Energy companies, oil majors and telecommunications firms are among those eyeing up a potential investment in energy tech start-up Social Energy.
Social Energy has tasked investment advisory Evercore to help them raise up to £50 million to finance an international expansion and tech development, and around 25 companies have now progressed to the due diligence stage.
Speaking to Current±, Social Energy chief executive Ryan Gill said that a “broad spectrum” of companies had expressed an interest in participating in the financing, with venture capitalists and institutional investors joined by energy companies, oil major and telecommunications firms, indicating the scale of interest in the UK’s nascent ‘EnTech’ sector.
UK-based energy technology firms have been hot property in recent months, especially those bringing to market solutions harnessing energy flexibility. Shell acquired Limejump outright earlier this year, while Engie acquired a 45% stake in Kiwi Power.
Gill said that interest from telecommunications firms was not of any real surprise and stemmed largely from interest in the emerging energy as a subscription service model, which the likes of Orsted and Good Energy are known to be investigating. Such a model, Gill said, could be bundled with other services such as broadband and entertainment, and sold directly to the consumer on a cost-per-month, rather than cost-per-consumption, model.
But Gill is keen to stress that the level of funding is matched by the need to find the right partner. “It’s not just the money we’re looking for, it’s also the synergies the investor can bring to accelerate the scale at which Social Energy can grow,” he said.
The due diligence process is due to last around four weeks, after which further discussions and negotiations will take place. Social Energy expects to close on the funding in late August, in time to support an international expansion and new product development.
Social Energy’s platform connects to domestic batteries - the firm has partnered with several manufacturers, and subcontracts domestic installers to carry out installations - and essentially aggregates them, professing to use that aggregated capacity to bid into flexibility and balancing markets.
Revenue generated via those markets is then used to bolster returns. Social Energy’s modelling has been backed by management consultancy Baringa, and claims to boost returns to such an extent that installing a 4kW solar rooftop alongside a 4kW battery - at a cost of around £8,500 - can boast an ROI of 365%.
Social now intends to broaden its scope of connected devices, starting with electric vehicles and hot water heaters. The company recently received funding from the Department for Business, Energy and Industrial Strategy to test the use of its system with hot water heaters in a number of homes, while HVAC systems are also on its radar.
Since formally launching earlier this year, Social Energy has laid claim to impressive growth, with its installer partners having fitted some 500 batteries in the UK last month. That figure would be enough to place it among the market leaders, Gill said, contributing to interest in the fundraise.
Social is eyeing launches in both the US and Australian markets, the latter of which is more advanced. A team is already in place in Sydney and the company looks set to launch its Australia-facing offering in October, which will again be launched in conjunction with Duracell.