Renewable Energy Industry Highlight: Dajie vs Tesla Powerwall
Social movements are difficult to track. We often don’t realize they happened until years later, when we recognize the effects. An example of this can be found in the renewable energy industry. On February 5th, 2018, the New York Times published a piece titled “From Oil to Solar: Saudi Arabia Plots a Shift to Renewables.” In past decades, such a statement would have been inconceivable. The desert kingdom has built its sizable wealth by becoming the world’s foremost exporter of oil (136.2 billion US Dollars), allowing the nation to maintain a semblance of stability while the rest of the region is hindered by political conflict. Although the Middle East used to focus solely on oil, the landscape of the energy sector is changing. Markets like Saudi Arabia are growing, and startups across the globe have started to forge a largely uncharted path towards a cleaner, more sustainable Earth.
The epicenter of this movement appears to have settled in a familiar locale for startups: Silicon Valley. Tesla, founded in 2003 by seemingly omnipresent Elon Musk, has gradually transformed itself from an underdog start-up to an energy giant. While the most well-publicized aspect of the company has been their production of electric cars, over the past five years Tesla has made arguably greater strides in the consumerization of energy. The Tesla Powerwall, a sleek and refrigerator-like apparatus, has emerged as the brainchild of Musk’s “Gigafactory” in the deserts of Nevada. Once installed, the Powerwall “integrates with solar to store excess energy generated during the day and makes it available when you need it, minimizing reliance on your utility.” The goal of the product is to allow consumers to effectively remove themselves from the electric grid and minimize their utility bill. Energy is produced by individual consumers during the day (preferably using Tesla’s own solar panels), with the extra energy produced getting stored in the Powerwall as a sort of security blanket. Another aspect of Musk’s plan involves positioning consumers to sell back their unused energy into the grid for a profit. More recently, a European company appears to have built on Tesla’s vision while emphasizing the relationship of energy-consuming communities.
Businessmen Alex D’Elia and Fausto Bernardini founded Dajie in June of 2015 with the goal of changing the way consumers use and acquire energy. The company is currently headquartered in London and in the “seed” stage of growth. Similar to Musk, D’Elia and Bernardini are insistent that the current model of energy distribution is no longer efficient. Their solution involves the creation of “smart microgrids” centered around communities with little to no existing infrastructure. “[The system is a] modular toolkit solution to allow and share, on a peer-to-peer basis, energy and data for local communities,” says D’Elia. Rather than selling excess energy back to the grid, communities can install a Dajie device. One kilowatt hour of energy produced by a member of the community with the device produces one “coin,” which is then deposited in a safe digital wallet. These coins can then be exchanged in a fashion similar to the methods used in cryptocurrency for any number of items within the community: energy, internet connection, etc. In theory, this device would create a highly centralized energy market centered around a neighborhood allowing for energy and coins to flow seamlessly between users.
There are two glaring hurdles to reach their vision. The first is that the system relies on a member already possessing the means to generate energy before the system is installed (i.e. solar panels or wind turbines). This equipment is getting cheaper but is still a significant investment on the part of consumers; consequently, areas with little infrastructure are less likely to have these items already installed. A second concern is the use of virtual coins. The system is strikingly similar to cryptocurrencies, an enigmatic and confusing topic for the average consumer.
The reason the Tesla Powerwall has become attractive to consumers is that they have succeeded in making it clean and economic while also keeping the concept simple to understand. Complexity is a common criticism of many energy startups today. Dajie’s ideas sound promising, but they don’t necessarily apply to the lives of the everyday consumer. Frankfurt School’s report shows that investment in the energy sector is the highest it has ever been; however, Venture Capital dollars remain the smallest portion of investment as whole. VC investment reached its peak in 2008, which coincides with the initial release of the Tesla Roadster. Since then, investment has been steadily declining, as interest has shifted to maturing alternative energies such as electric cars, solar, and wind.
The question that remains is if potentially revolutionary companies such as Dajie can reopen the renewable energy window that appears to be closing. Countries like Saudi Arabia are beginning to open their doors to maturing energy technologies. Innovation will continue; however, energy startups must now grapple with the challenge of adapting their advances to the everyday consumer across the globe.
Disclaimer: This article does not intend to provide investment advice. The companies mentioned are not currently or planning to raise funds via Slice Capital’s funding portal. Slice Capital does not view the companies mentioned as direct competitors to any of the issuers currently raising on Slice’s funding portal.
