Episode #009 with Torsten Brammer & Tobias Schuett:
We were very fortunate on Episode #009 of The Solar Journey Podcast, to host Tobias Schuett, CEO of German company DZ-4.
DZ-4 is Germany’s first distributed utility company that sells solar PV energy to residential homeowners in a “behind the meter” concept.
Tobias is a true entrepreneur and solar PV passionate with a proven track record of successfully developing, executing, and growing new business opportunities. In his roles, he's been able to push the limits of what has been considered financeable (be it large-scale solar PV projects, a start-up with a complex business model, or portfolios of residential solar PV systems). All his activities correlate with his core values: reliability, common sense, solutions-driven, sustainability, partnerships.
Connect with Tobias on LinkedIn.
Show Notes:
9:00 - 10:30 Tobias on the role of big Oil in Solar
18:25 - 20:30 How does DZ4 create value, what's the product?
25:42 - 27:18 How DZ4 enables scalable household solar leveraging regional suppliers
Transcript:
[00:00:16.210] - Torsten
All right, here we go. So welcome everybody, to a new episode of The Solar Journey. And today we're we have Tobias Schuett as our guest. He's the CEO of the German solar company called the DZ-4. DZ-4, that's a distributed utility company that sells solar PV energy to residential homeowners behind the meter concept. So what that all is, we'll find out later. But first of all, welcome to Tobias.
[00:00:55.670] - Tobias
Thank you, Torsten, for the invitation to talk on your podcast, I’m really excited.
[00:01:01.210] - Torsten
Yeah, thanks for joining. So you're the founder of DZ-4 and you've been doing this since 2011. So I'll just go briefly through your CV so people know who you are, what you've done in the past, and what's your background? So before that, before 2011, you were the vice President for Renewable Energy at Deutsche Bank and you did that for three years. You smiled, you can't remember. I do.
[00:01:36.810] - Tobias
I would like to give context to that because it's a little bit odd, but I can explain actually.
[00:01:41.630] - Torsten
Yeah, we'll touch ground on that. And you also spend a year in the San Francisco in the Bay Area with a company called Epuron. I'm also excited to understand what you did there. And I think you started your solar career with a solar cell module and I think also EPC can't remember quite a company, solar energy company in Germany. And before that, I think where you started your professional career. You were with the BP, the big oil company in Hamburg, based in Hamburg, and you held various positions there. And you did that for eight years. And the reason why you could take on all these jobs, because you've got a Master's equivalent, I guess, in German, master's in Economics and engineering. So maybe start with that. After school, many people struggle to find what they are supposed to do. What was the situation for you? Did you know exactly, I've got to go to Uni and do economics and engineering, or was it a struggle?
[00:02:57.890] - Tobias
I guess when people say they always knew what they wanted to do when they were teenagers, I think that's a big lie. I guess I was confused like everyone else. I considered studying philosophy, actually, but I ended up doing something totally different and getting into economics and engineering. So I wouldn't say confused, but I was open. But eventually, it was about I had the offer to use studio, as we call it in Germany, where you get paid, where you connect yourself with the company that pays for your studies and pay for your salary. That was attractive from a cash flow perspective. So I did that with BP, and quite important to me was you said it correctly, BP was a big oil company, late 90s, early 2000s. But during my internship at BP, I came in touch with BP Solar. And that was just mind-opening eyes, opening that. BP Solar was like a startup within a big old corporate company doing dirty stuff, carbon business. And then there was this world of clean energy. We worked on ideas like putting solar systems on rooftops in rural areas, for example, in Africa. And that was so exciting and so interesting that I wrote my thesis around Solar within BP, and I had my first job in BP at Solar and basically how I got in touch with Solar.
[00:04:32.340] - Torsten
All right, so your conversion to a solar maniac started during your degree and with your internship at BP.
[00:04:41.030] - Tobias
That's correct.
[00:04:42.070] - Torsten
All right, so you've been in the solar business, let's say, for what, two, three, two and a half decades, is it?
[00:04:54.190] - Tobias
Well, yes, two decades, actually.
[00:04:56.070] - Torsten
Two decades? Yeah. Pretty good.
[00:04:57.680] - Tobias
So the first internship was around 2000, and then I wrote my thesis, 2001-2002 for BP solar Diffusion of New Technologies into Markets. Excellent. So that's the background, really.
[00:05:14.070] - Torsten
Yeah. So, like Shell, BP was in PV for many decades, but they never really made it to the top. They bought production sites and then they gave them up. What was the reason? How do you look back onto it?
[00:05:31.430] - Tobias
What I would like to say is, when I started working at BP Solar, that was very early still. And it was at the beginning of the German Feed and Terrorist Team, the law that really provided a push for solar in Germany. And at that time, a 50-kilowatt system was huge. It was one of the biggest in Germany that we did at that time. Now, 50 kW is tiny, no one really speaks about it, but at that time, we did a 50-kilowatt system in northern Germany. It was all over the press, and it was just very exciting doing new stuff. So remind me of your question. Sorry.
[00:06:13.150] - Torsten
Yeah, the question is, I mean, Shell and BP, they've been in the renewal scene for decades. They own one of the first module makers, also in the US. Few companies, but they never really took it to the level where solar is now. Right. So they gave up. They failed, kind of. They had all the means and the know-how and the power to drive that change, but they never did.
[00:06:41.950] - Tobias
I would totally agree. BP Solar, when I joined them, was the third-largest module manufacturer in the world. So they were really one of the top players. And Shell was up in the top as well. With BP, the situation was at that time, Lord Brown was the CEO, and he developed that helio strategy that also focused on renewables. So BP got active in windfield project development and execution in solar. But eventually, the strategy was developed at a time where the oil price was very low. And when the oil prices came up again, it was simply the allocation of budgets went back into the oil business, into drilling, because it's much more profitable. And eventually BP sold off all its assets. So nowadays, BP doesn't have any solar exposure. And same with Shell. It's the same logic with low oil price. If you think about other strategies, what you can do and with oil prices going up, it just becomes investing into the oil business. I see a change now, I don't know if it's for if it's sustainable. What has changed over the last 20 years is for example, that we now really have carbon in pricing.
[00:07:53.090] - Tobias
It's getting introduced in Europe, much more severe in Germany. And if you have seen the latest developments that Shell has actually invested heavily into Sonnen, one of the world's leading manufacturers of battery storage systems. And BP Solar is also considering intensely a turnaround in their strategy. So they've built a zero-carbon business unit which is focused on renewable energies essentially and Immobility and all these kinds of things. So I guess the reason why they haven't done it, it was just too attractive to continue with the oil business.
[00:08:27.680] - Torsten
But still many are afraid that with these investments they buy shell buying sun and I think they just bought a Berlin-based electric mobility company, Ubiquiti Electricity, whatever funny name, they just tried to do a greenwashing of their business because basically in terms of total assets, it's possibly still negligible. Right. So what's your take? What do you guess? What's your take? Is it this time for real and they want to make it grow or is it just buy and kill?
[00:09:02.630] - Tobias
Well, I mean, as you rightly said, I'm in the industry now for 20 years in solar PV. I've done very different jobs along the value chain. My experience is with large corporates, they really still struggle understanding really solar PV and how it works. I really hope that big corporates, even oil companies get into this and really provide a big push into that because it's really about scale. The more we deploy of that product, the cheaper it gets. And so big pushes from big corporates will help. Is it sustainable what Shell does right now? I don't know. And I think we can all play a role in this. I see better indications that this works now with the carbon pricing that we see as a global trend and with the big push into E-mobility, we don't need oil for electric cars. At least if you fully roll out electricity production with renewable energy and you don't need oil anymore. Like Norway, like California introducing legislation where the sale of combustion engines is prohibited at some point in the future could also drive this, that this is sustainable.
[00:10:23.460] - Torsten
Yeah, also UK and I think Japan, many other countries already announced that they will stop selling, forbid selling of combustion engines in 2035. Big changes to come here. I guess we could elaborate more on this easily for another 2 hours, but we're still on your CV. So Conergy, what did you do at Conergy?
[00:10:57.670] - Tobias
I joined them in 2005 for 2006. I'm not really even sure anymore, but it was the first integrated renewable energy company that we saw in Germany. I personally did only solar TV for them. I focused on utility-scale solar projects and I helped doing stuff in Germany and in Europe, but mainly I was helping entering the US market. So that's the reason why I eventually lived in California for a year before that, two years, I was traveling back and forth. And what I mean by doing utility-scale solar PV is I was looking at permitting process fees, I was looking at acquiring land. I was looking at securing financing for projects worth 20, 30, 50, 60, 70, €80 million or dollars. That was really my role, putting all that together.
[00:11:52.330] - Torsten
Excellent. And that's why they also started with Epuron. They are also based in the Bay Area.
[00:11:59.590] - Tobias
If you want to subsidiary company or the Carnegie Group subsidiary company that did the largest.
[00:12:07.450] - Torsten
Okay.
[00:12:09.430] - Tobias
When I lived in California, what we did is we at that time built the 7th largest project in the US for a PV project. It was 3.2 MW. So considering today's standard small, we're now talking about 100 of megawatts. That's a big project, not 3. Size has increased over time, as you can tell.
[00:12:32.280] - Torsten
Yeah, I mean, from the size of the plans, one can say how long you've been in the business. You talked about a 50-kilowatt start of your career. Then you said it was small, then you said 30 MW that were small. Because now we talk about close to gigawatt plants. Right? Right. Fantastic. Fantastic evolution. And then you joined Deutsche Bank.
[00:12:57.250] - Tobias
How can that be right?
[00:13:00.010] - Torsten
VP at Deutsche Bank. Right?
[00:13:03.130] - Tobias
How can that be right? I consider myself a solar enthusiast. Really? I'm really convinced this is the technology. How can that be explained to you? I was working at BP Solar. I didn't want to pay any oil business. And with such a bunch of situation was two things. When I lived in California, I learned a lot. By the way, I went to high school in the United States as well. So I had some US exposure now, right? So what I learned is back at that time, the entire European market was about feed and tariffs. And when I started at DZ-4 Solar, we had to explain to people something really odd. We had to explain to people, you get a solar PV system on your rooftop, but no, this is not for your own supply. You still take coal electricity from the grid. Nuclear. Excellent. It doesn't have anything to do with that. You put it on your rooftop and you make a financial return. It's an investment. It's like putting it on a bank account, but it's better. But that was really odd. It was not about buying electricity to the house, to the shop, or whatever.
[00:14:16.340] - Tobias
It was financial return. It was totally separated energy from the grid. And the solar PV on your rooftop didn't have anything to do with each other. Yeah. And when I lived in California, that concept was again put together in a way that it should be. And the company started new Distributed Utility Company. You get a solar system on your roof and it is designed to feed your household with electricity, with energy, and that's called solar as a service. And that's basically the American approach of doing things. Eat all you want and still lose weight. A lot of marketing, they did really well with peace of mind. You don't have to worry, dear customer, we take care of everything. You just pay your monthly check and that's it. And that concept was so super successful, both for large projects, but also for the retail segment. So for homeowners, that I thought, you know what, this is really interesting and this is the way this should be done. It shouldn't be about electricity, solar PV, feeding it into the grid and getting a financial return and then still buying nuclear power. That's not the way it should be.
[00:15:24.320] - Tobias
That's the way it should be. You get your solar PV system on your rooftop and you use it in your household. And I thought, if time comes in Germany, I should start that. At that time, late 2000, that was for economic reasons, simply not possible. You got, I don't know, thirty-five cents per kilowatt-hour feed-in tariff to pay $0.05 for electricity from the grid. So you would never do that. Nowadays it's much different. You have a feed-in tariff of paying $0.30 for electricity from the grid. Now it makes commercial sense to use the electricity from the rooftop. But going back to learning in the US, I saw a business model that was super successful, very smart, which was very easy to understand for customers. I liked it. My company basically went bankrupt. So I sat there in a very expensive area of the United States with a company that couldn't pay salaries much longer. So I was thinking, what could I do? And then I got an offer from Deutsche Bank in Germany. And Deutsche Bank investment banking is quite the opposite of what I thought would be a great job. But I learned to know the people, got to know the team, and we were a team that was very renewable enthusiasts and they were also changing within Deutsche Bank.
[00:16:51.290] - Tobias
So what I did there was I was doing basically the same I did in California and what I've done all my life. I was doing utility or large-scale solar PV projects. And the idea was, or the concept was that Deutsche Bank would finance the first phases and then sell it off and make others participate in that. So we structured funds for Tolstons and Tobias and cut teams to participate in that with fund structuring. It was really what I've done, a traditional developer business model that we did enjoy. And that's the reason I joined. It was a lot of fun. I learned a lot about financial structuring, and it was doing a good thing, I say that also there. I did different projects. By that time we were talking more at 2030 40 MW, those projects not with going up the ladder again. And that's really what I did at Deutsche Bank. But eventually I decided that this was not my future for different reasons, the market developing further and I wanted to start DD Four. I wanted to build the Greenfield development, distributed solar PV as the concept to promote in Germany.
[00:18:06.950] - Torsten
And that's when you left Deutsche Bank on your own and then started DZ-4?
[00:18:15.450] - Tobias
Correct.
[00:18:16.190] - Torsten
So what is DZ-4 doing and what does it mean behind the meter concept and how do you do it? What do you offer?
[00:18:25.290] - Tobias
So how we would like to consider ourselves and the customers how they see it. Is solar as a service or solar and battery as a service? And what does this mean? Usually people like you and me, house owners, let's say, want green electricity because they want to do something for the in a given. So they understand that electricity comes from the box, it comes from the grid. But when considering solar PV, it gets complicated. You don't buy a solar PV system like a car every 2356 years. You buy probably once in a lifetime or not twice. And it's really a little bit complicated understanding what is the best technology, how big should the system be, all that kind of stuff. And we thought we integrate all that complexity in our company and make it easy for the customers to decide for a solar PV system by saying, look, if you want solar PV and a battery, we take care of everything. The only thing that you do is you sign up for a 25 year agreement for the solar PV system and storage system. The rate stays the same for the next 25 years. It's not going up, it's not going down, it's fixed.
[00:19:53.710] - Tobias
So basically, you lock in a lot of your electricity costs at the current rate, and we as DZ-4 take care of all the technical stuff. So the best module, if the system breaks, for whatever reason, we will repair it. Your customer, you don't have to worry about anything that is about solar as a service. With peace of mind, the customer make it easy for the customer to decide for solar PV system, okay? The reason we call it behind the meter is because the solar PV supply to the household happens behind the meter. So that you don't have to take the electricity that the house will need from the grid, but from the rooftop.
[00:20:35.050] - Torsten
Okay? First of all, your customers, they don't have any capex, they don't have to invest into the system.
[00:20:44.110] - Tobias
Not at all.
[00:20:45.100] - Torsten
Not at all. All right. And when you say you lock in the fee, the price for the kilowatt-hours they consume that's fixed for the next 25 years.
[00:20:56.770] - Tobias
Yeah, it works a little bit differently. It's like a flat rate if you.
[00:21:00.960] - Torsten
Want, no matter how much you consume.
[00:21:06.970] - Tobias
It doesn't matter how much solar energy you consume. The way this works is that the homeowners basically lease or rent a solar PV system from us.
[00:21:20.220] - Torsten
Okay.
[00:21:20.560] - Tobias
So all the energy that gets produced, the homeowner, the customer has the right to it and he can do whatever he wants with it. Of course, you would try to use it in the house, do cooking, do washing, do whatever, do lighting. Excess energy is fed into the grid and the customer also gets the feet and terry for that. What is fixed is the lease rate and basically the flat rate for all the solar energy that is produced from the solar PV system.
[00:21:52.960] - Torsten
All right, so by adjusting his time of consumption, he can optimize his bill, right?
[00:22:00.190] - Tobias
Correct.
[00:22:01.510] - Torsten
But the consumer still has a contract with the local utility to get electricity if he uses more than is provided by the PV panel and the battery at night.
[00:22:12.860] - Tobias
Yeah, unfortunately here in Germany, you really need that. Think of we're in winter right now. We just talked a little bit about the snow situation. The battery systems that we have, they also don't work and are not applicable for the need specifically in winter of electricity is too high. Solar PV system cannot produce that. And that's why all customers are still connected to the grid. And let me just give you rough numbers. If a customer signed up with DZ-4, with that system, about a third of the annual electricity demand that the house has is covered by the solar PV system. You add a storage system, that number goes up to 66%, two-thirds, roughly. So one-third is battery, and the last third is always with the grid.
[00:23:07.910] - Torsten
Yeah. And the battery part, that's also solar energy. You don't charge the battery via the grid. It's purely solar energy from the battery. Right. Because there's also schemes to buy cheap energy at peak hours or whatever.
[00:23:27.970] - Tobias
Yeah, no, we want our customers what they want really green energy.
[00:23:33.570] - Torsten
Green energy.
[00:23:34.910] - Tobias
It's only the exception that if a battery is really low and for technical reasons needs electricity, then it can tap on the grid. But that is just basically emergency situation.
[00:23:48.270] - Torsten
There are a few other storage companies like Zonin or Zenith, they provide some cloud functionalities. Is that something also is it working for you or would that fit into your business concept or it wouldn't work. What's your take on that? Because you could also share whatever with digital communication between your customers. Is that something you're looking in or.
[00:24:17.900] - Tobias
Is that absolutely, I guess something interesting and the customers wanted that's what we see from the market. By the way, both are suppliers of ours, all right, sending suppliers, batteries, and some of our customers also sign up for the cloud services that those companies provide. So we offer that to our customer base. We don't have an own solution. Generally, it is one of our concepts to work with network partners. We believe in strong relationships. The world is too complex for one individual company doing everything. That's why we're a network company. Local installers, we have different suppliers, different partnerships. So I guess it's interesting, the cloud services, the customers want it. At the end of the day, it doesn't change it's a virtual cloud, essentially, right? Yeah, it doesn't change the supply situation. The electricity that you get in your household, same electricity. And that's why we strongly believe, and that's what the customers also see in the solar PV plus storage. That's the real thing. The cloud is just basically a trade off thing. It's a marketing thing. It's a good marketing thing. I'm not trying to negate that, but in terms of further promoting solar PV energy, it doesn't do anything.
[00:25:36.340] - Torsten
Yeah, okay, cool. So you have an engineering team that designs the system, I would assume chooses the module maker. Or how do you go about the product design, the technical product design?
[00:25:54.830] - Tobias
So what we do is you're absolutely right. We have engineers, we have a technical department that is quite huge, actually. This is more about coordination, I should say, and supplier collection. So we work with around 40 installers nationwide. We define with them as standard framework agreement. And for us, it's also important that we have local people doing installations on local houses. Maybe sometimes it would feel odd if some guy from Hamburg talking with the Hamburg plane, showing up in southern Bavaria with a totally different plan. So, no, that's not what we do. We believe in installers. They've done that for many more years than DZ-4 is in business. So we cooperate with these installers. What we basically say is the customer interface. So we look at your consumption profile, about your preferences, and we come up with a seven-kilowatt peak system and a five-kilowatt hour storage system. And then we say to the installer that is in your region, Boston, once this system, you design it, please, we will have a final review and check and approve it. And then the local installer sources the equipment and does the installation based on our quality concept and quality.
[00:27:10.330] - Tobias
So we select the suppliers, we define the quality. But it's a local business to support the local business.
[00:27:17.590] - Torsten
Okay. And I guess you need that kind of still high level of customization because all the roofs are very different. Or do you have pretty much a modular system that it's like five options usually that you choose from. So how many customization do you require for those homeowners?
[00:27:38.550] - Tobias
At this point, all systems are really tailor-made for the reason you mentioned. I think we see a tendency with the standard and the average is about the numbers that I told you, seven-kilowatt peak solar PV and five kilowatt-hours storage system. But as you said, roofs are just so different. And then you have shading issues with chimneys and you have shading issues with trees and all that kind of stuff. So that this is really a lot about customization. So no, we don't have standard packages. We looked and customers define really what the system should look like. And the customer, from our perspective, they want two things. They want to have it simple and in some cases they don't want to understand the technical details. They just want that the system works. We will take care of that. And sometimes some of our customers want that the system looks good and they are willing to pay premium for that because I myself and customer of our company, I have black tiles, I wanted black system, and I'm paying €70 more per month because it looks better.
[00:28:46.280] - Torsten
And my wife is happier than seven odd dollars is cheap €7.
[00:28:54.490] - Tobias
Cool hygiene. It's the type of cigarette that I don't smooth.
[00:29:02.030] - Torsten
So what about the quality of the components? What's your experience? You've been in the business now for, let's say, 20 years. Is solar reliable, right? I mean, there's still friends of keep asking me, hey, I've got to put solar on my roof. What components should I choose? What's your take? How many issues do you have with the module, with the inverter, with the battery, the quality of the mechanical workshop.
[00:29:35.910] - Tobias
Craftsmanship plus, and I think you're raising a very typical question. So as soon as one considers solar PV system, it comes to so many suppliers, so many modules. Should I take Prince Chinese? Never heard of them. Or should I take a German manufacturer because it's produced in Germany or so that is what we're solving. We're saying trust in DZ-4. We're by now established. We're in business for ten years. We have 5000 customers. We have a lot of experience with doing that stuff, and we select the best product for you. So what I believe in, I mean, I've been in the business, like you said, for 20 years. So solar, PV modules, there have been issues at the start boxes and all that kind of stuff. But by now, really, this is such a commodity. By now what we focus on is established players, high quality. And you will also see that in our customer ratings, we really focus on quality. Why is that? Because we don't want to have the mess of taking back modules that don't work inverters, that don't work. Because that is our responsibility as DZ-4, that the system works all the time.
[00:30:52.660] - Tobias
And that's why we focus on quality components and have technical people looking at the suppliers, have technical auditors looking at that. So I think people can trust that we have good quality based on the experience of the people that work at DZ-4.
[00:31:08.670] - Torsten
Yeah. So now you're based in your market. You focus only on Germany 5000 customers. How many employees do you have? That's roughly.
[00:31:23.650] - Tobias
However, I mention that we have 40 freelancers in sales and we have 40 installers working for that for us.
[00:31:30.710] - Torsten
So we have a virtual group of 150 or so, something like that. So do you want to expand to international markets with your, let's say with the established business concept and let's say know-how that you can roll out? Or do you think it's too much local business, national business due to regulations or culture?
[00:31:56.510] - Tobias
I think both is true. Really. For one thing, we have 16 million houses in Germany. So single houses or double houses. And we only have 2 million solar PV systems installed on these houses. So there's still 14 million rooftops left. That is a huge market.
[00:32:21.730] - Torsten
So you're happy with Germany for the time being?
[00:32:24.830] - Tobias
Yeah, I guess so. I mean, the potential is still high. At the same time, this concept, solar as a service, and putting solar TV on the rooftop is clearly a global trend. And we have similar companies in the United States. We see the UK had that concept in Ben and looks there are companies with a similar business model. And yes, it is an option to go into other European markets. And some of our German competitors consider that strongly. We're open to that. But right now we're focusing on 14 million houses in Germany.
[00:33:01.910] - Torsten
You could turn it into a franchise, maybe with all the know-how you've established. I mean, there's two other countries worldwide.
[00:33:10.910] - Tobias
You should become the CEO of this company because that is really our path to market entries. We have basically a white label option. So what DZ-4 does can be done under a different brand. So our It and all the systems, and that's basically the entry point or the path into other markets would be easily done with the white-labeled approach where you connect with local entity that has some exposure, more experience, maybe a network, and then we can apply our know-how. And that's the way that we would likely enter to another market with a white-label or franchise approach.
[00:33:49.260] - Torsten
Yeah, because right now I think the industry that's like the standard markets, like the classic markets, like Germany, Japan, US. Right. But there's the whole of South America, northern Africa, southern Africa. Right. And there's so many regions where I think they know how the understanding is you've got 20 years experience and you know the do's and don'ts in solar. I think that could be attractive. Right. But of course you need to study the local regulations first. Right. What's your take? Is it easy, for example, to say, I move that business concept to what country could I come up with? Let's say Pakistan. Right. Do you think the regulations would be totally different or would you think that technically, in terms of legally you could roll it out identity or is it how much trouble do you have in Germany with your business?
[00:34:52.130] - Tobias
That's really a difficult question. So I guess I can answer with two different ideas. The one in the United States, where I learned this business model, the contractual relationship with the customer is really an electricity supply contract over 25-40 years. That is pretty smart. Other elements, but don't want to get into the details. In Germany or in Europe, you cannot do electricity supply contracts with private persons, with individuals that are longer than two years. That's why we've done the leasing arrangements, because only with the leasing arrangements, you can do 25-year arrangement. Right? And we need a 25-year arrangement because we do the investment into the solar PV system. If you secure on the contract, it wouldn't work from the numbers. What I'm trying to say here is a lot of it is driven by legislation and the other element is how you roll it out in a country or if it has to do with the commercial attractiveness of the offer. So what you need to consider is solar as a resource. Does the sun shine in Pakistan? Obviously the sun does shine, but then it also has to do with what is the cost of electricity for retail customers.
[00:36:18.090] - Tobias
And for example, you might think that south of France is probably very attractive, right? You got a lot of sunshine. But we would not consider that business model because the electricity for retail customers in France just so super low exposure to nuclear that can only be solved through subsidies. But then you are in a market that could be cut up immediately if the state budget is not there. So you don't want that. And that's, for example, why Denmark, as odd as it may sound, is quite an interesting market. It's small, that's not so good. Electricity costs are high. Solar PV is okay, but here you have a market that is attractive, which isn't obvious if you don't understand that all aspects need to work and also credit worthiness of the customers, what income situation. So that's a little bit more complex.
[00:37:11.150] - Torsten
All right, so it's closer to Hamburg.
[00:37:14.010] - Tobias
It's closer to Hamburg.
[00:37:15.150] - Torsten
Yeah, for you guys.
[00:37:16.490] - Tobias
And I like hot dogs.
[00:37:22.290] - Torsten
Wow. Was super interesting. So you started a company, you were employee for a long time for various companies, and then you suddenly decided, well, let me be a founder and entrepreneur. Was it a conscious choice or you just said, well, I've got to do it because nobody else does it. I want to be an entrepreneur myself. What was the thinking behind that other than the solar virus that called you 20 years ago?
[00:37:54.010] - Tobias
So I guess the solar virus was caught and was a big reason for that. Also the idea that I had in my mind that solar as a service was so successful in the US. And we didn't have that concept in Germany. I thought about the market structure. If you want to do that in Germany, it will not come from the corporate. But you need to be the first small, tiny ship that is acting fast and has a new idea. My real consideration started in 2010. That's the first time I had really my termination of my contract with Bank on the table. But I decided then to stay there for another year. And the reason I say that specifically is in 2010 there was no I don't know in English entrepreneurship and that was not something very common at that time. We didn't it was not about startup and all the new tools that we now take for granted. In 2010 and 2011 that was not the case. So it was really something where I had to do a lot of explanation to my wife, to my family, to my friends how I could throw away a Korean corporate for a stupid idea that everyone else that you talk to in the utility industry.
[00:39:08.950] - Tobias
Shit, we highly believe that you're a competent person, but the idea is not going to work in Germany. So it was the time when the CEO of RWE said solar TV in Germany is like growing pineapples in Alaska. So that was the mindset at that time and so that was really a big move. But I was convinced that this was coming. The time was right. And also I think I've been very successful in what I've been doing at VP at Carnegie and Deutsche Bank and all of these times, the business that I have done was basically put under a lot of pressure. Resources were cut, cash was cut for internal reasons that didn't have to do with the business model or the commercials that I was doing. It was more for strategic political reasons. And I thought I don't like that. I mean, I convinced that what I'm doing is right and it's doing something good and it makes commercial sense. But my bosses, not my immediate bosses, but somewhere up on the ladder were saying no, we don't want to support that any longer. And that was for me an indication to say maybe you need to become an entrepreneur, maybe you need to take your own decisions and take your own responsibility.
[00:40:17.350] - Tobias
I was willing to do that. I have a background. My father was self-employed, my wife's family also is entrepreneurs. So I wasn't so much scared. But I simply wanted to add at that time it was quite unusual to do that specifically with the corporate career in the background. But I was great.
[00:40:35.570] - Torsten
So you were ready to jump and super interesting to understand the evolution. And now looking back, what was the biggest learning, right? If you have kids, would you tell your daughter to what she shouldn't have ever do, she should avoid to do next time when she does run the company? What was the biggest mistake, your biggest learning.
[00:41:03.710] - Tobias
It's still a journey, and I'm still a lot of adrenaline and a lot of work to do. So sometimes really hard to sit back and review what has happened. You asked me that question as a heads up. I think for everyone that considers that there are two elements that you should look into. First of all, don't underestimate the level of stress it puts on you and your family. Highs are higher, lows are lower. Yeah. So I have a really good solid background with my family and two kids. I'm very boring in my personal and private life. I need that because the ups and downs, being an entrepreneur, being on a journey with venture capital funding, doing fundraising, winning customers, adapting the business model, I totally underestimated what that means and what that does to you. You get your adrenaline kicks also. But it's just much different from being in a corporate where I thought things are exciting and you got ups and downs. But you cannot compare that to finding a company and having responsibility for more than 100 people. As I just explained, I guess that's the one element and the other element is cash flow is more important than your mother.
[00:42:23.330] - Tobias
Cash flow is more important than your mother. I hope my mom never hears that, but I did think that I heard that also from someone else, and I think it's true with companies that are in a mode where you're not profitable, you just need to monitor your cash flow really well in order not to have severe consequences. So cash flow management, super important. Review it every day, manage it well.
[00:42:53.650] - Torsten
On the point, I think I would sign up to that. I'm also a founder of a company and running it and yeah, the stress levels I would totally subscribe. Right. The highs are higher and the lows are a lot lower and cash. Right. I mean, how do you develop your own skills on the side? Where do you get extra input from to become a better co, to become a better leader? Did you work on that?
[00:43:30.050] - Tobias
Absolutely. It's a personal journey also personal trip. I guess you can also agree to that. What I've done is the role really changes from founder, where you get one, two, three people and need to develop a business model. Now it's more a manager role, right? 60 people in payroll, 100 people working for you more including structures in here. The way that I learn best is through experience, but I also listen to people. So I have a network around me of people that I trust and that help me in making decisions, preparing decisions, and running the company. I have former CEOs of listed companies that I can chat with and that can help me with decisions. And I do mentoring and training, personal coaching. Essentially, that's what I do. And I try to do it in a way that is cost effective as we're not profitable.
[00:44:28.070] - Torsten
Okay, excellent. Do you know at Wavelabs, the company I'm CEO of, we're using the Scaling Up book based on the Rockefeller habits. To us, that's a magic book, right? Because there's so much stuff in there. I don't know, do you have any literature where you say that this is really cool business stuff for founders or entrepreneurs, CEOs? It doesn't have to be around if you have this mentoring and friends and stuff, et cetera?
[00:45:02.490] - Tobias
Yeah, I'm not good from reading books. I don't know. With reading books, I just enjoy sitting back and I don't have the time and the patience to do that. So I'm not a good at this point. I used to read a lot. I think a book that is kind of interesting in understanding we're in a market with investors, and what we're trying to establish is a modern company with flat, hierarchies, self empowerment, all these kinds of elements. But there are still huge, specific corporate organizations that work with hierarchies and also investors that have more of an Iraqi approach. So an interesting book in understanding some of the mindset is the 50 Laws of Power. So if you really want to understand power games, like what Trump is doing and what Putin is doing, it's about power. And if you want to understand the world a little bit better because you need it for your own company, 50 Lots of Power is a good one.
[00:46:01.720] - Torsten
All right, excellent. Cool. Interesting journey. So you've got this massive experience in solar. You defined solar also in whatever you did, you contributed to where solar is now. So, looking into the future, what do you think? What's required to get solar to the next level? Right. That's a pretty broad question. But when you look at these at four, or even on a global level, we're still not at 100% renewables. Right. So what would it take to get there faster than we do it now? Right?
[00:46:54.090] - Tobias
That is a complicated well, it's an easy question, but the answer is probably complicated because it's very complex. What we're doing. When I look at Germany, we're still not there with the right. A lot of it is about political and legal framework. So I think we're doing good things. On the electricity side, whatever has been missing in the past very much was the mobility side. So the way that over the last 20 years, our government has protected MercedesBenz, has protected Volkswagen, BMW I understand that why the protection happened, because a lot of jobs are associated with our car companies. But further supporting the combustion engine business is just not good. So I think a key element now is also about transport and getting transport electric with the support of renewable energy. And what really helps here is CO2 pricing. And that's the other element. So the way that we're doing this right now is that we don't have the full cost included in electricity. And mobility. The damages from CO2, they are not priced in. But that is happening now with CO2 pricing. It's still too low. If we have the real cost that the CO2 does to the environment, to the people, then the commercial attractiveness of renewables would be just much better and we would automatically have a faster rollout of imobility of electric cars and a renewable energy.
[00:48:29.750] - Tobias
So I guess my angle would be get the CO2 price up significantly. That would solve a lot of things.
[00:48:36.530] - Torsten
Yeah. So from a national level, there's of course criticism on that point because then electricity prices go up for Germany only if you do that only in Germany for a country, and no matter what country would do that. So the global competitiveness would decrease. What's your take on that? Right.
[00:49:02.840] - Tobias
That's what makes it so complicated. I totally agree. So Germany living from export, also putting pressure on the car companies. That is just, I guess a measured approach that Angela Mercury takes is probably a reasonable one. Still, it feels with a lot of anger that we're not pushing for specifically solar PV much more because the cost is there. But yeah, you're right, it's about international stuff. But eventually, maybe there's also one consequence to all of that, and that maybe it's more philosophical than commercial. Germany is one of the wealthiest countries in the world. And if you take the average income that people have and the average that people need in order to have a good living, Germany is super blessed. I know that we also have in Germany people that struggle every day to make a living. But on an average level, Germany is doing fairly well. And maybe it's about reviewing, growing, making more, becoming more profitable, and taking a step back. I know that is very tough. And if it starts with your own decision making, how much are you willing to sacrifice for renewables and for a better world? That has a lot to do with it.
[00:50:19.740] - Tobias
And I don't know, I'm not a good one at this either. I try to do my best, but I'm not flying anymore. I'm trying to restrict myself on certain levels to have a better footprint in terms of resources. But this is eventually a consequence. We need to have more sacrifices.
[00:50:43.810] - Torsten
And.
[00:50:44.210] - Tobias
Explain that to someone who's not doing well and where the neighbors drive a Porsche and you want one as well. But that is the problem that we have.
[00:50:52.510] - Torsten
Yeah. And I guess that's a discussion we need to have with our neighbors, right? So, hey, listen, what's going on? What are the issues? Yeah, to be honest. Thanks a lot. That was interesting to thanks a lot for taking us on your solar journey. I wish you all the best for DZ-4 and all the future ideas that you have. And good luck with your company.
[00:51:24.770] - Tobias
Thank you. Thank you for having me. Thank you for the great conversation. We can continue anytime, if you want.
[00:51:34.700] - Torsten
Excellent. All right. Bye.
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