Startup Series: Odyssey Energy Solutions

Financial Services

Nov 17

Today’s guest is Emily McAteer, co-founder and CEO of Odyssey Energy Solutions, helping emerging market project developers to finance, build and operate distributed renewable energy at scale.

How the Global South modernizes is the original climate justice debate that has been a key topic of global policy discussions for decades, going back to the Kyoto Protocol of the 1990s and even earlier. The crux of the conversation is that climate change has primarily been caused by the 20th century economic development of the United States, Western Europe, Japan, et cetera. And if the rest of the world were to follow the same fossil fuel enabled development path, we'd rapidly blow past emissions targets and into the worst possible climate change outcomes. So what's the rest of the world to do?

The answer seems to be to leapfrog, to modernize via a network of distributed renewable energy technology as opposed to a monolithic fossil fuel-powered grid. And yet that also introduces a whole new host of questions. Emily's been working at the nexus of climate and emerging markets for just about her whole career and brings a wealth of experience into Odyssey while working on answering these questions.

In this episode, Cody and Emily have a great conversation about energy access in emerging markets today, what new distributed grids will look like, how development finance institutions (DFIs) work and the role of nation states in securing financing for energy projects. We also cover how Odyssey is bringing financing, procurement, and operational solutions to market to solve the local problems inherent in this space. Emily and Odyssey just announced a seed round led by Equal Ventures that we at MCJ Collective were honored to participate in. So we’re welcoming Emily today as an MCJ Collective portfolio CEO, as well as an MCJ podcast guest. Enjoy the show!

Get connected:
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Odyssey Twitter
MCJ Podcast / Collective

*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode recorded on September 21, 2022.

In this episode, we cover:

[3:16] Emily's dedicated career in climate
[10:18] Grid challenges in emerging markets
[14:51] Financing gaps for small projects
[17:33] The Nigeria Electrification Project case study
[21:38] Profile of project developers in emerging markets
[23:56] An overview of Odyssey's solution
[28:38] The company's FERN platform
[31:44] How Odyssey is scaling and handling projects in multiple countries
[35:09] The capital they've raised thus far and what they're using it for

Jason Jacobs (00:01):
Hello, everyone. This is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode, and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms (00:40):
Tonight's guest is Emily McAteer, co-founder and CEO of Odyssey Energy Solutions, helping emerging market project developers to finance, build and operate distributed renewable energy at scale. Emily's been working at the nexus of climate and emerging markets for just about her whole career, and brings a wealth of experience into Odyssey. How the Global South modernizes is the original climate justice debate that has been a key topic of global policy discussions for decades, going back to the Kyoto Protocol of the early 1990s and even earlier. The crux of the conversation is that climate change has primarily been caused by the 20th century economic development of the United States, Western Europe, Japan, et cetera. And if the rest of the world were to follow the same fossil fuel enabled development path, we'd rapidly blow past emissions targets and into worst possible scenario climate change outcomes. So what's the rest of the world to do?
(01:33):
Well, the answer seems to be to leapfrog, to modernize via a network of distributed renewable energy technology as opposed to a monolithic fossil fuel-powered grid. And yet that also introduces a whole new host of questions such as how do you find capital to invest in a bundle of small renewable energy projects as opposed to giant power plants? And how do you source equipment for those? How do the small operators of those resources access the technologies they need to manage them effectively? These are the questions for which Odyssey is working on a solution.
(02:03):
Emily and I had a great conversation about what energy access in these markets looks like today, what these new distributed grids will look like, what the profile of a project developer is like in these markets, how development finance institutions work and the role of nation states in securing financing for energy projects, and of course, how Odyssey is bringing financing, procurement, and operational solutions to market to solve the local problems inherent in this space. Emily and Odyssey just announced a seed round led by Equal Ventures that we at MCJ Collective were honored to participate in. So I'm welcoming Emily today as an MCJ Collective portfolio CEO, as well as an MCJ podcast guest. Emily, welcome to the show.
Emily McAteer (02:44):
Thanks, Cody, excited to be here.
Cody Simms (02:46):
I am really interested to hear about your experience building on climate solutions in emerging markets, which it seems like you've dedicated so far pretty much your whole career to, starting all the way back with, I believe you were a Fulbright scholar that studied solar-based energy rural electrification in India. Walk us through that path for you and how you decided to focus on that in the first place, and ultimately how that's led you to what you're building today with Odyssey.
Emily McAteer (03:16):
I wish that I could have some story where I had this realization of why I wanted to go into climate and had a career pivot and whatnot, but I've actually been a one trick pony, not even my whole career, but my whole life. Was raised in a family, both my parents worked in environment and energy efficiency. My dad worked in the energy efficiency department of a utility and my mom was at the Environmental Protection Agencies. And I was an environmental studies major in undergrad and then worked on the climate change policy team of investment risk management when I first got out of undergrad. I've been focused on this problem for a long time. The pivot to emerging markets came when I was really young, I was about 25, spending time on Wall Street thinking about how to move the needle with big sort of institutional investors that were thinking about how climate policy would impact their portfolios.
(04:02):
But I heard the head of the UN Panel on Climate Change speak about a program that his institution in India was running to bring small solar lights to rural communities in India. I needed to spend time in emerging markets if I was going to truly understand the climate challenge, particularly because the bulk of greenhouse gas emissions growth is going to happen in emerging markets. I put together a Fulbright research proposal and headed to Delhi and spent a year in lots of different states all over India in rural communities working on different distribution models for small scale solar. Even at the time, the challenges that we were facing were very basic. How do we convince communities that have never seen solar lights to buy them, to trust them, that this is a great way to light your home? Which is kind of crazy because now you can't go to a village in rural India and not see some sort of solar products so it's really come a long way.
(04:55):
But even then, for me, the bigger question was where do we go from here? Lights are fine, phone charging is fine, but how do we get good quality, reliable grid-like power to parts of the world that don't have access to it? Came back from India, did a dual policy/business degree for grad school and said, okay, what's my next step to really move the needle here? And so I joined SunEdison right out of my MBA. I had a great career pivot. I was leaving my MBA and went into management consulting, but met Cathy Zoi, who had just taken on a position to launch a subsidiary of SunEdison called SunEdison Frontier Power.
Cody Simms (05:32):
SunEdison is one of those names that everyone's heard of, but maybe not a lot of people know exactly what they were doing. Describe broadly the mission of SunEdison before you go into the subsidiary that you worked with.
Emily McAteer (05:43):
SunEdison was a large-scale renewable energy developer. They were building what we call utility scale solar projects all around the world. They had a big practice in India, but also in the US. They were looking at the smaller scale distributed market and seeing the opportunity there, sort of seeing it as the next frontier of energy development, which is why we called it Frontier Power. It started as a small corporate social responsibility business where they were building these small energy systems in a box or these small micro grid systems. But we were tasked with really turning this into a large scale business.
(06:18):
So Cathy and I embarked on this amazing journey of spending our time in India and East Africa and then our home base in California, really thinking about how are we going to be building thousands of micro-grids in rural areas of these markets very quickly? And that's sort of where I got the foundation of everything that I do today, was really being on the ground thinking about what it's going to take to deploy thousands of these assets to really solve the energy access challenges that we were seeing.
Cody Simms (06:45):
Cathy has been part of the Odyssey Energy Solutions journey, if I'm not mistaken. Maybe thread the needle on how you went from Frontier Power to Odyssey.
Emily McAteer (06:53):
Cathy and I, we were building Frontier Power, doing everything manually. I can't even tell you how many hours I was building Excel spreadsheets to do things like estimating power demand in a community or sizing the solar system, and then taking those spreadsheets and trying to get investors on board. It was just totally an inefficient process, and so even from the early days of Frontier Power, we were thinking about what's it going to take for us to really be able to do this at scale? Fast forward, SunEdison. SunEdison closed up shop, the mothership went bankrupt. I've heard it's maybe the largest energy sector bankruptcy ever. So that was a very interesting experience, but we were obviously as a small subsidiary of the mothership, collateral damage there. Cathy and I stepped back and said, okay, what did we learn from being project developers ourselves, and what can we build to catalyze this market across all project developers?
(07:38):
And we originally had an idea that was even more than what Odyssey is today. We wanted to build a complete end-to-end hardware and software solution that could just be franchised. Project developers could just use our software, drop our hardware, build these micro-grids at scale. So we started thinking that idea and we connected with a venture firm in Colorado called Faktory Ventures who had a very similar view of what the market needed, especially around standardization. And so we narrowed the scope a little bit and thought about what sort of software tech platform can help with the standardization, help with streamlining project development? That's really where Odyssey was born, was in collaboration with them. And Cathy and I took it from there and turned it into a company.
Cody Simms (08:16):
Cathy, I think maybe just explain to people both her background as well as what she's doing full-time now, in addition to the time she spends thinking about Odyssey with you.
Emily McAteer (08:27):
Cathy, she's amazing. She has had a incredible career. I used to say career in clean tech, but I guess now I'm supposed to say career in climate tech. She was Assistant Secretary of Energy in Obama's administration. She ran Al Gore's organization for a while. She was a private equity investor. I mean just a amazing, diverse background, all oriented around climate and clean tech solutions. And now she's CEO of EVgo, which is [inaudible 00:08:53] EV charging infrastructure. So Cathy's got Odyssey off the ground with me as an incredible chair of our board and advisor along the way, tackling the climate challenges in other ways too.
Cody Simms (09:01):
Wonderful. Yeah, thanks for the origin story there. I always find it helpful to hear how a company came to be. And then maybe before we dive into what the company actually is doing now, let's set the stage by understanding a bit more about both the emerging market challenge as it relates to where the world is today from an energy perspective, and where things are going and what roadblocks stand in the way there. The way I think about it is, to me, this is the original climate justice problem. The developed world, if you will, has grown and achieved high GDPs and high emissions as a result of that. And now other parts of the world say, "Hey, we want that too."
(09:43):
But if those parts of the world grew in the same way that the United States and other developed countries have grown, it's game over. And so how does that evolve over the coming few decades is one of the biggest global challenges that we face, at least from my perspective, and has been the debate of international policy around climate for decades now. So I'm curious to hear your perspective on emerging markets, what needs to happen and what you expect the roadmap to look like over the next, call it two or three decades.
Emily McAteer (10:18):
A good starting place is to understand how we electrified the US and developed markets. We built a central grid and then we extended that grid over time to rural areas that didn't originally have access to that grid. And then we powered that grid with large, big fossil fuel power plants. Now, what we're doing is we're starting to integrate renewables into that grid primarily, as well as obviously at the source of consumption as well.
(10:44):
What's different about emerging markets is that there's either that centralized grid is not fully built out, it doesn't exist in a lot of places, or it's not working very well, it just doesn't have the capacity in terms of the generation capacity or transmission and distribution infrastructure. If these markets are going to develop, if we're going to have high quality power going to businesses and households, we've got to build out that infrastructure and we get to choose how we're going to do it.
Cody Simms (11:07):
Where it doesn't exist, what's in place today? Are we talking diesel generators? Are we talking completely disconnected solar panels that are just powering local buildings? What does it look like? You've traveled all over the world, you've lived in India, we'll get to this, you have a huge business today in parts of Africa. What does the disconnected grid world actually look like?
Emily McAteer (11:29):
At the most basic level, kerosene lanterns lighting homes. And when the sun goes down, it's really dark and you can't do that much. Spent a ton of time in communities that that's their main lighting or power source. If not that, then yeah, maybe smaller scale, couple of solar panels on a home that are powering some lights and phone, maybe a TV. Diesel generators for sure if you can afford one. And then even in cities in the more populated areas, diesel generators are often the main backups to the grid that goes down a lot.
Cody Simms (11:56):
I've heard in some markets there are local delivery businesses of, I don't know if it's propane or other forms of energy that people are taking on trucks, going home to home and filling up local storage tanks of whatever fuel of choice you're using to power your local home or business. Am I understanding that correctly?
Emily McAteer (12:16):
In some of these communities, one person will have a diesel generator and there really is a small micro-grid, it's just a diesel generator-based one and power a few homes with it.
Cody Simms (12:23):
Wanted to set the stage for that. So understanding the realities of that world today, which is so far removed from what most of us living in the United States even contemplate, you're now helping us understand, okay, where are these economies going to go then?
Emily McAteer (12:38):
Just from a pure economic development perspective, you need to have power, but you need to have power not just to light your home, but to have a business, to have industrial processes. And if you have no power, if you can't rely on reliable power, it's crippling to the economy. We have to make the assumption that these markets will develop and a key part of that is building out the energy infrastructure to power that development. What's really exciting is that we have the opportunity to do it differently than when we did it in the US. This is a very timely topic because even when I was in India eight, 10 years ago almost now, I still was arguing, like, "No, no, no, distributed renewals make sense over the long term," but I was arguing that everyone said, "No, the grid's going to extend to these areas. We don't need to invest in distributed renewables because eventually we'll build out that centralized grid."
(13:19):
But now the grid hasn't been expanding and investments in the grid haven't filled the energy gap in any way, or in any meaningful way, the cost of renewables has come down so much that it's actually also the lowest cost option to put a distributed renewable resource at the point of consumption rather than build a huge transmission line or distribution line and power more generation capacity. So the grid will certainly play a role, but there is a lot of economic opportunity to use distributed renewable energy to build out the energy infrastructure that these markets need and fill that energy gap. That's the opportunity that's incredibly exciting and what's behind what we're doing at Odyssey.
Cody Simms (13:56):
Going back to the work, not necessarily you had done, but the work an organization like SunEdison had done, this was identifying these large scale utility powered services that needed to get investments and providing financing for them, if I understand it correctly. Now, if we're talking about smaller micro-grid scale projects, how do those get funded today? How do you aggregate capital in a way that makes sense for a smaller project? Because at least where I sit, totally different space, but in venture capital it's kind of the same thing. It's like at a certain small scale, you're just not interesting enough for large institutional investors to put their money into you because they can't put enough money to work and they have minimums that they need to put to work. I'm guessing we're running into the same problem with how micro-grid type projects get financed.
Emily McAteer (14:51):
That's the real crux of the challenge. So if you're building a five megawatt massive utility scale project, you can invest a ton of money in the diligence process because the project itself is huge, the transaction is huge. If you're trying to finance a hundred kilowatt mini-grid, first of all, that's still an infrastructure asset. There's still a lot to diligence there. You need to make sure it's designed properly, it's going to perform, that your customer agreements make sense, but you can't put the level of diligence into such a small project as you can a huge utility scale project.
(15:23):
And so then that's where aggregation plays a role. You've got to be enabling ticket sizes of 25, $50 million, and so in order to do that, you need to put together hundreds of projects into a portfolio and get that portfolio financed. But that requires much more standardization because you just can't look at every single asset in that portfolio in depth or you'll blow your diligence budget. And this was the insight of Odyssey even in the early days, was how can we standardize the way that these projects are prepared and then diligenced so that you can do a rigorous job, but you can deploy 25 million at once into many assets rather than just deploying that same capital into a single project.
Cody Simms (16:00):
And how has it happened without Odyssey and without this notion of aggregation when it comes to looking at a smaller... Like you said, these are still power plants, they're just much smaller. My understanding is this is the world of development banks and green bonds and vehicles like that, but I don't know a ton about that world so maybe help me understand what the status quo looks like today in that regard.
Emily McAteer (16:26):
Basically, any financier needs to aggregate to finance his assets. No one's really able to put money into a single project. In the early days, at least for mini-grids, it was just grant capital. You're finding some donor to fund a project or a handful of projects. That's really all the capital that was available. But once we started moving into DFIs wanting to put money into the sector, needing to put money into the sector because that's such a critical foundation of development.
Cody Simms (16:50):
Can you define a DFI for us?
Emily McAteer (16:52):
Development finance institution. So the one that we work most closely with is the World Bank. The World Bank primarily gives loans to governments to finance development activities. Another one we work with is the African Development Bank. Even when DFIs started moving more in this market, there was a need for aggregations to deploy more capital. And that's actually where Odyssey got its start.
Cody Simms (17:13):
I just want to back you up. I just want to really make sure I understand this. So even still, we're talking large multinational organizations like the World Bank, and presumably in a country like Nigeria, it's still the Nigerian national government going and lobbying for money to deploy into these projects. Am I connecting the dots correctly?
Emily McAteer (17:33):
Yeah. So when they're working with the World Bank or they're working with the African Development Bank, it's the Nigerian government that's actually financing these assets. And I can talk about what that looks like specifically for some work we do in Nigeria. When we first built Odyssey, we were originally oriented around being a marketplace, so having projects that we were aggregating and then bringing them to a marketplace of investors. But very early on into Odyssey's life, we got to know a team at the World Bank that was focused on mini-grids and they saw our tech and said, "This is exactly what we need to deploy $350 million into assets in Nigeria," this amazing program they were launching called the Nigeria Electrification Project, with the government of Nigeria and with some agencies like the Nigeria Rural Electrification Agency. And that program was designed to be what's called results-based financing.
(18:19):
So the Nigerian government was going to be giving subsidy, concessionary capital to anyone who basically built a mini-grid and connected people to power, which is an incredible way to get the market moving and to achieve impact goals and development goals because you're saying, we will not disperse this money unless you are achieving our end goal, which is having households and businesses connected to power. That said, you can imagine how hard it is to deploy hundreds of millions of dollars at the level of a single household. Millions of households are going to be electrified in this program, and so how do you keep track of that? How do you validate that this mini-grid actually did bring power, the solar home system was installed? And so the technology that we built was actually really well suited to help the World Bank and its partners deploy that capital.
(19:01):
And we co-designed this end-to-end platform that took projects all the way from the diligence stage in the initial stages to get approvals with the government all the way to using data monitoring how a customer was using power to ensure that that was a viable connection that deserves subsidy. When you think about how technology can streamline financing at scale, well, that's what it looks like for the World Bank. Now that a number of these programs are in place, the market has the level of subsidies that are needed to make the unit economics of these projects work, we're seeing more commercial capital come into the market, folks that want to bring on a debt layer on top of the subsidies that the government's providing. They have the same needs in that you need to use technology and data to standardize the whole process end-to-end.
(19:43):
It's just a slightly different way of standardizing. They're not necessarily needing to deploy capital based in every connection, but they want to look at projects in a portfolio in the same way. They want to run analytics coming from operating projects to really understand, hey, what's the data telling us? Are these assumptions and forecasts making sense? It's the same concept, but just a slightly different type of capital and slightly different needs for how they diligence these projects.
Cody Simms (20:06):
We're going to take a short break right now so our partner Yin can share more about the MCJ membership option.
Yin Lu (20:13):
Hey, folks. Yin here, a partner at MCJ Collective. Want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have since then grown to 2,000 members globally. Each week we're inspired by people who join with different backgrounds and perspectives. And while those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change.
(20:42):
Some awesome initiatives have come out of the community. A number of founding teams have met, nonprofits have been established, a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming, like monthly Women in Climate meetups, idea jam sessions for early stage founders, Climate Book Club, art workshops and more. So whether you've been in climate for a while or are just embarking on your journey, having a community to support you is important. If you want to learn more, head over to MCJcollective.com and then click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (21:15):
All right, back to the show. Help us understand what does the typical project developer look like in these projects versus in a large developed market world? Who are we talking about that's actually out there identifying on a per project basis, "Hey, there's a plot of land here that we should turn into a solar farm," as an example.
Emily McAteer (21:38):
I have to caveat that I actually don't know what project developers look like in the US because I've been focused on emerging markets for so long. But to give the profile of the project developers we work with, I've been there. They're mostly local companies. There are some international companies as well, and a growing number of [inaudible 00:21:52] they're doing really hard on the ground work. I mean, for mini-grids, we both work with mini-grids and then what we call commercial industrial solar, so I can talk about that market's a little bit different. But for mini-grids, they are going into the community. They are getting buy in from the local government officials to build a mini-grid there. They're talking to all of the community members and really estimating what will happen if I bring power here, what will the demand on the system be?
(22:14):
Can those revenues justify the CapEx of the system? They are designing the system, they're going to access finance, they are building these systems. And usually they develop and operate the system so they're collecting via prepaid meters the revenue from each individual household or business that's using power. They're really kind of doing all of the hard work on the ground end-to-end.
Cody Simms (22:35):
They're essentially a small business utility that is building the power plant and then directly billing and monitoring and managing the deployment of power to the end user.
Emily McAteer (22:47):
Exactly. And that's a really interesting change and new paradigm as well. We're used to power being brought to customers through big utilities, usually quasi-government entities. In this paradigm, it's small, scrappy companies that are being these micro utilities and providing power where the centralized utility isn't.
Cody Simms (23:06):
And right now their priorities other than getting it financed in the first place are power generation and transmission, I assume. Are they also looking at storage in addition to that?
Emily McAteer (23:15):
Typically, the sites will be hybrid systems that have solar storage and a backup diesel generator.
Cody Simms (23:21):
Now you're stepping into the middle, you're providing this aggregation across the top, right now mostly working with development banks, I think, and also starting to try to pull in some commercial capital if I understand. And then in addition to the financing piece that you're providing, you also have two other key parts of your business at Odyssey. First of all, let's make sure I fully painted the picture of the financing piece that you're providing and what that looks like, because I'm sure there's more detail there that we haven't covered. And then, love to understand the other parts of Odyssey's business that helps make this a complete package.
Emily McAteer (23:56):
You've nailed the finance part. I mean, we standardize and aggregate assets in order to connect project developers to international capital markets and streamline their access to finance. Our big dream is that it becomes very straightforward. You develop a project in this way, you bring it to the platform, you get the financing you need. That's what's really going to get these projects moving and get project developers to the scale that they need. Finance is clearly the real sticking point in this whole process. But what became very clear as we were working with these project developers is even if you have financing, there's other frictions in the process of developing this wholly new asset class that operates according to a very different paradigm than energy infrastructure, as we've talked about.
(24:34):
So the next real challenge that we were seeing is that because so many of these project developers are small and they're developing smaller assets at a time, they're paying a lot more for equipment because they don't have the buying power with international equipment manufacturers. We were seeing up to 50% more for a [inaudible 00:24:52] cost basis than, let's say, a utility scale developer might pay that's placing, let's say, a five megawatt order in one time versus a project developer who might be placing a few hundred kilowatts at a time.
Cody Simms (25:02):
The equipment ranging everything from solar panels to transmission lines to concrete in the ground, I'm guessing. Is that correct?
Emily McAteer (25:09):
Yeah. We usually think of equipment, there's PV and batteries, which are the two components that come internationally. Often the poles and wires are bought locally. But yeah, PV, battery, inverters, those are the kind of core pieces of equipment that they're purchasing. But aggregation is really helpful here too.
(25:25):
So if we are already aggregating on the finance side, we had the realization, hey, can we aggregate across projects and across project developers to become a much bigger buyer and then deliver those cost savings that we get from having more buying power, having higher volumes back to developers to bring down the CapEx of these systems? A platform we call the PACE platform, procurement of aggregated cost efficient equipment and/or energy. We're still debating what the acronym actually stands for, but a PACE platform is our aggregation platform for procurement.
Cody Simms (25:53):
Mostly right now you've got demand side with all of the project developers that are on your platform today, and then how are you aggregating on the supply side of equipment? That sounds like a whole other business you got to go out and build.
Emily McAteer (26:06):
It is a whole other dimension to the platform. You can think on the finance side, we're bringing together project developers and investors and on the procurement side we're bringing together suppliers and project developers. But really the pitch to suppliers is, these are messy markets. You don't want to be interacting with many, many small buyers. Let us streamline that process for you and give you access to these markets by aggregating those buyers into one.
Cody Simms (26:29):
And so in either case, with the aggregated project developers to finance or the aggregated project developers to equipment suppliers, how much risk are you taking on somewhat vouching for these project developers either that A, yes, their project is going to be financially successful to your financiers? Maybe 99 of them are and one of them is not. And B, same on the equipment side, that they're going to properly pay for the equipment. And you're even representing the quality of the equipment that the suppliers are providing. As a middle person in this mix, how much responsibility do you take for the end-to-end project success?
Emily McAteer (27:07):
At the moment, we view ourselves as the aggregation and, let's say, system of record between these two parties, but we are not doing a credit rating ourselves in the financing process. We're enabling investors to do what they know how to do, but having the right sort of data and information available. The biggest role that we think we can play in sort of supporting the underwriting process is providing really good data, not just in terms of the pro formas and the forecasts and the way the projects are developed, but feeding in operating data. So making it easy for a project developer to say, hey, here's all the data streaming in for my existing projects that supports these projects that I'm looking to get financed and built.
Cody Simms (27:43):
That's the third pillar of your business, if I'm not mistaken, which is how do you actually help these projects operate? And you've actually now got some technology that you're able to provide to them that enables that to happen, is that correct?
Emily McAteer (27:58):
About a year and a bit ago we had this realization that the collecting data from operating projects and making sure that projects are really well managed once they got built was the missing piece of the puzzle of the platform. So we think about the phases of project development being finance, build, and operate. So we had started as a finance platform. We were starting to build out the build piece, which is around procurement. And then we said, hey, the missing pieces operate. And so we thought to ourselves, should we build this ourselves? And to be honest, we did start to build it ourselves and realized it was really hard collecting lots of granular data from all of the different components of many small assets. Most are in low bandwidth, low data bandwidth. It's not an easy problem to solve. But we had really great partners that we were already working with in a company called Ferntech.
(28:38):
And so we ended up acquiring them because they had figured a lot of this technology out and have really great tech for handling those low bandwidth environments, so collecting data locally via a small controller that's installed on site and then it's held there until there's even a tiny bit of bandwidth that will compress that data and get it into a web-based platform that can store the data. And so now that's a piece of what we offer. It's called our FERN platform, and it has three layers of what you can do with it. So there's the basic monitoring. You can collect data from your assets, unidirectionally, bring it into a platform and see what's happening, run analytics on it, make sure you understand what's happening with your portfolio. Then there's the control piece where you can actually turn things on and off and change parameters and hopefully avoid sending someone out to this remote area of Nigeria because you're doing it remotely.
(29:23):
And then the third is what we call logic loop. So that's really starting to optimize the performance of these systems, creating if/then statements that automatically say, if this happens with this component, turn this component off. And our vision and what we're doing is obviously providing really good technology to operate your assets, but making sure that you can feed that data back into the full platform so when you're having those conversations with financiers, you've got great data to share with them and then they know that they'll never lose visibility into the assets that they're financing.
Cody Simms (29:51):
And we talked about the core asset level, which is the photovoltaics and the storage. I'm guessing you're not going all the way down to a panel that's been installed on a house or a building.
Emily McAteer (30:01):
We actually do collect data from individual, what are called solar home systems with the FERN platform, with the controllers collecting data from all of the components of the system, so what's happening with the inverter, what's happening with the battery. We can even measure fuel levels of the diesel generator to know if your tank is getting low. Really sort of any sensor or IOT device will collect data.
Cody Simms (30:21):
And in this case, the developers are subscribing to this and paying you a direct licensing contract for access to this? Whereas I'm guessing in most cases the business model is on the supply side, either finance or the equipment suppliers. Am I making an incorrect assumption here?
Emily McAteer (30:37):
No, no, that's the right assumption. We do have a freemium model, so we really want to democratize at least access to data and monitoring. So we usually provide that free at least for a first handful of assets, a software product plus the cost of that controller to remotely control your assets.
Cody Simms (30:52):
And that leads me to my next question on the project developer side. For any of these components to work, you have to have a lot of project developers. How in the world are they finding you, or how are you finding them?
Emily McAteer (31:01):
Originally, we built our project developer base because we were working with the capital that was available, the hundreds of millions of dollars that were coming from DFIs and we were supporting them in that way and got to know them all. There's a number of countries where if you're engaging with government subsidy programs, and you would be if you're developing these assets, you're interacting with our platform on that front. And so we got to know the project developers and got to understand what are the core frictions they're facing outside of that one way that we're interacting with them, and said, "Let's keep building what the whole sector needs if we're going to scale."
Cody Simms (31:31):
Give us a sense of scale today. We talked about Nigeria a lot, but you're operating on multiple continents in different markets that I assume all have quite different needs and implementations and local details to how they work.
Emily McAteer (31:44):
The thread is really any clean energy distributed infrastructure is what we say. It's beyond just solar projects. Some of our customers that are using our FERN platform are fish farms in Norway that have carbon energy sources, or ice cream trucks that have an onsite energy source that they need to monitor. Security systems. Water systems are actually an area that we're increasingly seeing are distributed and have the same needs in terms of needing technology to manage them. The addressable market is this whole field of low carbon or clean energy-based infrastructure, and that's why we're on so many different continents because that's applicable in so many continents. We have assets in, I think, about five continents using our tech.
(32:26):
We interact with about 1,500 project developers today, but looking to significantly grow that as we keep building out our products and our value proposition. We say we have a billion dollars of capital on the platform and a lot of that comes from the concessionary capital that we're facilitating. So if you'd sum up the value of all of those facilities, it's actually, I think, now at 1.3 billion. A lot of capital that we're playing, at least the technology part in helping to deploy it we're just scratching the surface. We are so excited about where we go from here.
Cody Simms (32:53):
You're a small team, it's a startup. It's one thing to have customers in all these places. It's quite another to just manage the logistics of dealing with them all. So technical logistics like billing and invoicing to just the personal sanity logistics of time zones and sales calls and partner calls and this, that and the other. How are you doing all of that? And I guess your team equally is global, which adds that much more complexity on top of that, purely from a hey, you're the CEO of this company that has customers all over the world and employees all over the world. A, are you staying sane? And B, how do you do it?
Emily McAteer (33:35):
We were chatting before starting this conversation and I was complaining about having been up at 4:30 in the morning. That's really how I manage it. I've got to be up super early in the morning so I can maximize my time zone overlap. Our team is in 11 different countries: Rwanda, Zimbabwe, Kenya, Nigeria, Germany, Spain, US and we have 15 nationalities, which I think is the coolest thing about our company. I think it strengthens us in a lot of ways because we're great at working across nationalities, across cultures, across time zones, but I'm not going to say it's easy. Certainly has taken a lot of work and thought to figure out how we work efficiently with each other. And we're always working on it.
Cody Simms (34:14):
I thought we were crazy at MCJ with nine team members in three countries, but you've taken that to a whole new place. But I think it certainly does given the mission of your business, much like us at MCJ, having global perspectives helps you see the climate problem in very, very different ways.
Emily McAteer (34:31):
We experience the energy access problem just in our own operations. It reinforces our mission and keeps us all really driven to keep working really hard. I mean, our colleagues in Nigeria often [inaudible 00:34:41] will go out because the power went out and they have backup generators keep things going, but it can be super frustrating to be in the middle of a conversation with a colleague and have the power go out. And so we're living that just as a company. I mean, it's a little bit meta, we're experiencing that and trying to solve that problem at the same time.
Cody Simms (34:55):
You've announced recently your seed round. Obviously we at MCJ Collective are proud participants to be a part of that. But maybe talk a bit about the capital you've raised and what you're planning to use it for in terms of growing the business.
Emily McAteer (35:09):
Super excited. Just announced a firm called Equal Ventures based in New York. What was really exciting about meeting Equal is that they had a thesis that really what project developers needed was an end-to-end solution that solved frictions across the development life cycle. And it was mind-blowing to come together and hear them tell me that thesis and realize that someone else at least thinks we're onto something. So excited to be working with MCJ Collective. We have Founder Collective, Abstract and Twelve Below are all our partners in this.
(35:35):
And we have two big goals, really to unlock international markets for project developers and emerging markets, and so on the aggregated procurement side, that's about really starting moving large amounts of equipment through the platform and getting international suppliers tapping into these markets and delivering good pricing for project developers. And then on the capital side, it's really about bringing international commercial capital into these markets, making these markets accessible to the climate funds and the infrastructure funds that want to put this money to work, otherwise would find it difficult to even know where to get started.
Cody Simms (36:09):
Emily, people who are listening that might be interested in the mission that you're going after, where do you need help right now?
Emily McAteer (36:15):
Everything we're doing we need help with. We need really smart financiers to help us think about innovative ways to finance these assets. On our finance platform we're looking for great operational folks that are going to help us scale a procurement platform. We're essentially running three businesses at once, but all tied together and leveraging synergies. And so just looking to bring in people that will help each of these businesses take off individually and then interact with each other well.
Cody Simms (36:37):
When it comes to team, you have a lot of roles you need to fill and we've talked about how you and Cathy got the company started, but we haven't hit on what your team looks like today. We've talked a bit about you've got these people all over the world, but what are the main leaders of the company today?
Emily McAteer (36:51):
The key person to know is our chief business officer, Piyush Mathur, who joined about a year and a half ago. And Piyush came from the solar home system sector so he was CEO of one of India's largest solar home system companies called Simpa. And what was so exciting about bringing Piyush into the business was that he had experienced the same challenges that I experienced at SunEdison and had the same mindset of, okay, we can't just be building solutions at the project developer level. How do we really become an ecosystem enabler and how do we use technology to enable ecosystems? He's very much the partner for me in this next phase of Odyssey and we're basically working around the clock because we're 12 and a half hours apart. So one of us is always awake if you need us.
Cody Simms (37:31):
Well, I am so excited to have had the chance to learn more today about your story and for you to share it with everyone here listening. Thanks for including us at MCJ in your journey of course. And I can't wait to see where things go next.
Emily McAteer (37:45):
Awesome. Well, thanks, Cody. Thanks for having me.
Jason Jacobs (37:48):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (37:52):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity. To do this, we focus on three main pillars; content, like this podcast and our weekly newsletter; capital, to fund companies that are working to address climate change; and our member community, to bring people together as Yin described earlier.
Jason Jacobs (38:14):
If you'd like to learn more about MCJ Collective, visit us at www.MCJcollective.com. And if you have guest suggestions, feel free to let us know on Twitter at MCJ pod.
Cody Simms (38:29):
Thanks, and see you next episode.