June 26, 2012
EnergySage founder and CEO Vikram Aggarwal got the idea for his clean energy information and education startup from a rather unusual place: the lumber yard market.
While investing in a lot of different industries for Fidelity, he began working on a big project: consolidating the lumber yard market that supplies custom home builders – “We put together a $7B behemoth.” This was back in 2006-2007 when green construction was really taking off. When he started looking at what investments to make next, he turned to the green space.
“I realized there was one thing missing,” Aggarwal told me. “Lots of energy was being spent on building better solar cells, but there was very little happening in educating consumer. I am a finance guy – I always believed that green energy would become popular the day it made financial sense and went mass market. I started seeing this happen during 2006-2007. Oil prices had shot up, solar was more affordable.”
So, Aggarwal left Fidelity and launched EnergySage to educate consumers (residential and commercial property owners specifically) on how to use clean energy systems to heat and cool their properties.
“Our view is that clean energy should be a mass market product – and we want to be the driver of that. It has to be ubiquitous. It’s no longer a niche product. It will save you money as energy prices keep going up – and they will. They’re low right now due to the global slowdown, but once the world’s economy recovers, the price of fossil fuel will skyrocket.”
Thanks to a partnership with the Northeastern Sustainable Energy Association, EnergySage will soon have 2,000 case studies of people who have already bought an energy system. They also work directly with homeowners to evaluate homes (you can use a wizard on their site) and recommend the best clean energy system for you. You get multiple quotes from different vendors and information on financial options (lease, purchase, or share).
EnergySage was bootstrapped til this spring, when they landed $500,000 in funding through the Department of Energy’s (DOE) SunShot Initiative, the goal of which is to make solar achieve price parity with fossil fuel by 2020. “Over the last few years, the DOE has invested in solar technology development,” said Aggarwal. “Prices of solar panels have dropped 75-80% over last 4 years. What hasn’t come down are education/permitting – that accounts for 25% of the cost of a system.”
By showing the DOE that EnergySage could cut that 25% cost component by half – so prices of systems will drop by 10% or more – EnergySage received government funding. As Aggarwal pointed out, government funding is very important for unproven concepts. “Private investors are very risk-averse. They do not generally invest in companies who are trying to build a product. When it’s ready to scale up, they’ll invest.”
Though clean energy’s time is finally arriving, Aggarwal has had a steep uphill climb in growing EnergySage, and he has learned 3 valuable lessons along the way:
“Be persistent – believe in your idea. I worked on this for 3 years, was super passionate about it, and even though we weren’t getting financial success, we were getting a lot of traction.
“You have to go out into marketplace. I started consulting and that helped me learn about the market from the customers themselves. I built features based on the knowledge I gained.
“We are based out of an incubator – the Cambridge Innovation Center – and I have found that it is helpful to be co-located with other entrepreneurs. You can learn a lot from each other. Boston has a great ecosystem when it comes to entrepreneurship – there are always seminars, workshops, conferences. You have to stay motivated. Being an entrepreneur is very lonely – you can question your own ideas and motivation, but having that support system is important.”
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