. So there's like when you talk about reliability of the grid, this is like a cluster of things you want to do. You want to be able to, but they will boil down to three things. It's either kilowatt-hours that you move the kilowatt-hours in time in one or another way. It's frequency. You do something with the frequency or the voltage. So you do something with a voltage level. On the voltage level, we're able to use the inverters to provide reliability services on the voltage level. But that's also something where it's under developed today because we need more sophisticated software to do it and we need marketplaces to open up that we can participate. So I think ultimately solar. And people have been experimenting with this in California, again, of course, California, it's always California where they do things. But like first solar, I know they did like a 700 megawatt installation in California where they were selling reliability services back to PG and E and they just did fantastically well with that. And they were able to show that if you optimize the solar assets for reliability services rather than just kilowatt-hour production, you can get amazing results and better results than the equal or the kind of state-level deployment of, for example, gas peakers, which would be an alternative way to provide reliability services.
[00:39:09.220] - Harald
So I think it might come up points fairly soon when we start optimizing solar assets for reliability rather than energy production. And that's going to be the foundation of solid long-term development of renewables.
[00:39:23.670] - Torsten
Fascinating. Talking about California, it's also the country where there's freaking blackouts and PG and E, they didn't make it to the last fires. Do you have an opinion or understanding of what that happens? Because, I mean, you could think, well, if they are so advanced in their business models and technology, why do they have these blackouts? And many of course, critics then blame the renewables for overloading or the grid. Right?
[00:40:00.850] - Harald
[00:40:01.640] - Torsten
Opinion or knowledge on it?
[00:40:03.700] - Harald
Yeah, I mean, I'm not going to give a specific opinion on the current blackout in California because I just don't know that well. I mean, it's a very specific market. But I do want to say and come back to that, there's a massive underutilized potential of renewable assets to provide reliability services to the grid. So of course, like in places like California, same in Germany, we have a lot of deployment of solar assets way back. But the vast majority of this deployment is completely like stupid, if you like. I mean, it's just kilowatt-hours, completely weather dependent, just push it out into the grid whenever the sun is producing. That's it. That's so unnecessary. Like we would be able to if we were more coordinated here as a society or as a grid, we would make sure to open up the marketplace very quickly. That would put a serious price tag on the ability of all these solar assets to provide reliability services because then they could shift over to doing that even without adding, even without adding storage, they could utilize the inverters better to provide reliability and you would give everyone a bit of an impulse to add storage quickly to the assets.
[00:41:27.170] - Harald
Is solar to blame for anything? Well, I mean, certainly if you put a lot of solar into a grid, but only on the kind of the kilowatt-hour side, but you just don't allow for those assets to provide anything else, then that's not really sustainable in the very long term.
[00:41:46.310] - Torsten
Okay, yeah, yeah. Pledged to learn, pledge to develop in the markets, technology.
[00:41:56.070] - Harald
This is where entrepreneurial opportunities are opening up at this point.
[00:42:03.790] - Torsten
Okay, let's jump to what you're doing now. You co-founded and you're the CEO of Alight, and as I mentioned, you're the leading solar power purchase agreement provider in the Nordics. So first of all, why did you get started? Why did you found this company? You could have stayed on in previous jobs and do it from there, try to convince the CEO and say, hey, we need to.
[00:42:33.710] - Harald
Yeah, I guess as an investor you're not supposed to kind of tell your entrepreneurs what to do. So when you find yourself that you want to start telling everyone else what to do, then you realize that you have to become an entrepreneur yourself.
[00:42:46.660] - Torsten
[00:42:48.230] - Harald
That's the best way to get it done. Right. This was a gap in the market.
[00:42:52.640] - Torsten
Again, you saw the gap.
[00:42:55.550] - Harald
We had a vision of like setting up a leading European company that would do subsidy pre-solar as more or less base load and save money for power users across Europe and turn into commercial business model. At the time we had the vision and we just couldn't see that anyone else was doing it and we felt was a solid way. So we felt that someone has to do this. Let's get into that.
[00:43:23.910] - Torsten
Yeah, cool. So who's we?
[00:43:28.070] - Harald
Yeah, that's what me and my co-founders at that point.
[00:43:31.470] - Torsten
[00:43:32.870] - Harald
And Richard, who's our CFO, and William who's doing site development for us. So they're still with me in the company, but now it's 30 people in the company. So now we have become bigger. Okay. Yeah. And we have a bunch of investors, et cetera. So I guess we now is like a big community.
[00:43:53.320] - Torsten
Sure. Excellent. All right, but you founded the company, there was two of you.
[00:44:00.570] - Harald
[00:44:01.890] - Torsten
Okay, good. 30 people. Now, can you give us a rough indication on the revenue and the size of the company? How many customers you have got? Just to give an idea.
[00:44:16.440] - Harald
Yes, we're still a small company. We set up ourselves. We've done about 40 customer installations, but we came out of the rooftop side of things. So whereas some of the people have done solar parks in Europe, they've deployed hundreds of megawatts of solar, but maybe through two or three PPA contracts. For us, it's just been the other way around. We've done 40 PPA contracts, but still we're in total we're around 25 MW or 30 MW now, pushing into a very large pipeline because increasingly we are doing off site solar parks. So that's so much bigger. And revenue this year is going to be about €10 million. We just did the largest solar park in Sweden, which is still not very large. It's like 12. Someone came directly afterwards and said, oh look, we have the largest solar park and it's like 12.5 or something. Maybe it's not the largest anymore, but now we're also working across Europe. So since one year back, we pushed very fast to get out into the European market and position ourselves as a PPA. Solar experts very focused on rolling out solar PPAs for large companies.
[00:45:37.260] - Torsten
Yeah. So what exactly is the business plan? You also build the plants, the parks, the solar plants.
[00:45:49.230] - Harald
We coordinate the PPC, we contract someone to be the PC, and we have strong opinions about the EPC work. We have engineers that kind of think around what we want to build, but we want to contract Epices. It's a great market. You have really experienced European EPC out there, so it doesn't make any sense to build that on your own. Okay. We're very good at once you find the customer and sign the PPA, good at kind of finding the right PPC to build it for us, having the long term capital so that we really the long term owner or the long term controller of the assets, which means that we can serve the customer over a long time. It also means that we can add these new revenue streams over time. We can build reliability services over time.
[00:46:39.570] - Torsten
So you also own the park?
[00:46:43.250] - Harald
Yes, we own it, but we use assets financing from big pension funds to own the assets. But we control that financing and we control the assets over the long term.
[00:46:57.460] - Torsten
So you can be regarded in IPP, is that correct?
[00:47:02.660] - Harald
Yeah. In Europe, the IPPs were typically people who just own these really passive assets, like assets. We're more of like an operational IPP. I mean, we're an IPP within PPA. Too many strange abbreviations in that sense. But we have similarities to IPPs and not sure if we are totally similar.
[00:47:25.550] - Torsten
To just to explain, the abbreviation for IPP means Independent Power Producer, in contrast to, let's say, the established utilities, like, as you mentioned earlier, PG and E in the US. Or, I don't know, button file known in Europe or Eon and RWE in Germany.
[00:47:51.840] - Harald
[00:47:52.450] - Torsten
Okay. So you don't match one of those categories because you own the asset finance through pension funds, and then you provide the electricity through Ppl to end customers.
[00:48:09.350] - Harald
There's a different beast. Like, in European solar terms, we're kind of a different beast. In Europe, you typically seen as either a developer or an IPP, and we're kind of like something else. We try to do whatever Son Edison was doing, so the city was doing in the US. And they were not really called either developer or IPP. They were kind of called solar PPA companies. Like solar service companies sometimes. Okay, I guess we have to find some kind of new funky term for us.
[00:48:43.590] - Torsten
Yeah. Let's switch briefly to another aspect. So you founded the company, a few guys. Now you're 30 people. What was the biggest learning for you? Right, I went through that process myself multiple times, and it's a different thing than having a job in a company. What was the biggest learning? What was that maybe also your biggest mistake, if you dare to share?
[00:49:11.830] - Harald
I don't want to talk about that. No, but I think the learning for me personally, there's one key learning field, and it's actually the same learning that I had from my Ph.D. period. So I'm going to start there because when I was doing my Ph.D., sometimes when you do a Ph.D., you just go like, this is so difficult, I should just do something else. And then I talked to some people who came out of the other end who already had their PhDs and just ask for some counseling, whatever. And everyone said the same thing. And everyone said, you just simply have to keep track of why you are doing the Ph.D. Like, if you just remember why you're doing it, like the actual purpose of you doing this particular Ph.D., then you're always going to find a way out. That's it, just focus on that. And I felt going into business as an entrepreneur, it's exactly the same thing. It is difficult. I mean, there are times when it's really difficult and when you especially as you get a bit older and you're like, well, I could take this other job and that would be so nice.
[00:50:22.270] - Harald
Wonderful salary or whatever. Why am I not doing that? But the one thing that would keep you going and just answer that question is to keep remembering the actual purpose and just keep repeating it. And it might sound trivial, but I don't think it is trivial because I think a purpose needs a lot of attention on its own. Like you need to actually not just repeat the purpose. You need to challenge it and develop it and question it and talk about it and go deeper into it. It's like your religion. You need to pray to the purpose, you worship the purpose because otherwise you forget it. We can't just put a purpose on a PowerPoint somewhere and leave it at the bottom of the file folder. It's a daily activity to remember your purpose and to calibrate whatever you're doing so that you keep feeling that this is actually the best way to go after the purpose. Because it's a simple learning, I guess. I don't know. You recognize it from your own I.
[00:51:32.740] - Torsten
Mean, with my company, way less in the beginning, there's tough times, right, and you have a plan and then you think it's all set and easy peasy, you've got a business then. But of course there's obstacles you haven't really seen in these times. As you mentioned, you need to believe in your vision, right? Because otherwise this is then sometimes the only source of energy for you to keep going, right?
[00:52:00.060] - Harald
Yeah. It's the one thing that would just keep you going. And others will think that it's because you have the stamina or you're smart or whatever. But no, it's just like that one single thing that keeps you going every day. Once you get that loop going, like, no, but this is the most important thing that I can work on and it's a clear purpose and I just have to get it done. That's it.
[00:52:27.030] - Torsten
Yeah, good one. We talked about PPAs and when we listen to you then PPAs are the only way to get electricity business-wise from the solar park or from the wind farm to any source to the end customer. But I'm sure there are alternatives and why PPA’s are the best.
[00:52:55.950] - Harald
Yes, I mean, look at this big controversy and I think this is really like something that's actually controversial among customers and being debated and being like you can get kind of partly hard conversations going on this, but it's the question of ex and ex again, we have a strange abbreviation, but it stands for the Energy Attribute Certificate. So Yak is like a certificate that you're buying green electricity. And we look at commercial customers, power users, just a few years back, they were all saying that we have 100% renewable electricity, period. And then you check, what do they actually mean? And what they meant was that they were buying certificates, they were buying ex and they were buying ex that were not connected to any particular action on their part. So they could buy ex from like a wind plant that has been up and running for many years. But then suddenly the customer turns up and just starts buying the ex. And they say that now we're buying electricity from this wind park. That's great, we have 100% renewable electricity. And increasingly people are saying hang on a minute. If you want to talk about sustainability, like if you're doing this for a sustainability perspective, then surely you must do something that changes something in this world.
[00:54:28.090] - Harald
You have to tell us if you say that you have 100% renewable electricity, but you should probably tell us why you have made more renewable electricity. Why have your actions led to more renewable electricity? And the problem with the Eagle was that there was just no reasonable way that you could claim this because they were not that valuable. So the fact that you were buying Exit, it just didn't mean that anyone else started building new power plants because the ex were so valuable. It was just the other way. Ex cost them nothing. That was the reason why it was so simple. I think this is a controversial question because you still have a lot of big company brand names out there saying that we have 100% renewable electricity, but it's all ex. But increasingly, I think, consensus among the people who actually stands the SDGs, the UN Sustainable Development Goals that came out of the Paris agreement in 2016 and 2017. SDGs became like the kind of the gold standard for how to create your sustainability actions. You can't get around that. Like SDG 7.2 just says really explicitly that you have to increase the amount of renewable electricity in the world, and you have to explain how you're doing that.
[00:55:52.350] - Harald
And with the PPA, that's super clear. Like, you sign a PPA with me, I will build a new solar site. That change is super clear and it's like clinically proven. And with the ex, there's just no way to prove that change. I think that is the other way of buying new electricity. But I think I want to highlight that controversy like that.
[00:56:24.450] - Torsten
But with the PPA, you provided 24/7 electricity, right? So that's what your customer also depends on these certificates, cause you have to cover the night or let's say no sunshine days with other electricity you buy-in.
[00:56:46.990] - Harald
It's a good question. Solar PPAs typically tend to be paid as produced, which just means that we're selling electricity when we produce, not the rest of the time. So we're not selling 100% of the electricity that the customer needs. We're selling 30% of the electricity that the customer needs, and then they buy other electricity for the rest of the time. So we don't take the overall responsibility for the customer to complete our needs. We just say that whenever the sun is shining, we're going to sell you that electricity at that time.
[00:57:21.320] - Torsten
So you're selling actually to utilities because they then provide the remaining kilowatt-hours.
[00:57:29.950] - Harald
Yes. Again, you have good but technical questions. So actually you can sell PJs utilities, and a lot of people are doing.
[00:57:39.110] - Torsten
That on network operators. I don't know how you would turn them.
[00:57:42.450] - Harald
Yeah, you could sell to the network operator, too, but it's usually like a utility or energy trading company. But then you can sell PPAs directly to power users. If you're on the roof, though, so you're going to say behind the meter, you actually just sell the power straight into whatever they're using the power for. It's an industry. They have a rooftop. You're selling the power right itself. Okay, exactly. That's what we call an onsite PPA. And it just means that from the side of the grid, they're just buying less energy.
[00:58:16.650] - Torsten
Right, all right.
[00:58:18.670] - Harald
But then you can do an offsite PPA and then you're somewhere else on a field and there's a PPA with the customer. Now, the typical way we do this is actually through a financial mechanism where we're not like physically moving the electricity to the customer. We're just in the same electricity pricing zone as the customer. So we are here and we're selling electricity into the grid and getting paid for it, and the customer is here and they're buying electricity from the grid. And then we just make sure that we can swap the cost so that it's a complex difference. It's like the customers, if we have a certain level of certain price level, and if we're getting paid more than that price level from the grid, we're going to send the money to the customer.
[00:59:04.400] - Torsten
[00:59:05.160] - Harald
If we're going to getting paid less than that, we're going to take some money from the customer, but it's a financial settlement.
[00:59:10.830] - Torsten
Okay, then somehow sorry, you go.
[00:59:14.580] - Harald
Yeah. I was just going to add one last thing because you were mentioning the ex. And you're right about the fact that when you do a PPA, it's super important to transfer the ex. You can't do a PPA without ex.
[00:59:26.930] - Torsten
At least a solar PPA, a proper renewable.
[00:59:30.710] - Harald
Exactly, it's just the other way. It's just that the ex that we give the customer, they are what we call bundled ex. So the customer can say that, look at these ex, they wouldn't exist unless I, as a customer, had made it happen. So it's additionality is kind of like the sustainability where the customers create these ex’s themselves. This is technical. I mean, I'm not sure if it's devil's advocate.
[01:00:02.910] - Torsten
So is it very open for fraud? I mean, then basically you need to measure the meter smart super precise meters everywhere to measure the kilowatt hours and so that the total sum is then somehow the correct value. And also with these, let's say, virtual certificates, isn't that a system which is super open for fraud? And maybe you can live by small effects here and there and make a billion easily.
[01:00:40.350] - Harald
[01:00:41.460] - Torsten
What about, for example, transmission losses, right? You have a meet on one side and then you sell it on some other side, and then you have 10% loss on the transition line. I just realized that because with previous conversations it's not straightforward, right? So when you keep asking, then it becomes complex and more complex. Right?
[01:01:12.430] - Harald
So I'm going to say this to be perfectly honest about the way our industry works is that this simple pitch to customers is that, look, sign a simple contract, sign a PPA and you'll get all this easy. But the honest fact is that the PPA contracts as such are growing increasingly complex. And I think that's necessary. And it also reflects the fact that coming back to what we talked about earlier, pretty soon it's going to be more than just a kilowatt-hours. It's going to be reliability services, et cetera, baked into the PPAs. But there are so many reasons that the PPAs can be a bit complex in terms of what's the shape, who is taking exactly what risk and what part of the chain. If you would ask me what's like the downside of PPA, what's the most difficult thing for customers? I think it's looking at that contract and understanding that contract, you do need a lot of times customers bring in an external consultant to really put pressure on us and I mean really understand the contract. There might even be two consultants. There might be a technical consultant to kind of look at the fundamental technical aspects of PPA, but then a legal consultant to look at the legal side.
[01:02:33.070] - Harald
I don't think you need this. When you do onsite PPA, I mean, you just see how much energy you get. But when you do the offsite stuff, you do need a little bit of a team to make that work. But on the other hand, the volumes are so big and it's the transaction, the money involved is significant. So it probably makes sense that there should be a bit of work going on to make sure that everything is super straight and super clear.
[01:03:07.730] - Torsten
Is there some sort of authority, for example in Sweden or in other countries which then make sure that the sources and the things match up? And also related, the euro or the money flow is kind of matches that complex.
[01:03:27.170] - Harald
Yeah, we go there'll be a number of them. So because we use the electricity system, there will be someone who's responsible for balancing and it will be different settling counterparties, that's all part of the electricity system. You have those parties in there. And then in terms of the PPA, just making sure that there's a PPA standard, I think that's interesting work that's increasingly being done by a number of good organizations. So people like Solar Power Europe or Re Handle, I mean, doing great work in making sure that the way that we approach PPAs is being standardized and there is a common language and a common set of standards.
[01:04:20.590] - Torsten
Interesting stuff. Very cool. So where do you see, let's say we talked about bottlenecks as your guiding principle. One of the key questions we also address here is what do you think the solar or the wind and the renewables in general, what does it take to get the industry to the next level, to get to 100% renewable energy coverage? What's the thing where you think that's required?
[01:04:58.310] - Harald
Yeah. So two themes. The one theme is capital cost and that's pretty straightforward. The other theme is reliability services. So the first theme capital cost. I mean the capital cost is still the largest component of cost for both wind and solar. Largest single components of cost. And it's low. I mean capital costs, when you finance these things that come down hugely, I mean massively. And that's great. But let me be a little bit controversial here and say it should go down to zero. I mean seriously, not just for idealistic reasons, but just because this is the most solid future, proven critical infrastructure that you could invest in. And when you do the math as an investor, this is where you get the least risk in the long term. So it should go down to zero. And as it does, which is basically what's happening, I mean, the capital cost is constantly being pressured because of capital competition, but that is still the bottleneck. So being able to slash prices even further will demand even more capital cost pressure. And as that happens, deployment rate is going to go up even further. That's the one thing.
[01:06:17.310] - Harald
But the other thing is just as important to society, basically to the general reception of renewables in society is that this exact thing we have been talking about already. But as we deploy these assets, solar assets or wind assets, they have to be geared to provide reliability services back to the grid and we have to pretty much optimize some of the assets for reliability services rather than just kilowatt hour production. That is the only way we're going to be able to go to 100% renewable and use the grid and not be a problem for society in the end or not be a problem for we have to be responsible stakeholders. There is a grid. We need to kind of make it work in the long term as well. And we can, we just need to make sure that's being done. So those are the two big bottlenecks, I think, and one being just about capital, the other one being about how we geared the assets, how we create assets.
[01:07:25.110] - Torsten
Excellent, thanks a lot. Yeah, I mean cost of cattle. I'm still surprised when you say it's the largest cost driver for the assets because interest rates are that low already. Interesting view. Cool. Hey, anything else you want to add?
[01:07:49.690] - Harald
Now we talked about a lot of things. I mean it was a great conversation. Yeah, no, I think you had good questions.
[01:07:57.250] - Torsten
Good, excellent. Well, thanks a lot. Thanks for coming under the show and sharing your views. It's been a fantastic hour and all the best with your business Harad.
[01:08:14.650] - Harald
Yeah, thank you Torsten, and likewise. And it's been a really nice conversation. So keep up the good work with the solar journey and I look forward not only to hearing this one, we've already heard it, but to hear all of your future podcasts. They've been really interesting to listen to.
[01:08:31.410] - Torsten
Excellent. Thanks a lot. Hard bye.