How Smart Joules led by example by putting the spotlight on energy efficiency
In a market that is constantly evolving, businesses are routinely trying to up their game with smarter solutions, while trying to keep their costs at a minimum. One of the major pain points for firms is the rising energy consumption levels and unit energy rates year after year. While it becomes essential for companies to focus on energy efficiency with a proper plan, it is a path riddled with issues. Arjun Gupta, CEO, Smart Joules, noticed this challenge first-hand while working at the Chairman’s office in Jaypee Group.
Arjun, who had recently returned to India after studying and working in the USA for a decade, was responsible for driving savings by bringing in efficient technologies at the various companies of Jaypee Group. But he was given one clear instruction by the director - not to spend capital. He was told that he could get other Energy Service Companies (ESCO) to invest their capital and Jaypee would be happy to share some statements.
Over the next 18 months, Arjun identified various opportunities within the Jaypee Group of companies with savings potential of over 30 percent. But he found it virtually impossible to implement projects due to the complexity involved in implementing a Shared Savings Model - a model where the ESCO invests in the projects and savings are shared between the ESCO and the organisation. He also realised that most of these ESCO companies would simply sell the equipment without any real guarantee, instead telling the organisations that they would achieve savings after they used their equipment.
While working at Jaypee, Arjun met Ujjal Majumdar – chief engineer for the Jaypee Hotels Group division – who had successfully brought down consumption at various hotels, thereby leading the duo to join hands. But they didn’t have the capital or knowledge of starting a new venture. To fill in these gaps, they got Sidhartha Gupta on board, and together they launched Smart Joules in December 2014 with the sole aim of making energy savings simple, transparent, profitable and adoptable by businesses.
Energy saving solutions
During their research, the team realised that ancillary physical infrastructure (air conditioning, lighting, pumping, heating, etc) required in facilities is an unavoidable and a major cost concern. Furthermore, repairs and maintenance issues added discomfort to the organisation. Based on these observations, the Delhi-headquartered startup came up with its unique JoulePAYS (Pay-As-You-Save) business model. Sidhartha, the Chief Finance Officer at Smart Joules, says, “Through this model, we make all the required investments in whatever retrofits are required in the facility. After making the retrofits and design improvements, if there are savings, we would share them with the facility in a pre-defined ratio. So, the organisation we work with doesn’t need to make any investment in the design, execution or operation, and they only pay after there are visible savings. Making their previous electricity bill as the baseline, we decide the payment based on the difference in savings.”
But the team was quick to notice that JoulePAYS could be limited to certain sectors and they needed to come up with other models to reach more customers. “We thought instead of showing a bill to bill comparison, we should just focus on some utilities of the organisation,” Sidhartha says. They observed in most companies, the central chiller plant consumed a large amount of energy, while also being a massive contributor towards the carbon footprint of the firm. Apart from this, the repair work would need additional manpower. To tackle this, the team introduced the JouleCOOL (Cooling-as-a-Service or CaaS) business model.
“We would replace, operate and maintain the firms’ cooling infrastructure and we charge based on the savings that get generated,'' Sidhartha says adding, “Similarly, we have a JouleAIR (CompressedAir-As-A-Service) model. A lot of companies are using compressed air models, which are not functioning optimally - sometimes they’re old or have poor designs - so we replace the entire system and we charge based on what we are able to save, while providing firms compressed air.”
The team claims their biggest differentiating factor is the low lifecycle cost of delivering essential energy services like cooling, heating and compressed air. This can be credited to their in-house optimisation and control platform DeJoule. DeJoule comprises a web-based architecture, high-performance IoT hardware, intuitive user interface and a powerful data processing engine configured with energy saving algorithms (called Joule Recipes) to continuously identify and correct for hidden inefficiencies.
On shaky grounds
Despite its data-backed architecture and services, Smart Joules did not enjoy a smooth journey. When it had started out, its proposal — of investing its own money and only getting a percentage of savings from the electricity bill it helped reduce — was viewed as too-good-to-be true. Large companies, who believed they were following the best practises already, asked the team to come back after they had managed to execute a few projects. The fact that the entire timeline of contract signing, project design and execution is lengthy did not help either. Sidhartha says, “The time taken was lengthy because by the time you signed and executed a contract, you’re a year down and you need six months to a year’s history to show that we can deliver these services. So the first few years were frustrating.” The team also struggled with access to capital and delay in getting equipment. “Since we make the upfront investment, ours is a capital-intensive business. Accessing capital in the first two-three years was difficult,” he reveals.
After the initial hiccups on the first few projects, the journey became smoother and more so with a .in domain that gave the team a boost with some major partnerships and contracts.
Tasting success with a .in domain
Smart Joules always wanted to be identified as an Indian company and cater to the Indian market.
“A lot of companies want to give business to Indian startups. The first thing customers do is log on to your website and once they see its www.smartjoules.co.in, they instantly know it's an Indian company. It really helped us get a few key contracts without which we might not have bagged otherwise,” Sidhartha shares.
Like Smart Joules, the National Internet Exchange for India (NIXI) is helping hundreds of startups across the country to get a .in or .Bharat domain. Apart from cost-effectiveness, another advantage of getting a domain name from NIXI is that one can choose from 22 languages. This will help businesses be more visible to the right audience.
“It gives customers a lot of confidence that this is an Indian company that is here to stay,” he says.
The journey ahead
It took Smart Joules five years to execute 22 projects, which fetched them accolades across the country, including the first prize in National Energy Conservation Awards, awarded by the Ministry of Power for its client Sant Parmanand Hospital.
Today, the startup boasts of a team of 110 engineers and a prestigious clientele across 15 cities. Smart Joules is reducing over 25,000 tons of CO2 emissions and 350,000 kWh annually through its current projects. Hopeful about the future, Sidhartha says that most companies are now willing to outsource to companies like theirs to manage efficiencies. “I feel what the IT industry witnessed in the 90s and 2000s is what we will witness in this space as well. The market is expanding at such a rapid pace. Many companies want to be net zero by 2030-40 for which they will need to outsource most of the heavy-lifting. We are there for that,” he signs off.
The Shaping India Inc's Online Growth series chronicles the journeys of startups and SMEs in India and how creating an online presence on the .in or .Bharat domain powered their success stories.