Episode #022 - Christian Langen
Updated: Aug 14
Episode #022 with Torsten Brammer & Christian Langen:
In episode #022 of The Solar Journey, Dr. Torsten Brammer talks with Christian Langen Founder and Senior Advisor of Dynago. Christian has been active in leading solar businesses for about 20 years, from manufacturing wafers, cells, and modules with Sovello, building solar systems, and selling components with Conergy to selling inverters worldwide as Executive VP for SMA. For 10 years, he has been helping entrepreneurs and leaders in the industry as an independent advisor and board director. He is the chairman of Oxford PV, the Perovskite pioneer, and he helps entrepreneurs and investors buy and build businesses in the cleantech space. He calls himself a “free radical” and is a frequent contributor on LinkedIn and at industry events.
Connect with Christian Langen on LinkedIn.
What should the chairman's role look like in solar?
What was the cause of the industrial solar bust?
What can be done to simplify solar for residential utilization?
[00:00:16.650] - Torsten
Hello everybody. Welcome to a new episode of The Solar Journey. My guest today is Christian Langen. Welcome to the show, Christian.
[00:00:27.370] - Christian
[00:00:27.960] - Torsten
Hi Christian. So, Christian has been in the solar industry for 20 years. He has an entrepreneurial and business school background. And proof of his early drive for business is that he founded his first company in 1999, something with the Internet. We'll come to that later. But solar has been a major part of his professional career. So he's been in the solar industry since 2003, when he moved with his wife to Australia and started a solar wholesaler in Sydney. Together with the Congy group. He came back to Germany in 2007 and stayed in the solar industry and moved into Wafer Cell and Module manufacturing, turning Everq into Sovelo as Chief Sales and Marketing officer. That was, by the way, next door to my previous job in the Solar Valley here in Germany between Berlin and Leipzig at the time. Later he became CEO of the global residential and commercial business unit for SMA Solar, an inverter manufacturer, one of the big brands in that sector. But in 2013, after 15 years in executive roles, Christian had his “been there, done that” moment, so that he decided to become independent. And he has been helping entrepreneurs to build businesses in the clean tech space since then.
[00:02:10.890] - Torsten
Today on top, he's also the chairman of Oxford PV, one of the upcoming perovsky players in the industry. And Oxford PV may be the perfsguide pioneer in the industry. He calls himself a free radical and as a frequent contributor on LinkedIn and at any solar industry event. So Christian again. Welcome. You just told me you're now in Finland. How come?
[00:02:44.870] - Christian
Yes, well, that's mainly a private reason. My wife is Finnish and although we've been together for 26 years, we decided two years ago that it's finally time to move our family into Helsinki. Yeah, that's the reason.
[00:03:01.100] - Torsten
Okay, excellent. So your main job now is being a helper for solar entrepreneurs. So why do they hire you? What can you give example of your current projects? How do you interact with the solar industry?
[00:03:21.390] - Christian
In many different ways. I've been doing this for ten years now in a broad range of projects. Right now, for example, I help a few investors finding the right companies to buy in this space and supporting building new business models out of that. Those are actually some of the core projects I have right now. I'm helping the business model evolution of another player strategy process. So I'm reasonably well known in the industry. So I've been in the lucky position that actually over the last ten years, I've hardly ever had to sell anything. And that's really a positive for me. Always had the opportunity to pick interesting projects. But I'm not like a management consulting company. I'm like a one man show. I do this as a trusted advisor and partner to all kinds of managers. And entrepreneurs and founders. And by that I stay really up to date. What's happening in the industry, that's the other thing. So it's really interesting to continue to see from another perspective what is happening there. Without wearing too close ahead, I can see all aspects of what's going on here, which is really interesting right now, as you would know best.
[00:04:44.810] - Torsten
Yeah, there's a lot of movement in the market, and I'm sure it's interesting to follow that from your perspective and not to have the operational duties.
[00:04:58.270] - Christian
Yes, that's a big advantage and one of the reasons why I took that path.
[00:05:02.690] - Torsten
Yeah, but let's go back in time a little. Not all the way, just a little. You went to a business school, so for many people who leave school ready to have to follow their own path, that's a difficult process, a difficult time. So why did you choose this path? Business school, entrepreneurial training. And did you also think of alternative routes? How did you come up with them with a final decision?
[00:05:33.850] - Christian
Yeah, my alternative route would have been a technical career, engineering or more, because I grew up spend much of my time with my grandparents on a farm, and my grandfather told me to use every tool you can imagine from welding, electric, gas, well, everything you can do with the tool I learned. So that would have been the other part. But I was also always interested in why people interact with each other in business. And it tickled my fancy early on. So I actually just applied to this really good private business school, VIHA in Falinda, which is quite known as an entrepreneur's, very entrepreneurial place. And I got in and I felt, actually, this is a good place to be. This is really interesting. Very broad. I personally believe in having a generalist view. I see the value of a big range in what you do, doing different things, not too early, specialization. So if you'd ask me for advice, it is don't specialize too early, your life is too long for that. You see too many things, try to see many things. You may do your most productive work when you're 50 and not when you're 25, because many things come together after you've seen a lot.
[00:06:52.950] - Christian
And I think a business school can prepare you for that because it's more general what you learned there. But in that particular business school, it is really entrepreneur driven. So it's probably one of the most entrepreneurial places you can find for that.
[00:07:08.620] - Torsten
Okay, so it seems your expectations were met. What was the coolest learning when you look back from that business school that you can still apply today?
[00:07:23.310] - Christian
I think it's a way of thinking. It's like, how do you approach something? How do you look at something? Do you see an opportunity in something? In the business that you see, you take a different perspective at a question that you encounter. You ask yourself, is there a business reason why this has happened or not? Does this technology have a real customer value and advantage? We have very often situations also in our industry where people just are in love with their technology, but they forgot that customers will only buy it if it does something for the customer. So give an example. When I was later on at SMA, I was telling the sales teams regularly, sorry, guys, but nobody wakes up in the morning and says, I want to own an inverter. There is no genuine demand for something like an inverter, because people don't want to own an inverter. They want to have clean electricity. And the competition is that power plug in the wall that's just there. What we're trying to do is try to put 100 holes into their roofs, pull cables down to the basement, put seven boxes onto the wall, and tell them that's a better solution than the power plug in the wall where power is already there.
[00:08:42.340] - Christian
So you need to distinguish between you have a great technology, but what does it actually do for your customer? What is the customer value? And I think this kind of thinking, from this customer perspective, is the one thing that you can take from a business school. And personally, it's the people you meet and the relationships that endure, have friends that I still see, like, every year from there. But that's a different aspect, of course.
[00:09:06.930] - Torsten
Yeah, but still interesting. Thanks for sharing. And your business drive was not only talk, but you founded a company in 1999. You mentioned it's an Internet based company. Do you want to share? What was your value proposition you brought to the table with that idea?
[00:09:29.770] - Christian
Yes, there was the name of this interesting. Yes. Typical business school thinking. I was actually starting a PhD in production operations management.
[00:09:44.350] - Torsten
[00:09:45.070] - Christian
And I was at the university, and after about a year, I was together with the other PhD in my office. We both thought, you know what? Let's rather found a company. That's where this started.
[00:09:59.890] - Torsten
So you stopped the PhD.
[00:10:02.610] - Christian
Yes, I did. I never did a PhD.
[00:10:05.660] - Torsten
[00:10:06.160] - Christian
I started one year in.
[00:10:08.450] - Torsten
You said, let's do business.
[00:10:13.250] - Christian
Let's found a business in an old bread factory in Dislodor. Yes. And the question we wanted to address was, there are so many hotels and airlines that fly with empty seats or have empty rooms just because the pricing is too unstable, is too stable, and not variable enough. It doesn't really address what people are willing to pay. So we were basically the first people out there to do something like the variable pricing, customer driven pricing. So we would ask customers, what do you want to pay for that flight or that hotel room? They would offer that to the airline. They say, either take it or leave it via the Internet. But of course, the challenges in 99 were completely different. So you'd have to have a website that didn't have more than 100 KB because half of your customers still had a beeping dial up internet, so nobody was really willing to give their credit card to this obscure thing called the Internet. So the challenges were entirely different. But it was really a big learning experience. It was partially successful. Some part we sold, another part we had to close down. So I lived through the whole business cycle with this.
[00:11:27.580] - Christian
Raised a lot of money, some good investors. It was a really interesting experience.
[00:11:34.910] - Torsten
Wow. Excellent. Yeah. Quite an early move up with that kind of business concept. Now, of course, it's almost standard, right? But 1999, that was an early idea. Interesting. But then solar popped up and you joined the solar industry in 2003. Why did you move in that direction?
[00:12:01.830] - Christian
I always had an interest for solar, much earlier already, and then another life decision. My wife had a great job offer in Australia and Sydney with her company, and I was like in between things and I felt like, you know what, I'll come with you, let's just go there. So we went to Sydney and after having learned how to surf a little bit for a few months, I felt the entrepreneurial bone was tickling again. And I really wanted to do not just something, but something that touched my heart and was interested in. And I did a bit of a review of what is the industry like in Australia? And you know that because you were there actually before me at the ANU. Australia had a great solar industry of mom and pop shops distributed around the country, doing a lot of off grid, but there wasn't really a professional distribution structure. So you'd have a few wholesalers, but not really someone who could take this to the next level of professionalization. So when I happened to run into the founder of Conogy, because they visited Sydney and my wife and his wife were working together, so we went out for dinner.
[00:13:23.990] - Christian
I basically just pitched to him, hey, you know what, I'd really like to drive this year with a solar wholesaler because there's this gap in the market and I think this is going to happen. And that's the business school thinking, by the way. And he was a very entrepreneurial guy and jumped on it like, okay, what do you need? Let's do it. And that's how it started. So I started the solar wholesale business with a laptop on my dining table. I started to build the infrastructure, hire the first people, and got a forklift license in Australian One so I could unload trucks and took off from there. So that was quite successful and also another great learning experience and my start into solar. Of course, solar doesn't let you go.
[00:14:11.270] - Torsten
Once you're it's viral, at least for most. And we'll talk about market and tech, et cetera later. But just in terms of your career path, you told me that after being in various executives roles for ten years, from 2003 to 2013, you had your been there, done that moment. And I think that's an interesting phase, I think, in your career and maybe also many others. Would you mind to share how that felt and how you dealt with it?
[00:15:00.930] - Christian
Yeah, I think it's not so much related to solar as such. Number one, that's not really related to solar, but it's more related to many people think that when you make your way up the career ladder, then you have more freedom the higher you go, or you have somehow your life gets better the higher up you are in the organization. And that's just not the case. It's just different. You have just different stakeholders, actually have more stakeholders from all sides all of a sudden. And I was just at that moment where I felt like, okay, I have a big responsibility. At the time, I was leading the global residential and commercial business for SMA with about a billion euros in turnover and 3000 people around the globe. And it still didn't feel like you could move and shake what you wanted to do. And I had this. All right, now I've done executive life for quite a while. I've been traveling too much. I didn't like that so much, really. There must be something else. And I've learned so much in the industry over the years and from all parts of life. I founded the Inverter subsidiary in Japan, for example, or started with Khalogi, a business in Brazil and in the US.
[00:16:17.660] - Christian
And built factories here and there. So I'd seen so many different things that I felt like, I think I can achieve more if I just take that, try to condense it and help other people that are in maybe similar situations, or situations that feel similar or have some structural similarities. I think I can achieve more than just continuing to slog on within this in a line role, whether you're executive or not. And there was just a revelation, a moment when I just decided, I'm not going to extend the contract and I will actually go. That other path happened over time. It didn't happen in one particular, there wasn't a trigger or it was just like, you know what, this whole executive thing is not really what everyone tells you it is, or what you think it is, maybe. So, okay, I've been there and I've done that, and it's great. Now let me go to other shores. I don't know. What is your experience in this? I'd be curious about your own experience because you have similar.
[00:17:29.470] - Torsten
Right now I'm in a kind of similar situation, right? So I started a spin off with QCells and one of the Thin Film subsidiaries. Then I started the metrology company, Wavelps, and it's still successful, up and running, but I quit my job as the CEO pretty much a year ago, and all were good wonderful experiences. But there's always a time it felt then I achieved what I wanted to achieve and there's still plenty of interesting stuff to go. But yeah, kind of eager to do something else without knowing now what I want to do. It just felt that I don't have that ultimate drive anymore, which I had in the in the early phase, right from, you know, writing down the business plan, getting the first customers, building a company to 80, 90 people and then taking it to the next level. I thought that there could be others who are now more interested in doing that job. And right now I'm also in a similar situation as you as doing partially consulting, doing the podcast. And I'm also very happy now in that situation to, let's say, observe the market to look into new businesses and good part is that you learn from that role that you learned a lot.
[00:19:08.350] - Torsten
That I learned a lot over the last, let's say 17 years in my executive positions. And I'm happy to it's cool to share that with others and let's see where this path will take me. Right now I'm kind of enjoying the freedom that I've got.
[00:19:29.190] - Christian
I think that is a really important point in that and actually maybe last aspect of this. It's really difficult to start enjoying that freedom because we've been drilled so much into a hard working individual. And the toughest thing for me, I called it the Wednesday Challenge. But I took a book and put myself at 11:00 A.m. In a park where all these business people go by and sat on the bench and read the book and saw all these people in their suits and go by in the middle of Hamburg. And I listened to myself. How does that make me feel? And it's really tough because on the one side you have the time, you're no longer on the other side you have this urge of oh, am I still a productive part of this society here? What am I doing here where I am sitting here while everybody else is doing something? And it takes a while. It took me about half a year easily until I was a complete master of my time mentally. And now of course, I very much enjoy this freedom.
[00:20:37.950] - Torsten
Yeah, it is weird. After a year it still is for me. So I'm definitely enjoying it. I know it's the right thing to do, but it still feels as you said, we are so much trained on nine to five work life. I'm still searching and observing. Interesting. Maybe we should talk.
[00:21:15.450] - Christian
And it's a good way to just look into different things. And the good thing is too many options. Rather too many options than too little.
[00:21:27.870] - Torsten
We should talk about that maybe in a year or so and see where my life took me. Cool. Yeah. Today you are also the chairman of Parasky tech player called Oxford PV. It's based in England and also in Germany. We will talk about tech and markets later. I would like to raise another perspective, which is about the role of the chairman of a chairman. In my view, the role of a chairman in most corporations, or the ones I was involved in, is often very badly executed. And I'm sure, of course, you're doing a great job as a chairman. Or let's say the role of the chairman is underestimated, or the role is not really well defined. There's many different expectations to it, even from the person who is running, who's a master of that role. What's your take on that thesis? That the role of the chairman is really badly defined, mostly poorly executed.
[00:22:50.310] - Christian
I agree with you because think about what the context is of this chairman role. You have all these high powered executives and experienced investors and maybe corporate people in there around you. And then the expectation is so this is a particular culture that's in the board and in there, which is this kind of high powered culture. But those people don't tend to spend enough time talking about how do we want to organize ourselves, what are our roles, the soft aspects of this all they don't spend enough time in that. I've done over the last ten years, also coaching education, coaching executives, and using a broad toolbox of things. And I have to say that's one aspect that's really missing in many boards. You have to distinguish a bit among countries. In the UK. Where I'm in this chairman role, it's a more active role than, for example, in the German context there, it's the Alf steep. So somebody who's looking onto your hands as an executive to make sure you're not making mistakes. The name is already kind of telling you that the perspective is often a bit different. In England, it is much more active.
[00:24:10.630] - Christian
You have many more meetings. You are more expected to be something like a positive sparring partner for the CEO. So I'm definitely a lot closer than many would be in a similar role here in the German context to this. So speaking to the executive team and also within the organization, it is a more open role. But you're right, it is not very well defined and you need to find your way and be open about how do you want to live this.
[00:24:43.530] - Torsten
I think it's a super interesting topic. It's not very often discussed, or at least I haven't come across discussions or books about it. Right. But I think it's pretty blank. Definitely in Germany about the role of this person there.
[00:25:07.400] - Christian
[00:25:07.670] - Torsten
And also the, let's say team match of the executive players. Right. So I think as an executive in the company, you look a lot more about team fit of your employees. And I don't see that aspect usually taken care of by the chair, by the board, for their executive team. That's an interesting part. That I also observed, right. And a lot of problems arise from that.
[00:25:42.670] - Christian
I think the most important part of the job is to properly orchestrate this whole thing because it's complex. You have these investors that have entirely different interests. You have some experts, independent on the board. You have the executive team, you have the whole organization. You have the outside world. And you're somehow there a backstop for the CEO towards the outside world. Then you are a conduit for investors towards the company. It's different roles in that channel. But I agree with your point that we don't spend enough attention on cultural fit. I mean, the culture that a company has is the most important value driver, and we don't spend enough time. So it's actually one of the first things I did at Oslo PV was initiate a Vision Mission Culture Values Workshop series driven from the board with all the executives and then with the whole team, with everyone. And that will renew regularly. And it's super important that you take these so called soft aspects, which are anything but soft, and make them important when you choose executives as much as when you try to involve the whole organization. So I fully agree with your point.
[00:26:57.110] - Torsten
Cool. I hope we've seen person soon and we'll have a real campfire in front of us. I'd love to elaborate on that.
[00:27:05.930] - Christian
[00:27:07.850] - Torsten
So, again, stepping back in time, you are part of the first boom and bust phase, just like me, let's say, of the let's I would call the first industrial solar phase between 2000 and 2010. And now we have kind of, let's say a third industrial phase where the second I would say it was China takes league and takes the cost reduction to the next level. Now china is dominating. And now I would see maybe a third phase is entering where manufacturing will become a global thing, not only a Chinese thing, but maybe we can learn something from the, let's say, first boom and bust phase here in Europe, particularly Germany. What were the reasons for the bus, in your opinion, and what can be learned from this phase?
[00:28:09.930] - Christian
Well, there are several reasons. And the good thing is now the structures are entirely different. So I hope we talk about what is different today, what maybe give us a bit more hope than in the past. I think in this first phase, where I was part of building factories that ultimately got closed down, wafers cells and modules, we didn't understand what set us apart. That was the first thing. So we were investing into technologies, and then there were equipment manufacturers and these equipment manufacturers that worked together with us. And we didn't really try to look at what is the business model of an equipment manufacturer? Why is that relevant to my business? Okay, now, I told these guys we developed together how to make the best cells and what do they actually do with that knowledge. Okay? If you were to spend five minutes thinking about that, you would have realized that the business model of an equipment manufacturer is to build and sell equipment. So who's most interested in getting that equipment which has the whole knowledge incorporated? It's somebody who wants to play big in that role. And it came together at a time when the Chinese government made the strategic decision.
[00:29:26.930] - Christian
We want that to be focused and took away, also created some practices that some consider unfair. Endless financing, support of all kind. But ultimately, it was us not understanding that we've built something that we're exporting that will come back in the shape of products that are equally good because they're made with basically the same machines, but cheaper. And I don't know. Would there have been a way to do it differently? Very difficult. I mean, there are some examples. For example, first Solar took an approach and said, we go in such a close relationship with the equipment suppliers, nobody will get our technology all right. But of course, not everyone can do that, and it would have hindered growth on this side. So I think now we're in a very different playground. Times have changed fundamentally. The first modules you sold and I sold I mean, I sold the first modules for €3.70 per watts, and that module had something like 180 watts, similar size to what you have today. So that was an entirely different world for many, many reasons. If you were better in cost, which the Chinese wear, that would make a real difference to a project.
[00:30:52.370] - Christian
But now, if you are better by 10%, even 20%, if you're the cost leader in the world, you are like three cents, four cents better per watt. That is a difference you can bridge with other means, with better marketing, better service, proximity to the customer. Modules are not that relevant anymore in the overall scheme. So right now, the whole basis for competition has changed. And what has also changed is that the Chinese are no longer the ones who have these, who just have nothing and can start with the newest technology. Now they have all the big factories with the technology of the current mainstream. And the opportunity for us here is to start again on a higher efficiency level, on a better product level. We don't have this legacy 15 gigawatt perk lines, and we don't have that anymore. Now, actually, the tides have turned to a certain degree, and you hear often comments, oh, don't start an industry. It's got to be the same like before, and the Chinese will take it over anyway. I actually don't think so. I think there are considerable challenges in particularly building the ecosystem here, particularly building the supplier base.
[00:32:21.630] - Christian
It's super tough to get even a junction box for a reasonable price that's made around here or many other components. It's the whole ecosystem that matters. But I think it's a vastly different situation we're in now. What is your take on this?
[00:32:40.610] - Torsten
Yeah, it's definitely an interesting phase, right? And I mean, you mentioned building up the ecosystem is a massive challenge. There are companies out there who do their manage the growth and they walk their path just like, let's say, Maya Borga. And there's Carbon now trying to set up from scratch a new manufacturing site. There's the Italian consortium, many small players, module manufacturers who now think of a big large step for a longer time to come. I mean, you definitely they all need, as they do now, use a material from China, which is totally okay. I think what I would be interested in is to see if one of the big Chinese players then simply says when the conditions are fine for the US. They are defined. And the Europe, europe hasn't decided fully how it's going to look like if they just decide a Chinese player just decide, say, let's set up a 30 gigawatt factory in Hungary and how would that impact the, let's say, new, still small European players? Because a Chinese player would have all the supply chain issues solved. They have the know how for them, it would be a fairly small step compared to the existing, let's say, European or US.
[00:34:26.530] - Torsten
American companies, or even Indian companies to set up such a large operation.
[00:34:33.020] - Christian
I disagree because it works well in the Chinese context. It's definitely possible to put up a ten gigawatt factory. It's not that easy to do it over here. And they would encounter the same challenges. All of a sudden you have regulation different processes. I don't think so, actually. I don't think so. I don't think you can just say do a copy and drop it here and it'll be the same as over there. I don't think so. And my perception is that the Chinese players and there's some really good Chinese players out there too, they are taking a different approach. They have realized that, for example, purely with producing the same thing, but cheaper, you don't have a competitive value proposition anymore. So they're really investing more than Western companies right now in R and D efficiency advancing technology. That is the thing that should worry us more.
[00:35:32.020] - Torsten
Yeah, exactly. I mean, LONGi trina, they have now a record fantastic track history of world record efficiencies, right. In all sorts of silicon based technologies. And talking about Periscope, since you're close to that technology stream, I learned that there's 400 to 1000 institutes in China working on alternative thinfill materials like basically close to periskite. And that doesn't really show up here outside China on the efficiency tables, world record efficiency tables or any reports. Right. Because by now it's a pretty close shop in terms of marketing the achievements, except for those ones needed for marketing of, let's say, existing products. Yeah, it's an open race, right. And I think we should always remain open for collaboration. Right? I mean, we have. This new, let's say, trends in global global politics, and for various reasons, I think important for all of us, I think, should be to remain open for new collaborations, also across blocks, let's put it this way. Right?
[00:37:06.560] - Christian
Yeah, I fully agree. I mean, I really have a lot of admiration for what many of the Asian companies have achieved. And yes, they will play a positive role in here. The planet doesn't care where solar comes from, to be honest. We need as many of them as we can manufacture. And for the next decade, we need as many of them as we can manufacture. I think the challenge is a different one. It's not a winner takes it all market. We always behave as if there's going to be the one winner who takes it all. That's not the case. I mean, it's not even a highly concentrated market. And the level of concentration is not going up. It will go down because demand is growing even faster than the capacity currently is. Still. Yeah. When it comes to new technologies, you're right, there's a lot happening, particularly with regard to perovsky. I remember when Oxford TV started this whole perovsky thing, there were like three scientific articles per year and two of them were from us. And now it's more like 10,000. So, yes, there's a lot happening and it's good like that. We need that next stage, this tandems.
[00:38:27.100] - Christian
And perovskites begins where silicon ends in terms of efficiency, and we need that next step. It's important. So I'm not fearing innovation. I'm not fearing innovation from wherever it comes. It's really about there'll be many players that can be successful. I'm quite sure that the one I'm working with is one of them.
[00:38:58.240] - Torsten
You mentioned the role of efficiency, in my view, but I'm interested to learn your opinion. In the early phase of the, let's say solar industrial years, it was important to raise efficiency, bring down costs, just to be competitive to the conventional energy sources, oil, gas and nuclear. By now, solar and wind are in most times, in most regions, the cheapest source of electricity. So kind of that competition is won due to industrialization mass production technology gains. So that the driver for bringing up efficiency is today a different one than it was in the past. Right. Basically now it's really just about, in my view, about the competition between the solar manufacturers. Right. So to stay in the market, not to lose against competition in terms of product features, I think that's cutting it.
[00:40:12.220] - Christian
A bit too short. The competition will soon be around suitable space. And if we need to install a terawatt per year, I mean, this year, my personal theory is that we're going to be between 354 hundred gigawatts worldwide, and that needs to go towards a terawatt. And that will make the prime spaces to do that will become rare. You will see that space becomes a bigger factor. And if you look at the purely at economics. Modules are not the main cost factor anymore. It's everything around you. Look at the US. How much is soft cost versus actual component cost? If you have the same project but the same roof, the same system, but there's more power coming out, that is a very important economic driver. So it's not so much about primarily about competition among individual companies, but it is simply having a better, more resource, reserving solution. And that saves the space. I think that's the bigger driver.
[00:41:23.040] - Torsten
Yeah, but I think that's exactly the point, right? Because if you can't offer this high efficient module, you will lose out against your competition. Who drives the best economics. So it's really the competition within the industry rather than fighting against gas and oil. Right.
[00:41:43.880] - Christian
That fight is one.
[00:41:45.260] - Torsten
[00:41:49.320] - Christian
It's not one. In the public opinion.
[00:41:51.280] - Torsten
We always technically not.
[00:41:55.560] - Christian
Constance fights with the IEA, for example, have been proposing this is going to be solar, and then every year they have to shift it upwards. Then they can do too low prediction. The society in general has not fully realized that yet. We know that in the industry. Many people know it, but it's not fully internalized. But I'm not worried about the cost of any fossil alternatives that simply don't have a chance.
[00:42:29.940] - Torsten
Let's move to a different subject. You raise quite often the aspect of simplification of solar.
[00:42:39.480] - Christian
[00:42:39.950] - Torsten
So what exactly do you mean by that? And can you give us example where we are and what you foresee in the future?
[00:42:49.020] - Christian
Yeah, I think I said it in the beginning. I think we're making the life of customers initially quite complex from something that's super simple right now. So we're pulling the topic of electricity to the forefront, which is something that has always been in the back for companies. That's just been one line in the purchasing negotiate a new electricity price. Okay, we're done for a year. And now all of a sudden we fill that with all types of complex technologies that nobody really knows how to properly connect on the customer side. And it's difficult to understand, and we don't really have super good software tools to communicate that. And I think it's just a complexity that is holding us back. If we manage to make clean energy, distributed energy, simpler from a customer perspective, that's what will drive much more demand and much faster transition than any other thing we can do on the technology side.
[00:43:52.560] - Torsten
Do you have another example? So you mentioned the eight holes in the roof and the basement for installing the inverter. Do you have other examples? Right, let's say talk about the residential solar system. Where do you see complexity and ideas for simplification?
[00:44:12.760] - Christian
A key aspect is combining electricity and heat. Right now, these are completely separated. Now the electrician really doesn't touch anything where water flows through, and the installer really doesn't touch anything that has electricity. If you can avoid it. It's really tough for customers. It makes it tough for customers. We have to think this as an integrated item. And I don't feel that if you have tried to build a house and you need some heating system and you want electricity system, it is very complex to get that all done. You get like two quotes, 15 pages each from the one guy, the other guy, and then you need to somehow there's nobody out there who can really make it super simple. Now you see business models and companies that are trying to do this and approach it from the customer perspective and that is a big, big field for innovation, don't you think? This is all very complex. If you start to look into this, it's a one time purchase. I mean you don't do this every year, once in 20 years. That's not something you read about and know about.
[00:45:29.310] - Torsten
Yeah, you are absolutely right. I was approached in the last twelve months particularly due to the, let's say, let's call it the energy crisis here in Europe or particularly Germany because everybody now wanted to have a solar system either for just a small one for the balcony or if they own a house on their roof. Right. So I saw all those quotes from around Germany, southern Germany, northern Germany, and it's pretty complex. Right, so kilowatts are mixed up with kilowatt hours. There's a you have to have like 60% down payment, like for a 30 40,000 euro investment. It's pretty big call. No installation time guaranteed in terms of performance, unclear. Right. People are, as you mentioned earlier, afraid of the holes in the roof. What does it actually mean? What if I want to sell the house? Is it an extra value that adds value to my house? Or is it just a burden because the new owner might say, hey, that's a risk of fires due to the solar modules. The complexity then with the electricity bill so you have a supplier with your, let's say 24/7 supplier of electricity, but then you're also supposed to have a storage system.
[00:47:00.270] - Torsten
So how do they all interact? And what's my actual saving? So people really get into whatever english teacher now then needs to become an expert on electricity markets and storage technology and energy home management systems. So it's bizarre, right? So it's definitely not possible. And still only the ones with the big pockets just take a decision and say whatever. Right. And the other ones need to become expert or take a risk that they choose the wrong installer and or the wrong technology. Right, I agree. So that's why I find it interesting. But I don't know about the quality that there's kind of new players definitely in Germany like Einscoma finf and NPAL who now take a different approach in terms of marketing and offering complete systems versus the, let's say classic players.
[00:48:07.120] - Christian
Yeah, the really important innovation in there is that our starting point from within the industry has always been technology. We are so much in love with technology, but what really counts is the customer journey. It's the customer experience. And I think very few players in the market have really thought it through from that aspect and very consequently took all the processes and just optimized them from the customer experience. I think that's the difference. You said you named two DZ. Four also has been doing that. Yes. And they have their own challenges, like with increasing interest, maybe rental is not the best option and a range of other challenges. But really thinking this through from the customer side has been something that I felt has been missing. And the local small electrician, how can he do that? It's difficult. He needs to order 15 components from his wholesaler, gets all the data and drops that into an offer. But how can he add this communication layer, I would say towards a customer to make it easy for them. I think there's room for improved software solutions. There's room for a lot of again, it's the soft part that's missing.
[00:49:24.130] - Christian
How do you communicate that? How do you translate what we do in technology and what it actually does to a customer and what is the process? And take out some uncertainty of the process, as you said, as well. Like how can you give some commitments? By then it's going to be done and this is what it's going to do. And what we need from you is access to this and then you're fine. Otherwise sit down and we'll do it. It's too complex and that's holding back. And I think in the commercial and industrial space it's even more so. If you ask the average owner of a small company, they often don't have the expertise, but they have even more needs and even more opportunities to have already storage of all kind in there that nobody knows how to connect properly. I think the next wave of innovation will be simplifying decentralized energy from a customer perspective using good process, good communication, good software, not so much the technology. Maybe we need an extra box for communicating between all these components. But the innovation will really be in the customer experience.
[00:50:37.600] - Torsten
And do you see players in the market who are aware of this, in following this path?
[00:50:45.940] - Christian
I think there's a growing awareness right now there's the luxury of still doing business the old way and you're not being punished for it. So I think there's an opportunity, let me say it like that. I don't see particular players that stick out very much.
[00:51:07.500] - Torsten
[00:51:10.460] - Christian
Here'S the business school guy again.
[00:51:13.020] - Torsten
Everybody out there, you have an idea. Hi Christian. And you can next best solar company. Interesting. But I totally agree from the I agree that it's not simple. Cool. In our talks before this recording, you mentioned that you have special thoughts about the role of artificial intelligence in the energy transition with Jet GBT and everything ongoing. Of course, that's AI is very much a topic which is on the top of the list of many, many of our listeners. Where do you see AI in the energy transition?
[00:52:09.440] - Christian
In one aspect, like we said just before this, I think AI can help to simplify this. It can help to summarize, it can help to grab data from different sources and pack it together into something that makes more sense to customers. I think it can learn to optimize algorithms. It can learn to first get a good glimpse of what is really happening in your house. What are the low profiles, where is really where are storage, w everything that is out there? I think it'll help, particularly in the analysis phase and possibly also in solution design. I think it's early days. Right now it is mainly a productivity tool. I'm using it regularly for all kinds of things. It's an excellent productivity tool to start and fight against the toughest thing you have, which is a blank page. It doesn't give you all the answers, okay, but it gives you a start. And that is overcoming a lot of the hurdles. So I think when it comes to improving customer communication, answering questions, but also analyzing data, again, if you go back to the commercial and industrial side, it's not so easy to understand what are all the energy flows?
[00:53:32.830] - Christian
And you may have different sources of data and some is here, some is in the production system, and some is here, and there's something in the office. And when do we get power? You have external signals, like price signals on power. So bringing this all together is something where AI based technologies can help and should help.
[00:53:55.120] - Torsten
Cool. Now I need to jump again because that's really very curious about that topic. Again, jumping back in time. Let's say the previous phases of solar, let's call this there have always been large utilities, all companies, industrial players like Bosch, Siemens, General Electric or Shell, who were involved in the solar business. They had their own manufacturing sites, but they lost out very badly, even though they invested a lot of money into solar. And I think for many people who have been in the industry, that's quite a puzzle, right? Because you could think that's their way out, right? They have the money, they have the management, they have the technical expertise. It should have been so easy for them to take it well beyond the level where we are right now. And since they never managed to do that, many say that they used it only for greenwashing, what you would call it today. Right. So what's your take on that? Was it just greenwashing or did they really have a different approach? They had sincere interest, but they couldn't do it because of whatever management competence, different culture. Yes. What's your take?
[00:55:40.530] - Christian
Well, greenwashing is a part of it, but I think it's not the main part. The main part is that they come from an entirely different business structure and philosophy and management philosophy. I've been in the BP solar factory in Sydney 20 years ago. I mean, these guys were leading even in solar manufacturing, shell and quite a few others, but they couldn't deal with, number one, their controlling mind couldn't deal with the volatility. That's the first thing. So this whole selling a complex product that doesn't have this easy business case and a functioning market that was all too fragmented, small, this whole small thing is simply not compatible with their culture, not with the controlling mind of it. Goes up 30% one year and 20% down on the next. That's simply something that it couldn't really deal with. Maybe the Bosch and the Siemens and all these players couldn't deal with that. I think if you take a really top down perspective, what we see is the fight between the molecule world and the electron world. And they're very, very different in structure. Your business, if you're in the molecule world, you make oil molecules and gas molecules and all kind of other molecules is you have this centralized plant, you have a big distribution system, pipeline, ships, all kinds of big things.
[00:57:09.460] - Christian
Then you have a smaller distribution system, gas stations, and you have full control over that chain. You have like ten charge points on the way and you basically control how the consumer gets this product. The electron world bypasses all of that. And it's not the decision of some corporate boards how the capacity in the industry expands by building another refinery, which is like 10 billion investment and takes five years. But now it's the decision of millions of individual consumers that put something on their roof and then use it right away that same day or the next day in their car. And that is a business structure that's so fundamentally different. This whole decentralized world is so fundamentally different for the management, for the whole culture that you have in all of these big companies that whatever money they throw at it, it won't make a difference. It's the culture, the mindset. Plus they're not believable. I don't believe that I get the best clean energy solution from someone like Shello VP. I'm sorry, I don't think it's believable. For me it is not. I don't associate those brands with what I actually want to achieve.
[00:58:26.930] - Christian
I think the ESG aspect, they become much more important. You will really think about what are these guys about, what are they about? And it's not solar. Yeah, they will have successes, they will build large, of course they start with the large utility plants because that's the closest in their thinking. The wind power, large plants, offshore wind, that's where they build successful because that is the same kind of centralized thinking. But when it comes to really truly decentralized products, I don't think they have what it takes. Whatever how much money they put into it.
[00:59:03.520] - Torsten
Interesting to hear the thoughts the opinion of a free radical. Right? So thanks a lot for that. So we talked about a lot about and thanks for sharing your opinions about the past and the future perspectives. So, as my final question, right. What's the single most important thing to do to get solar and wind renewables to the next level?
[00:59:40.400] - Christian
That's a good question. If I would have the complete answer on that. I think the best point about that is we don't have to reinvent the wheel. We have everything we need.
[00:59:56.980] - Torsten
[00:59:59.060] - Christian
Yes. So it's more evolutionary, it's more coming from the customer and the application side, what you talked about before, truly understanding why do people do this, how do we get we are all convinced, but hey, not everyone is yet. You see the fight about electric cars and prohibiting ice cars. You see these trench fight. It is really interesting how you can get to that level, give more people the chance to realize that it's cheaper to have clean energy, but it's also better in every aspect for your life. And I think a lot of it is momentum building. It's a slow, it's like a wheel that you need to fly wheel that is already moving at a reasonable speed, but it's just keep on pushing. I don't think we need any wonders anymore. I think the pathway is clear. It just needs more of the same from more people. And that's the very positive answer and view that I have on this. So I don't think there's any rocket ship kind of innovation needed for that.
[01:01:19.680] - Torsten
Okay, excellent. Christian, it's been a great pleasure. Thanks so much. Thanks for sharing your solar journey and your perspective on the future of our solar industry. I wish you all the best and please keep up your role as a free radical. Thanks for that.
[01:01:41.830] - Christian
I will. It thank you very much.