Despite a rocky start, energy firm BBP's faith in its energy efficiency solution has paid off handsomely.
Singapore-based Barghest Building Performance's energy efficiency solution measures buildings' existing energy consumption and simulates how the solution can achieve savings. (Photo credit: Barghest Building Performance)
By Joy Fang
You would think that a system that can cut a building's power bill by up to 30 per cent by making it more energy efficient would be highly sought after. But the developer of just such a solution, Singapore-based Barghest Building Performance (BBP), needed to throw in a sizeable, and novel, financial incentive before customers were convinced.
The company's co-founders, Poyan Rajamand and Ong En-Ping, devised a unique financing model that does not require clients to pay the company upfront. BBP only takes a portion of the energy cost savings enjoyed by their clients, so the company doesn't get paid if their system doesn't result in lower power bills.
About a year after it was established in 2012, BBP finally managed to secure its first client – an office building in International Business Park. They persuaded the client by making a very attractive offer that involved sharing a large part of the savings.
Its co-founders saw an opportunity to create an energy efficiency system that could fit the needs of the region. Their proprietary solution uses an algorithm that optimises the operation of a building's heating, ventilation and air conditioning systems, lowering its energy use. The pair, who were classmates at the Stanford Graduate School of Business, had poured in $1 million of their own money to set up BBP in 2012.
A showcase of technology
Mr Rajamand said that there was an “understandable scepticism” at the start among potential customers. Among other issues, they worried about whether installing the system would lead to frequent shut downs of existing equipment, increase wear and tear on their infrastructure, or if the energy savings would come at the expense of higher indoor temperatures. Despite the obstacles, they kept faith in their product.
“One of our biggest competitive advantage is when we go into a building, we can measure its existing energy consumption and simulate where it would be with our solution. And we are 80 to 90 per cent sure of where we are going to end up, that’s why we are comfortable with taking that financial risk,” he said.
He noted that start-ups must view the early days of their journey not as a profit-making venture, but rather a showcase of what the company’s technology can do.
“As a new technology provider you need to accept that with your first client, the process is still a little bit like a co-creation. You basically give away your solution to them. We gave fantastic deals to our first few clients, deals that no one will ever get again!”
Stamp of approval
When its solutions started showing results, more clients followed. “Once you implement the system to more buildings, you get better and better at it and improve your ability in predicting savings,” Mr Rajamand said.
Currently, BBP has 12 clients, with 40 more offers in the pipeline. However, the company now only works with buildings that can achieve energy savings of at least $100,000, to ensure it makes sense commercially.
The company received a big boost when it was accredited by National Environment Agency under the ESCO (energy services company) Accreditation Scheme in 2015 and the Infocomm Media Development Authority (IMDA) a year later.
Mr Rajamand noted that the IMDA’s accreditation scheme gave BBP a boost to its credentials. "It assured customers that a credible party has validated the technology, which means it delivers what we are promising, that the technology is unique, as well as that the company has the financial strength and processes to deliver its solution."
With its technology increasingly accepted in the market, BBP has turned its attention to growing its business in the region. The firm has opened offices in Malaysia and China and snagged clients from Indonesia and Thailand as well. Meanwhile, multinational corporations have invited the firm to participate in global tenders.
“Clearly we are developing something that is unique and for that I am extremely proud. But is our work done? By no means,” said Mr Rajamand.
Developing solutions for customers in different geographic locations comes with its own set of challenges. That is why BBP uses a remote cloud-based asset management system to track the progress of savings while reducing the costs of maintaining its systems.
Once performance is seen to be deteriorating, a BBP team will assess the data or even go onsite to evaluate the situation, before giving advice to clients on how to turn things around.
The current focus on businesses to reduce their environmental impact in the long run is also likely to help their business.
Said Mr Rajamand, “The Singapore Government intends to implement a carbon tax soon, and that is clearly a step in a direction which will see companies start paying the true cost of energy. And I think companies know that, therefore they cannot stop continuously looking into lowering their energy costs."
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