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In Europe’s palpable drive towards a low carbon future, solar power is going to play a significant role and the contribution of residential solar within that sphere would in itself be significant. Across the continent, governments offer incentives for homeowners to go down the solar pathway. However, popular perception is that the arduous nature of the process from selection to installation puts off a sizable chunk of conscious citizens from going solar for their energy needs.
Enter Otovo, an Oslo, Norway-based clean energy startup that’s looking to brighten things up via its digital marketplace that promises to make the selection, purchase and installation of residential solar panels as easy as any online purchase.
The concept was born when a group of friends with an e-commerce background got together in 2016 and conjured up a platform to “digitize a fragmented but promising market”, according to Andreas Thorsheim, Cofounder and CEO of Otovo.
Speaking to Forbes on the sidelines of the recently concluded Ignite 2019 energy conference in Oslo, Norway, Thorsheim said: “We weren’t [and aren’t] your typical energy utility sector crowd but e-commerce professionals with a vision that solar panels and installation services should be sold online both cost effectively and with as much ease as a television set or a pair of jeans.”
Thorsheim and co-founder Simen Fure Jorgensen had also been studying the market for residential solar panels and the profound changes it was undergoing in terms of cost permutations, prior to launching Otovo.
“There were clear signs that renewable energy hardware was getting cheaper from a consumer standpoint, with the cost of solar panels coming down by 10% per year. Our estimation was that 10 years ago, 90% of the cost of installing solar panels would have been hardware and 10% would be the localized costs.
“That has changed so substantially that in the future it could be the other way around, i.e. 90% localized costs and 10% hardware. It might even reach a point where hardware will be free or of nominal cost but installation will not be. We feel winners of that future would be those can make a business case for mastering those local or last mile retail costs, and make it easier for the end consumer. This thinking forms the basis of our solar marketplace platform.”
That platform – currently available in Norway, Sweden and France with other pan-European roll-outs on the way – uses satellite data and mapping information to create 3D models of homes. Should someone at a particular address, in a country Otovo offers its services in, require information and installation on solar panels, all the platform needs is the address to subsequently deploy an algorithm to plan the installation project and calculate costs based on analysis of satellite images and property data.
“It is then reconciled with a digital mechanism for solar panel installers to bid on the residential project, like advertisers bid on Google’s platform. The consumer then receives the quotes – quite akin to a financial price comparison website – and can pick one of his/her choice all complete with hardware, installation and labor costs to exact specifications, minus applicable green subsidies. Once an option is selected, the chosen installer would take care of the rest.”
It is convenient, hassle free, competitive and transparent based on exact specifications from digital mapping.
“Over the next five years, we fully expect Europe to surpass the United States in terms of solar installations. From a residential solar installation standpoint, we are just at the start of the journey and expect five million homes to go solar in the next five years. Market growth will be driven by declining costs of solar panels and the European Union’s homogenizing of regulations for people to connect into the grid.
“Yet wherever we look across the continent we see fragmentation, and no singular or convenient marketplace like Otovo to turn to. That’s our opportunity and we expect to grow our business 2 to 3 times in terms of headline revenue per year over the next decade premised on our offer of competitive convenience for the last mile. Additionally, installation of solar panels is a very simple decision; either you want them or not. Making the process easy convinces more people.”
And in its bid to convince more Europeans, Otovo has raised €20 million ($22.4 million) to embark on its journey. The initial seed funding came from Nysnø; sovereign climate investment company of Norway’s Ministry of Trade, Industry and Fisheries.
“Other investment has since followed the seed capital but we are lucky in a sense that Norway, our home country, is using its oil wealth to alter the climate trajectory of the world, and Oslo is a great place for start-ups like ours. While the depth of venture funding capital that you see perhaps in financial centers like London is missing, Oslo makes up for it by nurturing nascent ideas like ours to have an internationalist streak right from the world go as the domestic market is quite small.”
Otovo’s data provides a glimpse of that. From just the one client in it first week of trading in 2016, the company has 70% of the residential solar market in Norway, 20% in Sweden and 10% in France, with the latter coming via its acquisition of solar panel installation start-up In Sun We Trust for €3.7 million in March.
The team is growing and has come a long way from Thorsheim and Jorgensen’s kitchen table to offices with 35 people in Oslo, 15 in Stockholm, 15 in Paris and counting.
“Much of the forward growth is going to be purely organic. Our solar marketplace category is not defined and there are no readily available acquisition targets. So we will be looking at greenfield entries to new markets.”
The Iberian Peninsula is firmly on Otovo’s radar, as is the Netherlands. “Ultimately, for our platform to work we would need markets with good data of residential properties, especially mapping, and conducive planning regulations as we want the software to do bulk of the work to create a good solar installation ecosystem in whichever market we are in. That’s typically EU markets rather than emerging Europe.”
As for the competition and major utilities conjuring up similar platforms, Thorsheim said it is both happening and to be expected. “In the Nordics, the big utilities have made clone sites and replicated our model but we seem resistant to that. We have faith in our product offering and first movers’ advantage in key markets.”
Ultimately, solar panels are becoming “fast moving consumer goods” as the EU is championing consumers’ rights in the renewable energy sphere via new regulations to generate, store and sell energy and in some ways making life difficult for the big utilities.
“We are witnessing removals of tax on solar panels in various European markets, simplification of metering rules, and countries copying each other on their respective renewable energy cost frameworks. In such a setting, our platform lets homeowners buy solar panels adapted to their homes in just a few clicks and that’s an appealing business preposition.”
July 9, 2019 at 12:13PM
Forbes – Entrepreneurs