In recent years, the demand for energy in the MENA has risen significantly due to the region’s rapid population growth, economic development and urbanization. The power demand in the MENA is expanding between 3% and 8% annually, which is above the global average. A reality that has spurred the formation of a vibrant market for energy solutions, which has the potential to drive economic diversification and create new jobs in the Arab world in the future.
However, many Arab countries still lack some of the basic elements needed to enable the development of new energy markets. In order to reap the full economic, social and environmental benefits of these budding markets, more Arab countries need to improve the legal frameworks regulating the “green economy,” ensure the availability of funding for “green enterprises” and develop individuals with the “green expertise” needed to create and implement such energy solutions.
Taka Solutions, a Dubai-based startup in the energy sector, is a prime example of a “green enterprise” that is trying to deploy innovative energy solutions that support the MENA’s economic development in a sustainable way. In the following interview, Charles Blaschke, Managing Director of Taka Solutions, shares how his startup is trying to promote energy efficiency in the region, while also educating their clients and the public about the importance of responsible consumption.
1. What is Taka Solutions?
Taka Solutions is a Dubai-based ESCO – Energy Services Company – that finances, develops and implements solutions aimed at enhancing customers’ energy efficiency and reducing energy-related expenditures providing both economic and environmental benefits.
We have delivered; audits to 350 buildings in the UAE, over 5 million sq.ft. worth of retrofits and an average of 29% energy savings. Taka Solutions is building a new energy future for the MENA and the world.
2. How is Taka Solutions trying to change the perception of energy consumption in the MENA region?
To achieve the region’s energy efficiency targets in the buildings sector, a global “race to the moon” approach is needed to launch deep building retrofits. The private sector’s effort towards energy efficiency in buildings is crucial to offset building energy demand growth while still providing comfort, improved quality of life and reduced energy/operational costs.
Greater effort to improve global understanding of energy efficiency services and energy performance contracting therefore seems be a priority. Taka Solutions, is trying to change the peoples’ perception by findings new and simpler ways to explain the benefits of energy efficiency.
Our business itself is built around an innovative paid-from-savings model, benefiting building owners, operators, end-users and finally the planet. Sharing is caring!
Making energy, efficiency and people buildings and homes easier to understand, and giving them the information in a clear and concise way will help them learn about their impact, consumption and how to reduce it. Buildings and homes represent 40% of the worlds carbon output, and they can easily save 50% using readily, easy, cheap technology. If everybody did this the world would meet the COP21 targets and more.
3. What are Taka Solutions’ objectives in the MENA region? How are you trying to position yourself in the region’s energy sector?
In a few bullet points, Taka Solutions objectives are:
- To make of energy efficiency services a simple and seamless user experience.
- To shift energy efficiency’s current reputation of “hidden fuel” to “first fuel”
- To leverage technology, engineering and finance in an integrated solution addressing our customers’ energy needs efficiently.
- To create value for society, business and people
- To make the biggest impact by reaching more customers, and helping them save more, with deeper retrofits and technology, not just the cheap and easy stuff
We really want to refine and focus our energy to plan the launch into new markets to reach more people. We position ourselves as a global and trusted energy efficiency partner.
4. Are Taka Solutions’ internal objectives aligned with any national, regional or international energy frameworks? (For example, IRENA’s Pan-Arab Renewable Energy Strategy 2030 of the UN’s 2030 Agenda)
International organizations’ policies and objectives are part of Taka Solutions’ DNA. Not only are our objectives aligned, but we also share the same vision of a world where energy needs are met without negative impact.
As a company, we forged a global vision of the challenges to develop a diversified energy mix and manage resources, buildings as well as networks to achieve sustainable growth. In the United Arab Emirates, in Saudi Arabia, in Jordan and Kuwait, we have seen a rapid development of the urban environment as well as governments creating entities or investment funds pushing energy efficiency across buildings and new renewable energy infrastructure.
Over time and with tangible results being published, private customers are showing more and more interest in taking part in this clean energy transition. Taka Solutions is therefore at the forefront of this transition and making these international policies and frameworks a reality.
We are facing the world’s biggest challenges head on, with a solution that works. This is why most global and local governments around the world have policies and programs around sustainability, energy, and efficiency, of which we are not only aligned with, but solving without manipulation or intervention, using raw engineering and business.
5. As you mentioned in an article in Arabian Business, Taka Solutions focuses on promoting efficient energy use. With this in mind, do you believe that countries in the MENA region should investment more in energy efficiency or renewable energy production?
There are three levels in the electricity value chain, generation, distribution and consumption. For the MENA to remain a central player in the global energy industry we believe that the MENA countries should diversify their investment on each level, but will gain the most from efficiency.
This is because it is the easiest, cheapest and most scalable, because every single person can make an impact. If each of the 5,000,000 people in the UAE reduced their energy at home and work by 50% (which is very possible and even easy), then the countries energy consumption would reduce by 30%. That is a HUGE impact.
On the generation side, in rapidly developing cities, the need to satisfy growing electricity demand offers an opportunity to deploy energy efficiency services and renewables from the outset to ensure the development does not consume, or require large generation. This allows for renewables to be made to serve these.
On the distribution side, incorporating a higher share of renewables and supporting the electrification of end-use sectors will require a more flexible electricity system. Existing regulatory and market frameworks are currently supporting the system-wide flexibility benefits of certain technology options, such as smart metering and feed in tariffs.
On the demand side, increasing the efficient use of electricity can help reduce investments both in generation and at the system level investigating opportunities to avoid the unnecessary use of electricity and to improve the efficiency of remaining generation should be a first step in any effort to transition towards a sustainable energy system.
The cost of more efficient technologies on the end-use side are often more than made up by savings making the investment in energy efficiency more attractive than investments in generation. In the end, energy efficiency can free up the same amount of energy than new renewables only at a fraction of the cost.
6. With one of the youngest and fastest-growing populations in the world, the MENA region will inevitable need to generate more energy as its population grows. Keeping this in mind, how do you think government and renewable energy providers can ensure that they are efficiently using the energy they are producing?
By;
1. First, reducing the existing consumption and demand using energy efficiency and performance standards.
2. Second, ensuring that all new development is efficient through good code, and strong enforcement.
3. Third, requiring all new generation to be clean and renewable – but without too much intervention and support, to ensure sustainable business that does not fail without subsidies.
Indeed, growing cities will have to match energy demand with supply and the way the infrastructure is designed, built, operated and maintained can yield different energy performance outcomes. Compact urban development, energy-efficient buildings, public transport, low-carbon end-use fuels, distributed renewable resources generation and smart energy networks all offer a vast and largely untapped potential to effectively achieve the MENA countries’ energy related targets.
For the past 3 years, governmental entities led the way on the critical tasks of adopting, monitoring and enforcing building energy codes for new power plants or buildings construction and a global uptake of retrofits in existing power generation assets. These efforts have included the development of local energy and awareness programs supporting the private sector, as well as end-users’ involvement, which is a great step in ensuring the efficiency of the energy system.
The results of the region’s first renewable energy production assets and energy performance contracts are a huge step in developing the understanding and confidence in these innovative business models.
7. What criteria were used to judge the participants of the GCC edition of The Venture competition and what aspects of the Taka Solutions business model led you to win the GCC final?
The five criteria that were used to evaluate the participants of The Venture were:
- Market opportunity and size
- Business Model & organizational strategy
- Skills, Experience and commitment of the Team
- Social impact
- Scalability
The two main drivers that led to the Taka win were;
1. Paid from savings model that could have a big impact in solving the world’s biggest challenge, with aligned interest between Taka, the customer and the environment, where Taka bares all risk and is only paid once we save
2. The B2C mobile app and business model that would help to reach down to the individual level, and help people save, the ones who can and want to save, and need to save.
Cities are at the heart of the decarbonization and energy efficiency quest. With more than half of global population and about 80% of the world’s GDP in 2016, cities account for about two-thirds of primary energy demand and 70% of total energy-related carbon dioxide (CO2) emissions.
Continuing on the current trends, carbon emissions from energy use in cities, including indirect emissions from power and cooling/heating production would increase by 50%. Hence the market opportunity, size, business model, social impact and scalability of Taka Solutions’ business model.
Finally, and most importantly, the team was recognized for its expertise and commitment towards contributing to a world where energy needs are met without negative impact. A company is only as strong as the people behind it.
8. What gaps currently exist in the MENA’s energy efficiency and renewable energy sectors?
The biggest gaps are the understanding from customers about the potential or energy efficiency, and specifically the paid from savings model and their inability to make smart, informed decisions to saving and reducing their energy consumption, while getting new technology, engineering, finance and a better building that is better for their tenants.
If we look at renewable energy strictly as a means of large scale power generation and energy efficiency as small-medium scale services then the gaps are huge. Renewables being a tangible product, they benefitted from a seamless deployment and gained popularity. On the contrary, energy efficiency is a service aimed at uncovering a hidden potential which is more complex to show.
Despite this apparent gap, we also see growing synergies between energy efficiency and renewable energy especially in the building, transport and district energy systems sectors.
Net zero-energy building (NZEB) projects are getting more and more consensus and we have recently offered consultancy services for a few of these in the UAE. The energy efficiency of the building is ensured from the design stage and the remaining needs for energy are satisfied with renewables.
9. What challenges do you face as startup in the energy sector in the MENA region? What can be done to eliminate these challenges?
Our biggest challenge is educating people about their impact on the environment by not using energy efficiently and the magnitude of savings and positive impact they can have by saving energy. Another challenge we face is how we manage our resources to achieve a global impact and create the greatest capacity to reach people effectively to help them save more.
Finding qualified and experienced employees, partners, contractors and vendors is a huge challenge now, and will get bigger over time.
We are looking to spread the word around different educational institutions. By taking part through global conversations and through combined teamwork, and experts in a wide variety of areas, we can team up by cutting and making our presence be known globally through platforms such as the Venture.
10. What role do you think that startups should play in the energy efficiency and renewable energy sectors in the MENA region?
We might say that the recipe to Taka Solutions’ success includes adaptability, research, ingenuity, and the fearlessness to go against the pack to find new and better ways to navigate the industry. Startups are generally highly adaptable and every idea is valued and considered, making of them very agile, quick and customer centric entities.
Startups can therefore adapt their offers much more easily than big corporations which have defined range of offers and capabilities. Providing innovative, out of the box solutions is where startups can challenge the status-quo.
11. What should the key stakeholders in the MENA’s startup ecosystem do to promote energy-focused entrepreneurship in the region?
The energy industry, and especially the energy efficiency sector, is still in a growth phase, creating or reinforcing existing associations gathering the different players in the market would help shape best practices and promote energy-focused entrepreneurship in the region.
Creating an infrastructure that would help small companies support larger companies with their services, and get contracts, along with secured payments would make a very large positive impact.
12. What trends do you see emerging in the energy efficiency and renewable energy sectors and where would you advise foreign venture capitalists and angel investors to invest?
Foreign venture capitalists have already understood the attractivity of the energy efficiency and renewable energy businesses. We already see large Groups entering the MENA looking for partners already having an experience in the region, enabling them to take part without having to start from scratch.
For a riskier, but very lucrative investment would be in technology deployment and R&D in existing energy efficiency firms of the region. There are many hardware, software, equipment, technology and processes that can be used in projects in the region that are not available.
To have the venture funding to create and deploy these (through existing contracts like we have) would make a low-risk investment with a huge potential return. A secure investment would be the newly formed green funds financing renewable energy and energy efficiency projects.
