This Week in Startups - Crypto climate bill resurfaces, BlocPower raises $155M + Arcadia CEO Kiran Bhatraju | E1692

Episode Date: March 7, 2023

Molly kicks off Climate Tuesday breaking down the news that the Crypto-Asset Environmental Transparency Act has resurfaced (1:37). Then, she discusses BlocPower’s $155M raise and their collaboration with a town in New York to achieve net zero emissions (6:12). Finally, Kiran Bhatraju of Arcadia joins Molly for 2023’s first official Climate interview (11:38). (0:00) Molly kicks off the show (1:37) The Crypto-Asset Environmental Transparency Act resurfaces (6:12) BlocPower Raises $155M (10:12) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (11:38) Unlocking utility data with Kiran Bhatraju of Arcadia (21:48) Linode - Apply to Linode's Rise program for up to six figures in discounts at https://linode.com/twist (23:14) Breaking down Arcadia and Arc (26:13) Democratizing solar energy with community solar (33:57) Fennel - Join the fennel waitlist now and get your first month free at http://fennel.com/twist! (35:27) Arc users + carbon accounting (43:15) Kiran's journey into climate tech (45:59) Opportunity in the climate tech space FOLLOW Kiran: https://twitter.com/kiranraju FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Hey, everybody, welcome to the first edition of Climate Tuesdays. We have an awesome episode coming up for you. First up, I'm going to break down a little climate news. US lawmakers have reintroduced a bill that would force crypto miners to disclose emissions. You know that this is near and dear to my heart. And we do a quick climate startup of the day, a company that I love. Block power just raised $155 million to turn buildings into Teslas and train workers for the green economy. We're going to break down that business.

And then we've got a great climate interview with you with a climate unicorn. Kieran Betrajou is CEO and founder of Arcadia. We're going to get deep on clean energy arbitrage, community solar, how to make a crap ton of money doing this. It's a great conversation about a fascinating business and a great episode. Stick with us. This week in startups is brought to you by LinkedIn Jobs. A business is only as strong as its people and every hire matters.

Post your first job for free at LinkedIn.com slash Twitter. Linode. Apply to Linode's rise program for founder-led early stage startups and get a $500 credit, up to $120,000 in infrastructure credits in year one, cloud consulting, and so much more. Apply at linode.com slash twist. And Fennell. Make investments that make a difference. Fennell is an investing app that gives you over 200 ESG metrics and information about past and upcoming shareholder votes so you can manage your portfolio and your impact. Join the Fennell waitlist now and get your first month free at fennel.com slash twist. All right, let's start off Climate Tuesday with some news.

Now, you know, you've probably heard me say that I have in the past tended to think of crypto and Bitcoin in particular as my enemy, as somebody who cares about climate solutions. And apparently I'm not the only one who feels that way. U.S. lawmakers have reintroduced a bill that had been previously proposed that would force crypto miners to disclose their emissions. Right now, we don't know like a ton specifically about how much of an impact miners really have on greenhouse gas emissions, but there have been attempts to quantify the amount of energy usage, which will often lead to quotes like as much energy as the country of Belgium sort of things, or, uh,

There was research from the University of New Mexico published recently that said that Bitcoin, when you assess the climate cost of it as a commodity, as a portion of its overall market cap, caused effectively close to as much damage as the entire value of the market that it supports. It's actually in the category of beef when it comes to how much energy it uses and how much damage it can cause. And that's because, of course, as we've talked about, the way that proof of work mining works, it requires massive, massive amounts of energy, huge electricity expenditures to participate. And there have been attempts to deal with this in various ways. We talked, of course, about Ethereum moving to proof of stake instead of proof of work,

which dropped its energy usage by like 99%. But you're still seeing a lot of energy usage. And so the crypto asset environmental transparency act was first introduced back in December, and the reintroduced version is pretty similar to the one that was introduced then. It would mandate the Environmental Protection Agency to conduct a study on what impact miners using more than five megawatts of power have on greenhouse gas emissions. So not just their actual energy usage, because that has been somewhat easy to refute by saying, oh, well, we mostly use hydropower, or we can see.

situate ourselves next to solar installation and use renewable energy, they're saying, okay, we want to talk overall about greenhouse gas emissions. It would also require the miners to disclose information about the emissions. There is a hearing, apparently, coming soon on the environmental impact of crypto mining, and so that's why this bill is being reintroduced. It was penned by Senator Edward Markey, Democrat of Massachusetts and Representative Jared Hoffman of California. In a statement, Senator Markey noted that the pollution generated by the crypto mining industry is growing. He also said, quote, while we're working together as a nation to face down an existential crisis that puts the health and safety of our people and our planet in jeopardy,

crypto miners are sucking megawatt after megawatt from our public grids and emitting skyrocketing greenhouse gases just so they can make a buck for themselves. typically restrained language from Senator Markey there. We can't afford, he said, to let this industry run roughshod over our communities any longer. He also noted that several other senators have asked Urquat, the Electric Reliability Council of Texas, about the impact that crypto miners have had on its energy grid. You may remember that Urquat has had a lot of power outages during extreme weather in Texas, and there have been sort of varying reports.

Some people had said that crypto mining might be partial. to blame because of the increased energy usage and stress on the grid. Miners pushed back and said that they actually reduced their usage during times of extreme need. And so they actually helped the grid. But you do see a lot of states that are attempting to revive their fossil fuel industries, specifically around coal, try to attract Bitcoin mining by saying we have a less cheap power. for you. So I have long thought that this was a conversation that was not going to go away. That seems to still be the case. And I think once you started to have Ethereum make a huge

shift to a different kind of mining that was not so energy intensive, it just turned the spotlight right back around onto Bitcoin and that type of mining. So it'll be interesting to see if that goes anywhere. All right, let's do a quick climate startup of the day. This is actually one of my favorites. I've been talking to Block Power for years. It's the Brooklyn-based climate tech company. Block Power has raised $155 million from investors like Kimball and Christiana Musk, the NBA player Russell Westbrook. Blockpower is a super interesting company that's trying to make cities more environmentally friendly. In fact, the CEO, Donnell Baird, is somebody I've talked to a lot. His Twitter handle for a long time was turn every building into a Tesla. He's a big proponent.

of electrification. And what block power has done is initially where they started was identifying buildings that were eligible for an energy retrofit and would work with cities and banks to finance and build and retrofit existing real estate with more energy efficient, either heating and cooling or even just windows or, you know, reflective paint, things like that. On top of that, Black Power has this really cool job training program. They hire people to sort of broaden the green workforce, because what you will find, if you're trying to decarbonize your house or your office building,

is that it's really, really hard in some cases to find people who know how to do this. It's hard to find installers and contractors and people who can evaluate all the options, create a package, help you with all the rebates that are available, especially now since the Investment Reduction Act has passed. Block power focuses on areas like heating and cooling systems, and in recent years, transition to residential. They say they've completed energy projects in more than 5,000 households, commercial buildings, and houses of worship.

Right now, its most high-profile project is in Ithaca, New York, where it's actually trying to make the city, the city, the municipality of Ithaca, wants to be the first to become fully net zero. So block power is engaged in this project that will electrify a thousand residential buildings, 600 commercial buildings, and all of that is just the first phase of this total building inventory of 6,000 buildings in Ithaca. I'm in my mind right now as I'm saying this, I'm picturing like a little green spot in the clouds above Ithaca.

The reason that I'm imagining a little clear skies above Ithaca is because building use, like direct energy and electricity use, makes up 38% of greenhouse gas emissions in the United States, according to the U.S. Green Building Council. This includes power use for water, space heating, lighting, obviously heating and cooling, and in some cases the building process itself. People often refer to this as the built environment and trying to create massive electrification around. that powered by increasing renewable energy is a huge deal. Block has its total capital race today is more than $250 million. And let's talk for a minute about workers in the green energy field. The company's civilian climate core, they call it, was awarded a two-year, $108 million contract from New York City last year to train 3,000 city residents for clean

energy jobs. So this latest funding, of course, will also help broaden the workforce initiative. Power wants to focus on hiring at-risk people in vulnerable communities. I love this company. I've been following him for years. Congratulations on the raise. You'll love to see it. Okay, now to today's this weekend climate startups interview.

We've got a great one up for you. Kieran Batraju is CEO and founder of Arcadia, joining to break down a climate unicorn. That's right. These companies can get really big. We're going to go super deep on clean energy arbitrage. It's a super interesting conversation about a fascinating. business and getting clean energy built everywhere. It's just you're going to love it.

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It tells your network and your expanded network that you're in the market to hire people. And I've done this for launch for inside.com. And I found my best people on LinkedIn jobs. Hands down. It's the greatest platform for hiring ever created in the history of humanity. So go find those amazing candidates right now. Post your job for free. LinkedIn.com slash twist. That's LinkedIn.com slash twist to post your first job for free terms and conditions to apply. Kieran Batraju is the CEO and co-founder of Arcadia, a climate technology unicorn. Welcome to this week in climate startups. Great to be here.

So tell me for those who are not familiar in your own words, because you're in a bit of a complicated space doing a couple complicated things. Give us the like high level what you're doing. Yeah. So Arcadia is an energy data platform. We unlock all of the geographically limited monopoly utility data that is all around the world across tens of thousands of utilities. We plug, we uncover that data for companies in new energy companies or carbon accounting or all sorts of different sort of use cases. And that data is sort of, of, you know, it's incumbents that don't really have an incentive, frankly, to make it easy for, you know, companies to actually get access to the different, you know, energy usage data, tariff data, cost data, of how energy is priced, and then payment details as well. And so our platform now operates across the world, across 10,000 utilities. And we make it super simple for anyone to get data for,

from that incumbent utility, no matter where they may be. Breakdown again, you went by that pretty quickly. Breakdown again for me, what types of data and why it's valuable. Yeah, of course. And let me talk a bit about the problem. So utilities, you know... Are the worst. They're special.

They're special dinosaurs, as I like to put it. So, you know, public-private entities that are geographic monopolies, right? That's a structure that's persisted for a century. And so what that means is there are these little fiefdoms, right? But it is, you know, trillions of dollars of infrastructure. That is the meters, the wires, frankly, the bills you and I pay. And we joke in the office as debt taxes and power bills. It's basically something every person in business will pay.

And so within the utility, there's a ton of rich data that is we've sort of put in three buckets. One is usage, how you use energy throughout the day, Historically, there's a lot of rich data that lives within your utility account that we unlock, even on time payment history, to help underwrite customers. The second bucket is rates and tariffs. So power is not the same cost throughout the day. There are things called demand charges. There are weird taxes.

Tariffs are wildly complex, maybe purposefully so. sometimes when we see how these proceedings go down, you really wonder if they're just trying to make the most complex thing under the sun. But these tariffs, we normalize through a single API. We unlock for companies that need to understand, for example, how to size the solar system, when to discharge my battery, when to charge my EV. And then the third bucket is payments.

So, you know, that payment relationship and being, being able to understand costs, transact, manage a single bill for energy services. Those are the three sort of big buckets of data. And as you can imagine, the applications sort of run across all of electrification. I think that's what makes it as this like so interesting and exciting is we operate and our customers we serve are across rooftop solar, community solar, which were the largest player in the U.S. Energy storage, electric vehicles, electric vehicle charging, retail energy, and even carbon accounting is one of the fastest growing parts of the business today.

I would imagine, yeah. But draw that bright line for me about how it enables, for example, the development of renewable energy, development and deployment. Like where does this data company become a climate solution company? Yeah, definitely. So I'll go back a little bit. This is my second startup. And the first company, we would go to buildings, try to make them more efficient, save them money.

And through that whole process, it was sort of this realization that you can't actually deploy infrastructure. You can't actually deploy new energy solutions unless you understand the raw data of how a business or a customer is using energy, what it costs, you know, all this rich data from the incumbent. There are a lot of similarities to what we're doing between what we're doing and what's happened in the world of fintech. Flat is a great example. Fulio, another one for sort of communications, programmatic communications, and connecting to telephony and SMS. But in the payments world or in fintech, if you want to connect to the incumbent, if you want to understand my checking and savings account, there needed to be a pipe. And there's so many of those companies, a single API makes it really simple, right, for you to build your business. business.

So I learned that hard lesson through my first startup to come here and realize if we're actually going to deploy DER's distributed energy resources, new clean energy solutions, energy efficiency. Someone had to unlock the incumbent effectively, the old dinosaur. And there have been attempts at this in the past, like during the Clinton administration, there was a thing called the Green Button initiative where they said, utilities like it's time to finally, you know, the public is basically paid for all these meters through rates. It's time to unlock the data. And there's like five utilities that have

effectively done that in two decades. And so we took a page out of a playbook that, again, you know, you've seen in other parts of the, you know, the tech industry where if we can build a simple API solution, unlock that data, people can build all sorts of, you know, the tech industry. new value, deploy new infrastructure. And so I think one of the more exciting things in the journey has just been, you know, I fundamentally believe that this software opportunity around data is the biggest opportunity in energy because, you know, if we do our job right, we see a huge acceleration in the deployment of new clean energy solutions and products.

Yeah, I mean, I think these are such interesting solutions because they sort of sit at, It's literally the interconnect, which is already an energy term. But it's the ability to say, if I am going to create a new renewable energy development, I'm going to build a huge solar farm. Like, I'm going to simplify it even more. I'm going to build a huge solar farm. I need to know who needs energy when, what demand there's going to be, when I should deploy it so as not to pay the highest rates or not cost my customer the most.

and all of that is literally like, you just can't do that unless you know how utilities work. Totally. And I'll give you some examples of this that are, you know, my last company and you see this still with a lot of companies today, a lot of this is estimates or manual work. Yeah.

Right? It's, you know, the energy efficiency company, manually reading bills to understand how you use energy, what your tariff structure is, how much am I actually going to save, you to create a proposal. You know, almost 5 million rooftop solar proposals went through our tariff engine last year, as an example.

If you install a battery and you want to know when to discharge it for the most value and when to pull power for the most value, you need to understand tariff structures. For our community solar business, if you want to connect a customer, don't want to ask for a credit score because it's regressive, you can actually get on-time, utility bill payment history, which is an amazing indicator of if you're going to pay the next power bill to help underwrite a customer.

There's just so many, to your point, if you really want to deploy a solution and make it bankable, understanding that data of how you use energy at the core system of record, which is the meter that the utility owns, that's incredibly valuable. So now, speaking of valuable,

I feel like the $1.5 billion dollar valuation question is how did you get the utilities to give up this data? Yeah, I mean, the honest answer is we didn't. We went through the customer. Okay. And so it's a, and I would say like, you know, things have changed pretty dramatically in the eight years we run this business. Like, you know, the first year in, there was one or more cease and desist letters

saying, you know, stop what you're doing. But I will say, like, there's sort of two buckets, of utilities. There's ones that understand the future that they're about to go into, that have progressive leadership. And there's others that, you know, they're older dividend stocks, older leadership that doesn't see the need to put in this new infrastructure, a new sort of pipeline of data. That being said, we get data customer permission through the customer account. Okay. And that could be, you know, a big customer, like a REIT or a real estate company, or it could be you, right? That's connecting.

your online utility account to us and allowing us to pipe all of that data. And there are some instances now, I will say in the last few years, where we have set up direct API integrations with big investor-owned utilities. And it's exciting, and we're going to be doing a lot more of that. But I think we kind of had to prove it and prove the necessity and prove why customers wanted it to get utilities on board. Sometimes we get a partner where the offer is so amazing. I don't even need to read you the ad copy.

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And you can also apply to their startup program, Rise. And again, Rise members will receive up to $120,000 in free infrastructure credits during their first year and up to 50% discounts after that. Well done, Linode and Akamai. So then tell me how these become products. So you're built on two separate business units, Arcadia and Arc. Can you break down sort of what those are and why, you know, I the individual might want to connect to the system and give me my data? Yeah, yeah. So Arcadia is sort of, Arcadia is the company. Arc is the data platform for, you know, let's say software developers or, you know, larger companies like Ford to access the raw data I described, energy usage, rates and tariffs, or payment information.

So, ARC is a series of APIs. And I think what's really interesting, and we're seeing so much more of this, and maybe see even some of the companies you're looking at, is we have large enterprise companies, big energy companies like Anji and, you know, companies like Ford and Rivian and EVGO. But we also have a lot of, like, you know, software engineers. who've left Fang, who are looking to start their climate tech and the company, and they just come pick up an API and start building.

So that's art. We actually started, so when I started the business, it was this big idea, unlocking this data is going to unlock millions of new innovators. And it was kind of crickets. Because at the time, it was like Nest, Tesla, there just weren't that many. I mean, it's kind of amazing how far we've come in like eight years. in terms of like new products, new solutions. And so we went really deep in the community solar market

because it was the one place we were seeing just fast-moving water, and they needed it all. And community solar, for those that don't know, it's not on a roof connected to your home. It's in a field, right? Or it's far away. But to monetize it to provide savings to customers, you need energy data and you need billing.

it needed the whole platform. And so we went really deep in community solar. We're the largest manager of these assets in the country. When you say manager, do you mean you own and operate? Like, did you actually develop them? No, so we work with over 50 different solar developers. Sometimes it's big private equity funds. Sometimes it's a small shop that's building, owning the project.

And then they come to us and they say, hey, we need you, we need your platform. and we also do some customer acquisition too under their Arcadia brand. We need you to get customers and manage the bill, the credit for 25, 30 years for the life of the project. And so we're the software layer to monetize their asset. And that was like the first vertical, right? It was like fastest growing segment of solar in the U.S. Honestly, it makes more sense than rooftop solar. Not everyone has a roof.

This is where it might be a good idea for us to step back and sort of explain how renewable energy works at the electron level, right? Because I think that people are under the impression that, well, the deal is you put rooftop solar on the roof. And then those are the electrons that your house uses. And so this idea of this distributed community solar thing might not make that much sense. And there's only some states you can build in, right? Let's go like all the way down to like. Let's go. Renewable energy credits and BPPAs.

So let's do this. It's always tough to know how deep to go. We can super geek out, but I think like high level, how does this stuff work will be super useful for people. The short story is like the utility cannot tell me which electrons are lighting, you know, firing my laptop over and the light bulbs about me. They don't, the physics of an electron is an electron electron. When it goes into a pool,

of gets lost. And even sometimes in those rooftop cases, you're not consuming your own electrons, you're spitting back out to the grid or pulling from the grid. So what community solar is, is on my distribution grid, so in the poles and wires in my neighborhood, someone builds a solar project, interconnects it. So it's feeding clean electrons into that grid, and those electrons get lost. They're part of the grid. Now, it's offsetting, if you need a hundred you need 100 electrons and I just added 10 that are clean, you're directly offsetting the need for 10 fossil electrons. So you're immediately impacting the grid. And effectively with community solar, it becomes a financial transaction.

The customer is buying power both from the grid, but directly from that project, right, and the clean electrons from that project. Now, we as the intermediary is the tech platform, we're helping doing all the accounting, all the billing and all the management of those electrons flowing, you know, understanding how many electrons flowed into the grid, how much value was created, and then a customer paying for it. And so it's a complex transaction, of course, and it's virtual. And you may not be consuming the exact electrons that came from that project, but the customer in buying power, paying that project through our platform, is helping build a new clean energy project on the grid. Right. And there's this concept called like additionality so that the more

you build, the more fossil fuel based electrons you can replace over time. And you can totally see when we, I feel like when we describe it in these words, in this way you can completely see why like, oh, obviously you need software to do that. Yeah. I mean, really the simplest way to think about it is it's rooftop solar just in a field in your neighborhood. Right. Or like upstate New York, it seems like it's where they all are. There's a lot of it up there. That's for sure. And we're seeing, and like, you know, at the end of the day, too, not everyone owns a roof.

Not everyone's going to live in a home for 20 odd years. And so, and the community solar at the end of the day is actually like, it's the most equitable clean energy product. I think rooftop solar has been a, like, it's a rich person's product. It kind of has been for the long time. and what's amazing is we're able to give people who are in apartments or low-income customers who've never had access direct bill savings. There's no long-term commitment. You're not to take out a new mortgage.

It's frankly, like, the best clean energy product in America. So we went really deep. And we, like I said, we manage almost half of all the residential-focused community solar megawatts in the country. Wow. How many projects is that? Or megawatts? It's over 500 different projects across 15 states. And like, you know, even before the IRA passed, it was the fastest growing, you know, from a small base, but fastest growing segment of solar for all the reasons they described. Post-IRA, we're going to see, you know, there's specific incentives that just make community solar,

or maybe even the best infrastructure project in America because you're getting all these tax credits. As a developer, you're getting economies of scale by building larger projects, and you get to sell power to a retail customer like you or I who are paying some of the highest prices for power in the country. Right. Okay, so that's, and then as a consumer,

like someone can just go to Arcadia and sign up for this anywhere? Are there geographic restrictions? Like, do you have to be located near? Yeah. Like, everything in energy, right? It can never be as simple. Yeah, it's, it's, so, and it goes back to what you said about interconnection, right? You can't just build a project and plug it into the grid in every state.

And so states have to pass rules in legislation that says a community solar developer can build and can interconnect. It can sell that power to you or I. And there's 16 states in the U.S. that have that today. California just opened their market. And we should have the first projects flowing in 24, which is super exciting. Hot damn, we got a lot of sunny spots. Oh, yeah. And a lot of people.

And a lot of people who, yeah, it's, you know, California was already the best solar state in America with rooftop. But with community, it's going to be an amazing, you know, for all the multifamily properties and people who can't access, it's going to be a really huge market. But it does require that regulatory change because we've been living in a monopoly, you know, own generation world. And that's changing, but slowly. I feel like, too, as long as we're saying this about utilities, we should say, like, these are regulated monopolies. These are not, this is not an accidental monopoly where they got really big, like an Amazon

or Facebook. These are monopolies that have been explicitly, at least in California and some other states, allowed and incentivized to exist that way. And that's why some of this is so difficult. Because it's not just about enabling regulation in some states. It's about removing regulation that was written into law with the helping hands of some of these utilities. I mean, they're not all in favor of this. No.

And it's a great point. I'll step back for a second. So I, you know, most climate tech founders will tell you they're like died in the wool environmentalists. And I care deeply about the environment. but I actually came to energy work through politics. When I worked on Capitol Hill right out of college, I had an amazing job working for a congressman. And when I learned about, you know, regulatory capture

and the structure of these monopolies and the fact that you couldn't just provide power to your neighbor or plug in a new clean energy project, to me it is, yeah, the market structure is just, just broken. And obviously, technology is one way to unlock that innovation. And I feel like, you know, regulators are always a step behind the market. But I think because of all the focus on climate decarbonization, you're seeing a lot of, you know, one of the most powerful entities in America is your local public service commission. And it's kind of a crazy thing to say,

Uber realized that with cabs. And I think the entire climate tech world is really, realizing that now with energy. Okay, listen, if you follow this podcast, you know that retail investors have taken the financial world by storm over the past two years with tools like commission free trading apps and robo advisors. But it still feels a lot of times like the deck is stacked in favor of the big institutional players. They keep profiting at the expense of you, the retail investor, especially if you care about things like climate or governance or how the companies you're investing.

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So then, okay, so that is the kind of Arcadia network. Yeah. Part of things. And it sounds like what you're trying to do with Arc, what you're trying to do with this API and this platform is enable other solutions like that. Like, can you give us some examples of things that have been built on top of that network? Totally.

So, and that's exactly. We had so many people, you know, in the last few years knocking on our door saying, how are you getting this data? Can we use it? That it was amazing to come back to the original idea, unlock this platform for companies. So I'll give you a couple of different examples. You know, I'm a rooftop solar company.

I may knock on your door and say, hey, I want to install solar storage and EV charging in your home. They can get the home energy data, the rates and tariffs, and give you a proposal that's actually accurate. that shows you cash flows over 20 years. Another example is a battery business that's installing just batteries behind the meter,

let's say, in a commercial building, to know when to push and pull power based on the distribution rate, time of use rates. We have an EV company that will be announcing soon that is within their app basically going to tell you what's the cheapest charge and what's the least carbon-intensive charge. And you just push a button

and then we take care of all the calculations behind the scenes. And then carbon accounting, I think most of the... Yeah, talk more about that. That's interesting that that's becoming a big part of this. I mean, it's not that surprising, but considering we don't have a price on carbon, like I wonder how people are figuring out. Yeah, so we are, if you'd asked me two years ago,

I wouldn't even know this was going to be a use case. But most of the carbon accounting for the built environment today is sort of made up. It's all estimates. It's, hey, 12 Main Street kind of looks like 50 Main Street. Maybe the weather's the same. We're just going to say, this is how much energy they used. And the thing is, we're sitting on the actual energy usage from the meter, 24-7, 365, and you just take that data set that we pipe in and you map it to carbon,

and you have an accurate, auditable view of, and that word, like, you know, might be the most important because we keep hearing from CFOs. You'd be like, uh-huh. Auditable. Like, you know, there's a lot of people running around, you know, saying, you know, this stuff is mushy, et cetera. And it's like, all right, here's the data to make it work. And so, yeah, I think our platform should become sort of the standard for the built environment.

You know, you should not be able to do carbon accounting unless you have that raw utility data primary source data. And it should, you know, we are simply the data providers. So we, you know, we provide data to companies like Salesforce's Net Zero Cloud. We're working with Persephone, Watershed, all the major sort of full ESG providers. We're just the data input so they can produce accurate reports. In a post IRA world, do you expect that that carbon accounting part of your business and potentially a post-SECC regulations around reporting,

do you expect that that part of your business will leapfrog, even maybe some of the other renewable energy parts of the business? I mean, it is, it's the fastest growing part of the business today. It cuts across every major enterprise public and I think eventually private to who need to report to investors and boards. It will become, yeah, if it becomes standard, it will become wildly important. And we also have, you know, one of the things is we're seeing companies in Europe, right,

pull up gas data back during the crisis or what they were anticipating the crisis in Europe, you know, to be able to understand how we transition. So that, the data being used for carbon accounting, I don't, despite whatever the SEC might do, it's sort of a runaway train. I think every enterprise, every investor, every, board is thinking about it anyway. Right. Even private companies. I'm hearing more and more and more solutions being aimed at private companies because they're realizing they've got somebody that they want to partner with

or some potential customer who's like, you have to have this. Yeah. Yeah. I think it's become necessary. I think, you know, and we're hearing from investors, like mostly for larger businesses. Like if you're not, if this isn't auditable, if there's no assurance to it, then we're not going to consider it real. Right. And so, yeah, a huge opportunity, not just for us, but frankly, to make sure that all this stuff is like not just greenwashing. Right. This is not just, hey, a made-up estimate. We're going to move on now, which I think a lot of it was the last few years. I wonder, too, like, this is a little bit of an aside, but not really.

Like, we know that one of the most impactful and boring solutions is just sheer efficiency, right? less usage, which is such an easy sell in so many ways because it saves people money, it saves businesses money to use less energy to be more efficient. And yet, without that raw data, like, it's, you know, that's the shock you need to go like, wait a second, I used how many, I used what, and I paid what? And like, I wonder to what extent you're able to or interested in or do you outsource, like, do you bundle it with insights that just say, hey, if you were actually, more efficient. You'd save this much money in these many, you know, tons.

One of my, one of my favorite customers is a company called Butterfly that goes to franchises, think like Subway, and basically said, you know, uses our platform to pipe in data, understand how they used energy and benchmark it against weather. And then they go to them and say, hey, I'll fix your bill at, let's say, 500 bucks a month, or I'll give you a 10% discount. If you let me do X, Y, Z for free. And people are like, sure, savings? Great. No problem.

Yeah. And like energy efficiency, you know, then it becomes a monetizable asset because you have data that shows how this place was using energy before we did the measure, how it's using energy after. I can go get financing to go, you know, install those lights or the switches or whatever that made the place more efficient. So no, I agree with you. And I think efficiency, because I also came from that world, that was part of my last company.

I think it always struggled from data. Like, you could do things and people would always say, well, maybe that would have happened to any way. Right. Or like, I feel good about it, but I don't know if it mattered. Yeah. And to be able to actually say, like, yeah, you lowered your demand charge, you lowered your overall energy usage.

And here's the data to back it up. That makes it monetizable. And I think that's like a huge online. We're seeing a number of companies use our platform effectively to do that. I think you're hearing a lot of businesses to try to create new credits, new financing, basically. If this building used energy during less carbon-intensive times and I can prove it, that should generate a credit that someone else is willing to pay for. I think there's all sorts of new models that come out of just like having data that never existed before.

It's also interesting. I love it. Talk about the journey. So you have been at this a while, you said, about eight years. You have a hostile industry, incumbent industry. You have a hard story to tell, right? You're either starting or coming right out of the kind of Clean Tech 1.0 bust, I would assume. And it's just complicated. Like what was the, now you're sitting here, you've got this scrape.

valuation, you've raised a lot of money, you're the, you're the like the one, I think a lot of software developers in this space aspired to. But tell us how you got here. Yeah, I mean, I have since I, since college have been really focused on energy, right? This is, I mean, you even said it. It's like, in my, I'm, I'm still learning about energy markets. Like, it's such a deep and complex space. I think the conviction early on was just around there is literally we will not see the pace of innovation or deployment if this data did not exist, right? If this data was not available.

And nothing has changed. And you're right. Fundraising the early days was super hard, right? Like I see people raising at like 15, 20 cap seeds. Even now. And like, you know, I think our first round was at 3. You're like, I shake my tiny fist at God, yeah. So like, I've seen it. I just think it's, to me, like, I still think we're running our own race. Like, we're, we have this breadth now, too, that's 10,000 utilities worldwide. There's no reason to go anywhere else.

You can pick up a single API and get all this data. You know, there's been, it's highly regulated, even community solar, right? Tons of fits and starts to that business is a, it's going to open up, how's it going to be structured. But I fundamentally believe, you know, this is the biggest software opportunity in energy is unlocking the incumbent. And I think you could, you know, some people could argue that that was true in fintech with, you know, over time we'll see around payments and, you know, connecting to payments

networks or connecting to incumbents with plat. Like, it just feels like we cannot actually decarbonize fast enough. unless someone solves this. And so put aside all the fundraising and like the painful sort of regulatory bumps, it's just that's sort of a conviction I think everyone at this company has is like, unless the core infrastructure data becomes available, we're just not going to be able to decarbonize fast enough. And then finally,

just talk about that software opportunity because I've been trying to evangelize. I think this, I talked to, you know, like a young person who was like, yeah, my friend wants to start a climate company, but like, they don't know anything about carbon capture or hydrogen. And I was like, dude, if you want to start an investable, super impactful climate company, like there are a million software solutions out there that need to be built. Like, just help us get this message out that this is that you can't, I mean, this is the world we live in, right? Like, you cannot accomplish anything without software.

otherwise you just have like dead assets and hardware. Yeah, totally. Look, I think there's, there's, there's so many different parts of the value chain that, like, look, what we're doing,

like I said, the alternative is manual or estimates or, you know, and it's software sort of makes that job easier. I think, you know, data obviously, like,

software gives it trust. Like, it's not even just unmanageable, right? Like, it's like you said, it's greenwashing. Software is what makes it actually

reliable. Totally. There's huge opportunities still in aggregation of assets, right? And you see a bunch of companies in the space and I still think there's a ton of opportunities to aggregate different assets. In fact, the other day I saw a company that hasn't launched yet, but is looking to aggregate water heaters as assets in power markets. Like there's still so many opportunities there.

There's tons of opportunities. I love that stuff. Describe, go back and. I love that stuff. Describe how that would work. Like how each water heater is actually a little battery, right? Like a little energy storage device. We're going to get nerdy again.

So every water heater is a thermal battery in your basement. You don't need 100% of the hot water that's in that tank unless your family's showering, right? And so if you put a little controller on it, tell it to only heat 50% of the water because you know, you understand behavior in the home. you can get paid in power markets for managing all of that electricity. And actually a thing called frequency markets, which is like the quick on-off frequency regulation. So there's all sorts of opportunities. And you need software to manage, let's say, 10,000 of those devices, the data to aggregate

it. I think another really big opportunity is just making workflow simpler and easier. If you're a commercial solar developer, you're dealing with a lot of paperwork, a lot of back and forth with banks and lawyers and accountants. And there's like so much opportunity to just make that process simpler. And that's like an easy software problem. I think it's been solved, you know, across other industries.

So there's a ton of stuff out there. Yeah, it doesn't all have to be new chemistry. and, you know, really hard climate stuff. And it can be like wonky financial tools. I promise I'm not going to like take a sudden. Yeah, I mean, that's the stuff. And the IRA, so I have this fundamental belief that I also, you know, every new industry is sort of born out of some regulatory arbitrage.

And that could even be true. That's true about social media platforms. And the fact that, I mean, it's at the Supreme Court right now. talking about, you know, is a social media platform a publisher, right? And the IRA just unlocked massive new problems to solve, whether it's tax equity, making that simpler. So, you know, I would encourage, if there are founders listening to this, like, go deep in the IRA, go find, go find your hold of plug. I love that. Yep. All right. Kieran Batraju is the CEO and co-founder of Arcadia. Thank you so much for the time and geeking out. I love it.

You got to understand, like, you know, the money is made in the markets that no one else understands. I think the crypto bros showed us that. So like, now do that in energy. Yeah, except our stuff is real. Thank you, Molly. I appreciate it. Thanks so much.