Taka solutions's pay-as-you-save model for energy efficiency | taka solutions
Wednesday, 16 March 2016 on arabianbusiness.com
 Charles Blaschke and Chris Burkhardt, co-founders of Taka Solutions.

Charles Blaschke and Chris Burkhardt, co-founders of Taka Solutions.

 

Not long ago, the United Nations was trying to foster a top down solution for cutting carbon.

Around the same time two flat mates, Charles Blaschke and Chris Burkhardt, co-founders of Taka Solutions, a Dubai-based energy services company, batted around business ideas over many dinners oblivious to the fact that their concept – a pay-as-you-save model for energy efficiency – could become a bottom up approach to tackle the same problem.

Similarly, when 196 nations signed the historical Paris Agreement on climate change in December 2016, Blaschke and Burkhardt learnt about their being short-listed for the GCC finals of The Venture, a $1 million Chivas Regal global fund designed to support social entrepreneurs.

“The regional presentation showed us that we need to think about bigger picture and social impact. We typically do show people that we save energy, we show them how we do it, and we show them how much money they can save,” explains Blaschke, an American mechanical engineer who moved to the UAE in 2008.

“But we don’t usually say that this is actually carbon savings and has a social impact. So we had to put that together to communicate what is the impact outside of just saving people’s energy and money.”

Blaschke is referring to his learnings captured at The Venture’s competition round for the GCC region held recently in Dubai. The two co-founders were chosen among four other social entrepreneurs to represent the region at the competition’s global finals in New York in July. In March they are taking part in an intensive accelerator week hosted at Oxford University by the Skoll Centre for Social Entrepreneurship.

“We want this to be a platform to educate and make people aware about energy efficiency as a whole.

“A lot of people talk about renewable energy. It’s in the news and there are governments behind it but basically energy efficiency can accomplish the same impact at the fraction of the cost. But nobody knows that,” explains Blaschke.

 “For example, if you want to generate a megawatt of renewable energy, it will maybe cost you $10 million, but to save a megawatt of energy by using energy efficiency or what we do, will cost you $3 million. So for 70 percent discount you can have the same impact. And nobody knows that!”

Defined as using less energy to provide the same service, energy efficiency is at the heart of their business idea. They provide tailored energy-efficient solutions – energy performance contracts (ESCO) models – to address the waste of energy caused by the poor and unhealthy construction of buildings in the region.

Not only does this save money on a building owner’s energy bill, but it indirectly leads to reducing the amount of greenhouse gases going into the atmosphere.

Taka Solutions charges for its services only from the financial savings its work generates.

“I remember testing this one piece of equipment and saying: ’If I put this equipment in this building, I’m going to save around AED100,000 a year. Wow, that’s a lot,” recalls Blaschke.

“Then we calculated that that thing [the equipment] costs AED50,000 and I was like: ‘If I buy it and put it in somebody’s building for free, he actually doesn’t need to pay me for it because I will save him AED100,000.

“As long as we do that for two years, we will save AED200,000 and again I spent only AED50,000. So it’s a ton of money. That’s when Chris stepped in from a financial standpoint saying  that this is a lot more than just saving energy, and that this is a financial mechanism to make investments.”

Having spent his first four years in the UAE working for a couple of engineering firms, Blaschke teamed up with Burkhardt, an American finance and business development professional, to set up Taka Solutions in the Fujairah Free Zone in the summer of 2013.

Hesitant to jump into the business waters too quickly, the co-founders had tested their technology in a building a few months before registering the company. “And sure enough there were 30 percent savings just like we planned,” says Blaschke.

“We had this chart and the project used to spend AED2 million, but we said it would spend AED1.5 million. Then we plotted the actual spending and it was right on where we had said it would be.”

The pilot project’s promising results aligned with the vision of the Emirates Green Building Council (EmiratesGBC), a government entity formed in 2006 to encourage implementation of green building policies and regulations across the emirate. EmiratesGBC is one of the many initiatives of the UAE government aimed at developing green initiatives across all sectors, and thus facilitating the country’s green transition to a robust low-carbon economy.

With a case study based on their pilot project being awarded by EmiratesGBC’s Energy Committee, the co-founders got the much needed proof of concept.

Open the topic of funding and we see what differentiates Taka Solutions from other social enterprises.

Blaschke and Burkhardt spent no time persuading investors that their business would have return on investment because they simply did not consider bringing external investors on board at all. Taka Solutions became profitable within the first six months.

However, starting with the money of family and friends put a special burden on their shoulders. “Since it is the money of friends and family, it makes you consider and reconsider every time you want to spend a dirham,” explains Burkhardt. “But that fact was really positive in the long run because we really held on to the money.

“The world is filled with promises but we’ve been super lean and one of the easiest ways to be super lean is to spend more time yourself on your business. And Charles felt that a lot [laughs].

“In the past two years we’ve been super lean. We could have probably employed five more people a year or two ago, but you put more and more on your own shoulders just not to spend that money because you don’t know what’s going to happen.”

Blaschke adds: “There’s another thing that people don’t realise, and that’s the sacrifice. You have to give up your life. Everything you have ever thought about your life, you have to be able to say: ‘I’m consciously giving that up.’ I didn’t think of that beforehand.

“Most people don’t have work ethic or commitment or perseverance to go through that when they hit those challenges.”

Spending time with The Venture’s 26 winners from other regions will further help them shorten their entrepreneurial learning curve.

However, applying for The Venture has also allowed them to connect with other local entrepreneurs. “We’ve got into the start-up community a bit later, but only because we were rejected so many times because we aren’t doing an app or e-commerce,” Blaschke says.

“We are doing like equipment and engineering. So when we go to these events, they are like: ‘I have the latest app.’ That is all what people want to hear about. I think we are more involved now.”

Launched in October 2014, the first year of The Venture saw 16 counties participate and over 1,000 start-ups apply. Sahar Wahbeh of Dumyé, a Dubai-based business that makes handcrafted, eco-friendly, personalised dolls that serve a social purpose, was the Gulf’s first winner.

Talking about what the finals in New York, Blaschke concludes: “We want to make the region proud. We are a home grown, Dubai-based SME that is making an environmental and social impact and we want to spread this around the world,” he says.

“One thing that we want to do is to try to work with the UAE government for them to show to the world that there’s a company from Dubai, started by expats, which is now going out and changing the world.”