U.K. residential energy aggregator Social Energy is planning international expansion after gaining multimillion-dollar backing from U.S. alternative investment manager CarVal Investors.
The parties have not disclosed the amount involved beyond saying it represents “a significant investment.”
Minneapolis-based CarVal Investors bought into Social Energy in December last year, the energy company said in a press release. As a result of the deal, London-based CarVal Investors principal Stuart Lammin will be joining the Social Energy board.
Seven-year-old Social Energy specializes in offering low-cost energy to residential customers. It sells solar and Duracell home battery systems, and then aggregates their output using an artificial intelligence-based metering system called the Social Energy Hub.
As well as providing round-the-clock power for its customers, Social Energy uses the aggregated capacity to offer services such as demand response and frequency response to U.K. electricity system operator National Grid ESO, as well as offering flexibility services to distribution system operators such as U.K. Power Networks.
About 70 percent of the revenue from these services is split among Social Energy’s customers, allowing the energy company to offer a faster payback than residential solar and battery owners would get with a standard self-consumption model.
In the U.K., Social Energy claims it can help residential customers save an average of £226 ($310) a year. The company now has 6,300 U.K. customers, Daniel Mahoney, Social Energy’s marketing director, told GTM in an interview.
Famous faces fronting the brand
Prior to the current fundraising round, the business had brought in £12 million ($16.5 million) from high-net-worth individuals, he said.
These include two sports celebrities from the world of cricket: Michael Vaughan and Shane Warne, who formerly captained the England and Australian national teams, respectively. Warne invested in Social Energy in 2019 and helped launch the business in Australia last November.
Mahoney said Social Energy is looking for significant growth in the Australian market because of the prevalence of residential solar and battery storage in that country. “We’ve already seen a really strong uptake over there,” said Mahoney, without providing figures.
The U.K. averages between 1,500 and 2,000 residential solar system installations a month, he said, “whereas Australia has been peaking at 24,000 a month, so it really is a 10x larger market.”
The market for retrofitting batteries to existing residential solar systems is also much larger in Australia than in the U.K., Mahoney said. There are around 3 million residential solar systems without batteries in Australia, compared to 1 million in the U.K., he claimed.
Finally, Social Energy expects to be able to offer its Australian customers much greater savings. The company said in a tweet that it could save AUD $2,182 (USD $1,679) a year on energy bills, based on its U.K. business model of selling services to the grid operator.
“In Australia, we can take those complex earnings and translate that into the feed-in tariff,” said Mahoney. “We’re paying feed-in tariffs of 40 cents [USD $0.31] per kilowatt-hour, compared to a market average of 10 cents [USD $0.08].”
Entering new markets and delivering new products
Expansion into the Australian market will be partly funded by the CarVal Investors cash injection. But Social Energy is also hoping to use the money to grow across Asia, Europe and North America, with Mahoney citing Japan, Spain and the Netherlands in particular.
Separately, Social Energy is hoping to develop new products for its customers. The company is already trialing the use of its software in controlling water heaters and next year aims to cover electric vehicle charging too.
“A big thing for us is becoming a center point for the home in terms of smart energy management,” Mahoney said.
GTM Squared highlighted Social Energy last year after it emerged as one of the winners in a November 2019 flexibility tender by U.K. Power Networks, the grid operator for London and Southeast U.K. Other distributed energy aggregators winning contracts include energy storage aggregators Limejump, Moixa and Powervault, representing a sample of the competition it faces in its chosen field.
In the United States, companies including Sunrun, Tesla, Generac, sonnen and Swell are aggregating solar-battery systems for grid services, although U.S. regulatory structures don't support the same range of revenue-generating services are available in the U.K. In European markets, Shell-owned sonnen is a major solar-battery aggregator, along with other players with major energy investor support such as Engie-backed Tiko.
Beyond financial heft, one key to success in the residential space is likely to be acumen in the domain of customer acquisition and retention. This week, Social Energy's customer service won an award from the Renewable Energy Association, the U.K. industry group for renewable energy and clean technology, which cited Social Energy’s “effective platforms” and “excellent” response times.