The Last Frontier of the IT Revolution: A Chat with Ecofective CEO Mats Pettersson
[UPDATE: Ecofective was ranked 1st in the Energy Efficiency category (and 3rd overall) in the 2014 Nordic Cleantech Open]
One of our sessions during the Cleantech Forum Europe that will be held in Stockholm (May 19-21) is titled The Entrepreneurs Track. Building Innovations Meet Their Target Purchasers: Where the Rubber Truly Hits the Road. In this session, selected building technology companies developing solutions for the buildings industry deliver their “customer pitch” and discuss their products with a group of targeted corporate buyers from the real estate and building industries. Mats Pettersson, CEO of Ecofective, is participating in this session at the Forum. In this related interview, Mats talks about the last frontier of the IT revolution…
What is Ecofective’s genesis story, how did this company come to be?
Ecofective started off as a consultancy with one customer – Wallenstam. Wallenstam is a multi-tenant building owner with around 150 large residential properties here in Sweden. The original project was to develop technology to help these buildings to be more energy efficient, with particular attention on heating systems, since we have long and cold winters here. Ecofective used a thermodynamic optimization research technology, developed for at the Royal Technical Institute in Stockholm, to focus in on new ways how buildings could reduce the energy needed to heat them. This technology was developed in the late 1990’s, but the computing power available was not that efficient at that time, so it didn’t reach the commercial market. It was ten years later, in 2010, when thermodynamic optimization technology and algorithms got to a point of commercial viability. And so we started to use this technology in collaboration with customers to find ways to harvest free sources of heat (sunshine, radiation, heat from people, machines, and electrical devices) for overall building heating needs. It worked out very well. So in 2012 I entered the company to help the technological founders transform the company from a consultancy into a product company and ta a complete solution provider. While the technology proved to be very efficient, it was simply too hard to scale it under a consultancy business model. It was during this transformation in 2012, from consultancy to solution providing, that Ecofective was born. What’s beautiful about our beginning is that technology was already developed, tested, and proven with customers. By repacking our core technology as a product, we now have a solution that fits 98% of all central heated buildings. This is where we are today.
Let’s dig deeper into Ecofective’s technology… what is it that you’re providing?
We provide transparency, optimization, and analytics of energy data in a building. Our system is installed in the central heating room of the building. There, we measure the incoming energy (district heating, gas, oil) and we calculate and measure how much energy is used. We have sensors inside the building and sensors outside of the building measuring sources of free energy (angle towards the sun, sun radiation etc.) and we do this calculation every five minutes. The output of this calculation is then input into the building’s HVAC (heating, ventilation, air conditioning) system via our patented, robust, analogue interface. And it’s this interface that makes it possible to integrate into existing HVAC systems. Our product is easy to install, it takes less than one day for two people to do it. The complete software, hardware, and services piece is less that 10,000 EUR, regardless of the building size. Our system reduces by up to 25% the externally bought energy for heating. For example, the internationally renowned scientific research institute Fraunhofer IBP (Institute for Building Physics) has tested our solution applying it. They own a unique testing site in Germany, near Munich, with two identical buildings (identical in materials, construction, in heating, and in operations). We installed our product in one building and left the other as a reference building. Comparative measurements of Fraunhofer IBP resulted in the fact that for these single households, applying our EE2 system, we were able to reduce the heating energy needed by 13%, please note without reducing the indoor temperature. The testing analysis is available on our website.
Can you share how your background fits into this story, and where your experience aligns with the company’s future?
In the 1990s I worked for Motorola, first on the sales side and then as director of distribution and channel management. During my time at Motorola, I was staffed in Stockholm, Germany, the U.K. and the U.S. This provided me a lot of international experience in marketing and sales, building relationships with partners, customers, and suppliers. Following a graduate degree, I launched isMobile, a start-up helping to optimize work-order management using mobile devices in the early 2000s. That was a lot of fun because we were pioneering real-time work-order management on the scale of 25,000 work orders per day. And so my background is a mix of mobile and IT. Our international expansion is an important part of the growth strategy here. For example, very shortly after Ecofective’s transformation to a product company, we launched operations in Germany. This is very exciting because the German market is ten times the size of the Swedish. In addition, energy efficiency issues are on both the political and managerial agendas in Germany, as the country presently moves away from nuclear and fossil fuel energy towards renewables. Of course, reducing the amount of energy used is a major part of that shift, and buildings account for around 40% of European energy consumption. Ecofective’s solution can save between 15% and 25% of the heating energy in buildings.
The overall theme for Cleantech Forum Europe 2014 is “10 Years of Innovation: Much to Look Back On, So Much More to Come”. Can you share with us what you see in Ecofective’s future?
I honestly think that buildings and the real estate market is last great frontier of the IT revolution. It’s a fantastic opportunity. As a Nordic company, we have a great head start with a knowledge base for both IT and mobility, thanks to Ericsson and Nokia and others. Germany is a very conservative market, and when we are successful there—and I’m confident in saying we will be successful because it looks so very good at the moment—most of Europe will follow. Germany is an energy and energy efficiency leader, and neighboring countries will have an eye on Germany’s leadership there. We also have a business in Finland, Denmark, Switzerland and Austria, next step for us will be UK. In United Kingdom, we expect to use an agent who will sell under our brand name. We’re also looking into Eastern Europe… and please note here that there is enormous waste of energy in these markets, especially in Poland, Hungary, and Czech Republic. Apart from this, we’re getting requests from China and North America, but I think these markets are still a few years away for us.
Do you expect corporate partnerships to play any role in this future growth?
I think these kind of partnerships can play an important role. There are several areas where I believe it can be quite interesting. Indeed, we are already working with facility management companies like Dalkia, which is part of Veolia. We’re also in talks with hardware manufacturers, for example of circulation pumps, to create and to build up channel partnerships. A partnership like this will for sure help a hardware provider to become an energy efficiency service provider, which is of higher value and higher profitability.
Is there anything about our upcoming Forum that you find particularly exciting?
I really support the concept of pushing innovation forward, especially as it relates to improving the environment. Progress has been too slow, but I strongly believe pushing forward is a good thing, not only for me, but in particular for my children and for the future of our planet. I participated in your Forum in Bilbao, and I was very impressed with both the quality of the speakers, content, and the whole arrangement. I’m also very happy that this year’s Forum takes place in my hometown Stockholm. The Swedish Energy Agency has invested in Ecofective’s technology, and I’m proud to participate in this year’s Forum alongside the SEA. The other thing is that Cleantech Group has some very smart ideas: I was reading your Buildings Get a Brain report and I think it does really sum up, to a large extent, what the problem is all about. Despite the massive potential, the commercial building sector did not seriously tap this market and its opportunities, although solutions are there already and available. This is where your Forum can play an important role, by influencing the old-guard experts, politicians, real estate owners, and the market by attracting attention on the commercial viability of new technologies.
Thanks Mats, this has been a great and interesting conversation.
Oh, of course, I’ve had fun and this is a great opportunity. One thing I’d like to add is a quick story about the shared history of buildings and automobiles. If you look at a new car today, you’ll see self-driving cars on the road. These machines are full of IT and processing power and they need 60 to 70 percent less energy to move the same distance compared to earlier times without IT. Please consider that we’re talking about the same fundamental engine technology – cars still have four wheels, their weight is about the same, etc. The main difference is the technology, smart IT, and the intelligence on how to use energy much better to move. On the other hand, most of the buildings are still as stupid as they were 30 to 40 years ago. This is problem we want to solve, we want to do to buildings what mobile and IT has done for cars.