Hi Steven, could you give us an introduction to yourself?
Absolutely, I’m originally an electrical mechanical engineer from Belgium who managed to be in the right place at the right time to get into finance in the US, which was three weeks before Lehman Brothers went bankrupt. This saved me from a career in finance and instead I got into the wondrous world of batteries with AES Energy Storage (now Fluence).
Admittedly I thought it was niche at the time (2008), little did I know that I would end up there again, after spending a decade in the oil industry. Firstly consulting for Oliver Wyman, and then afterwards with Trafigura looking after risk and optimisation of their midstream assets, refineries, terminals – trying to capture optionality with a team. Consulting and trading were quite transferrable skills for what we do now at Zenobe. This I set up with two colleagues to help get more renewables on the grid by using batteries. Now we also support fleet operators to transition to electric vehicles on an EV ‘mobility-as-a-service’ type model.
We set up the business three and a half years ago, initially with private investors shortly followed by Tiger, a PE investor, and most recently, another good partner in the form of two Japanese utilities JERA and TEPCO. We’ve always been quite lucky having shareholders and team members who with different perspectives; technical, commercial, legal, or other skills that when brought together, got us to where we are now and will help us maintain the growth we’ve had in recent years.
It is also important to highlight the background of the other two founders, Nicholas Beatty, who is a corporate financier. The financial engineering is important in an asset-intensive business to bring the cost of capital down through correct structuring of contracts.
The third Founder is James Basden, who has spent a good part of his life advising utilities & water companies and who understands the wider energy world and its regulations. He also has prior experience with start-ups.
What is Zenobe’s mission?
We believe sustainability is not just about being green and helping the environment. It’s about doing it in a way that’s financially sustainable. I think that comes out strongly in our fleet business as well as the work we’re doing in the utility space.
There are three pillars to our business: large grid-scale batteries where we help keep the lights on by providing stability to the grid. A second pillar where we support utilities and large energy users improve the quality of their power supply by, for example, capturing solar energy for later use, avoiding expensive production shutdowns.
The third pillar is the fleet electrification business where we help businesses with heavy-duty fleets like vans, last-mile deliveries, buses, trucks go zero-emission in a less risky, more cost-effective and hassle free-way. We do this by tackling two biggest challenges with large scale EV adoption: lack of power in the right place as well as time and reducing the cost of the vehicles.
We address the first challenge by using data science, smart charging and small batteries in the bus depot to avoid the need to commit to expensive and slow grid connection upgrades. We then also use that battery during the day when the vehicles are on the road to generate extra income by bundling it with our portfolio of over 75MW of batteries. We can do this as Zenobe funds all up-front costs and offers charging-as-a-service.
We then started looking at how we could address the second challenge by lowering the cost of ownership of the vehicles. This is largely driven by the cost of batteries on day one, and replacements later down the line. We solve that by turning the upfront investment back into a running charge like diesel for the operator, sans emissions. You pay for it as you use it, so the cash flows of the investment are aligned with the savings from not buying diesel.
Now, the battery degrades like any other battery. At some point, it won’t do the range required for the daily run. But when we take that battery off the vehicle, we can still use it. While nobody knows what the value of second-life battery is, we can redeploy it in one of our projects. In a way, we worked backwards from the ‘waste’ to the first life use. This requires a lot of modelling, monitoring and active management which would not be possible without our own software, telematics and testing. So far none of the existing telematics and software providers are really looking in detail at the battery as they’ve traditionally focused on the rest of the bus.
As a result of this waste first approach, we have set up an ecosystem within our company, which uses the battery for the highest value purpose first. Subsequently, rather than recycling, we kick the can down the road by using it in a second less intensive application. Zenobe doesn’t need to buy a new battery which is great for our business, great for the environment and great for the customer who pays less. By tweaking every little lever across this ecosystem, we lower the cost for everyone. That’s an ethos from the oil trading industry that we pushed into our business. We’ve now completed our first ‘Second Life’ bus battery system, so to de-bottleneck the grid at one of our bus depots – coming effectively full circle.
As the business grows, we’ll have more assets, more data, and our software and technology will make this portfolio, even more, cost-effective for our customer-supplier-partners to the extent that not only is it unpopular to buy non-green solutions, it is also financially unattractive.
What is one of the best thing about being a part of Zenobe?
If it wasn’t us, somebody else should be doing this. The exciting thing about being at Zenobe, is that we’re working on something that me, the other founders and the whole team feel somebody should be doing. It’s so logical. Yes it’s difficult, yes you need to get all these different perspectives together but somebody should be doing this.
What is the current focus of the business?
As we offer the assets as a service and they’re quite large, expensive assets, we constantly need to attract funding. Recently we’ve done a debt raise with Santander and we’re hoping to announce another successful debt-raise very soon. Obviously, alongside the banks, you also need equity. We’ve been very lucky to have good equity partners. Rumours in the market are circulating that we’re going out for more capital, all I can say for now is that for any scale-up business it is important to find the right partner, not just with money, but in terms of people, capabilities and sector expertise.
That’s why this mix between engineering, corporate finance and consulting is important –the capital is the oxygen for the business to breathe and then the engineering, data science and software optimises what’s been deployed.
What does 2020 look like from a product perspective?
COVID permitting, we should be going live with circa 100 vehicles in the fleet business, a market-leading project in the water sector as well as an exciting first on the grid level project with National Grid in Mersey. We’ve also started expanding abroad where we are redeploying our UK model. In addition, we are broadening the foundations in the organisation to support that growth.
We’re expanding amongst others our data science team: we’re always looking for driven people. People often wear multiple hats so we tend to hire people for how they fit in the team but keep in mind a skill that might come in handy in the future. At our current growth rate that usually doesn’t take long. We highly encourage people who are interested to come in for a chat. We are very lucky with our current team that we’ve been able to keep the diverse mix of skills as we’ve grown. This is crucial in our fast-moving environment. Energy and transport are likely the two sectors that are experiencing the largest change in the last few decades, maybe even century.
Why do you think you have been able to hire so successfully?
We are working on exciting problems in an exciting sector to start and in line with that, we give people a lot of responsibility. One team member joked that we ‘give the team enough rope to hang themselves with but not the company’ which is perhaps a rather grim way of looking at it, but with a grain of truth, you get a lot of responsibility from day one and a lot of support. People like that which is why I think we’ve also been able to grow the team, largely through referrals thus far.
Furthermore, our internship programmes are attractive, we have got people coming to help out for four to six weeks, and then often a few month’s later they come back for more.
Now with Covid-19 working remote does make it harder to onboard people but with virtual pub quizzes and yoga classes on Tuesday mornings, the team is potentially bonding even quicker than before.
What does the role of a Data Scientist look like at Zenobe?
Part of the role will be filled by daily or weekly recurring activities related to the auctions for grid services or the traded markets as well as keeping the existing assets functioning. Once those are out of the way, it’s time to dive through the backlog of various project or market-specific analyses. These can include comparing auction strategies, finding ways to save energy costs, supporting the development of a new business case for a specific client or working with the software development team to analyse logs as well as define new business requirements.
So It’s really hands-on and with a lot of responsibility on day one. People don’t work in a vacuum, but collaborate with operations, business development and finance teams for these projects.
We’ve got quite a big asset fleet with 75 megawatts deployed on the stationary side and then another hundred buses or so, therefore there is always more to do.
You also have a very efficient algorithm that the team have built if I’m not mistaken?
Our revenue contracts in the grid-scale business are secured in auctions that used to be held monthly, or sometimes even longer, but these are now becoming shorter and more fast-paced, as the volatility in the system needs to be managed towards the timeframes of a cloud moving over the sun, the wind in Scotland changing etc.
We had to become much more rigorous and quicker at bidding in these auctions. You can’t just throw darts at the wall so we analyse bid stacks, other providers strategies, requirements published by National Grid, forecasts on the weather to determine which of the various markets to participate in. We’ve been quite successful over the last 27 months or so now in terms of securing the highest-paid unit that still gets awarded a contract. We find ourselves in that region quite often, while encouraging we must continuously improve as competition is catching on which makes it very dynamic. There’s increasing innovation in bidding strategies across the markets. Data science is a key piece in staying ahead.
How are Zenobe adapting to being fully remote?
Naturally, we hope that people get through the current environment as soon as practical. But in this period of time, we – as a company – while before perhaps a bit old fashioned are finding that working home can give you sometimes more brain space to do deep creative thinking work.
The team has managed to stay in-sync with a weekly Friday Beers session to close the week where we on occasion invite external speakers on various topics. We have a colleague who’s an extraordinary Zoom pub quiz organiser and we another colleague organised Tuesday morning yoga classes that were quite popular across the organisation.