Decarbonizing heat at Cleantech Forum Europe 2019– A sit down with Toon Bouten of tado°

At the recent Cleantech Forum Europe in Stockholm, we explored innovative solutions to tackle the heating challenge. We looked at alternative heat de-carbonization pathways, including the digitization of heating systems, the conversion of the gas grid to low-carbon hydrogen and emerging waste heat recovery solutions. One of the experts joining us on stage was Toon Bouten, CEO of tado°. The company has raised over $100 million in venture capital funding and remains one of the leaders in European smart products and services for heating and cooling. We sat down with Toon to hear more about the company and his views on the de-carbonization of heating.

Cleantech Group: Can you summarize how the company started and what they are doing today?

Toon Bouten, CEO of Tado°
Toon Bouten, CEO of tado°

Toon: Founded in Munich in 2011, tado° started to develop technology that makes an impact in this space. We believe that all homes will soon be heated and cooled intelligently – smart technologies ensure energy savings and at the same time deliver more comfort. tado° Smart Thermostats connect heating and air conditioning systems to the internet. The smartphone app detects when residents are leaving or approaching their home, or when windows are opened, to set temperatures efficiently. Additionally, weather forecasts and adapting algorithms further contribute to saving up to 31% on heating costs, while improving comfort and well-being at home.

Cleantech Group: Why is the technology different and how is tado° different from its competitors?

Toon: tado° works in the background like a digital climate assistant. One of our key features is the Geofencing Skill, which ensures that the heating/AC is turned down when the last person leaves home and that it is already warm or cool when the first person returns. We offer a solution for every household no matter whether a home is fitted with a conventional boiler, underfloor heating, heat pump or any other kind of heating system.

Unique to tado° is also the interface with digital boilers. tado° has developed a patented solution enabling us to connect to over 16.000 digital heating boilers for modularized steering resulting in more energy savings and more comfort. Besides this, the digital connection also enables remote monitoring of boilers for predictive and enhanced service and maintenance.

Cleantech Group: How does the business model work and how do you work with the supplier partners?

Toon: tado° has four primary routes to market: direct sales through our website, retail sales through leading retailers, partners such as Amazon and Apple, and solution sales through utilities. We have partnerships with more than 30 utilities and our products are actively sold in 1,600 retail outlets. 

Cleantech Group: How much impact can heat and cooling smart products and services have on the de-carbonization of the European heating sector?

Toon: On a global scale, around 30% of all energy is used for heating and air-conditioning – that’s more than the entire transport sector. 79% of total final energy use in EU households stems from heating and hot water; this can be made far more energy-efficient with intelligent technology such as smart thermostats.

Cleantech Group: Can you tell us a bit more about the $50 million investment round which closed in October of last year? Why the investors and what is the funding being used for?

Toon: In 2018, we raised $50 million in international investment from Amazon, E.ON, Total Energy Ventures, Energy Innovation Capital, Inven Capital, the European Investment Bank and others to bring our total funding to $102 million. We are proud to have a diverse range of investors from the energy, tech and financial sectors who want to accelerate the path to better climate protection. The new investment is used to strengthen our market position with best-in-class products and to extend our service offerings with our boiler repair service and remote monitoring, for example.

Cleantech Group: What is tado°’s view on the outlook for the heating market. Will we see global heat pump electrification, or will a combination of innovations ultimately play a role?

Toon: It is a combination of different things we can do. Adding connectivity to heating and cooling systems with smart thermostats is a crucial step to cutting heating emissions by decreasing energy usage, while also increasing comfort at home. Our tado° device can be connected to any type of heating system no matter how old it is. By increasing efficiency and comfort, we can access more and more households. That is the basis for continuously rolling out a range of services such as remote maintenance, which means we can detect a problem with a user’s heating system before they even realize something is wrong.

Electric-based heating systems such as heat pumps will become more important for clean energy. However, for the time being, a large majority will continue having conventional fuel-based heating systems and we need to have solutions to make them more efficient.

Cleantech Group: What are the key challenges the industry needs to address to achieve wide-scale adoption?

Toon: We helped build the smart heating category and the biggest challenge is still raising awareness of the category and conveying the benefits of switching to smart heating. That’s why we have developed understandable and easy-to-use products and services which can be easily adopted by the mass market. Utilities will help to bring the intelligent climate industry to the mainstream and governments should make intelligent climate management obligatory.