David Auriau of Postive Zero - Solar Power, Clean Mobility and Decarbonisation as a Service #010

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James Taylor 1:46
go to mena-speakers.com That’s mena-speakers.com Alternatively, you can drop them an email at book@mena- speakers.com to book the perfect speaker for your next event. David Auriau is the CEO and co founder of positive zero a company providing decarbonisation as a service to help industries, businesses and communities reduce their operating costs and slash their carbon emissions. Previously, David held senior positions at Austin power and was a strategy consultant at Oliver Wyman in their manufacturing, transportation and energy group. He also led business development for mubadala investment company in the MENA region. With over 25 years of experience in infrastructure, energy and utilities. David has a strong focus on financing renewable energy assets. He also holds a Master’s of Science in Electrical and Mechanical Engineering, and an MBA from INSEAD. David, welcome to The Ethical Futurists podcast. Welcome.

David Auriau 2:47
Thank you. Thank

James Taylor 2:47
you for having me. So share with us what’s got your focus just now what’s going on in your world at the moment? Well,

David Auriau 2:53
in our world, you know, we are focused in decarbonisation, decarbonizing the operations of our clients that’s really like the focus and trying to do to do it, through, you know, like, fully finance solutions. So this is really like are focused in the region.

James Taylor 3:08
And you have these different kind of pillars, I guess, to your business as well, in terms of the kind of things that you do, that

David Auriau 3:15
is true, I mean, we’ve positioned our business around three verticals. The first one is generation, and more than generation, this is distributed generation, which includes solar rooftop solar carport, hybrid, off grid solutions, or storage. And those solutions are producing on site basically. So as opposed to a utility scale. So that’s, that’s the, the first vertical the second vertical is called efficiency. And efficiency is ultimately the best use of what we have how to reduce the consumption. And today, we believe that we have the ability, the technology and the know how to reduce by 30%, the consumption of any buildings of any type. So that’s, that’s, that’s what we do in energy efficiency, trying through capital deployment to try to reduce the demand. The last vertical is called Clean mobility. This is the last edition, and this one is wrong, you know, like electrifying fleets. So helping our clients to turn electric and again, the decarbonisation of the transportation sector is primarily a power game. First is not to complexity is not to buy an electrical car is basically to charge it. So, here is like this is where we come into the play, and then we help our clients to first you know, like design charging solutions and find instance and then and then in addition to help, sometimes, you know, like to finance fleet

James Taylor 4:41
and that seems to be one of the things that you have, your position in the market is taking what we often think as a as a capital expenditure and making it into an operation or just helping companies make that transition.

David Auriau 4:53
That is true. I mean, like what we do all across is as a service. So what as a service means, you know, means that there is no upfront cost for the clients. So, we actually from the investment, so, we are, if I want to say a big balance sheet, so we everything we do needs to be fully financed. Number two it is we are based on output, that means that everything we do, we need to know like to or we are performance based. So, for instance for solar, it is based on kilowatt hour for, you know, efficiency, it could it could be based on kilowatt hour, but it could be based also on like, you know, quantity of chilled water that we delivered to a building. And then you know, for mobility, it could be on a mais you know, per mile or even maybe like per kilowatt hour for the charging infrastructure. And the last one, the last part of as a service model is that we are very connected. So digitalization is really a big part of what we do.

Alison Burns 5:55
And so, considering your top three accomplishments in your role as CEO at positive zero, what do you what do you think they are? To date?

David Auriau 6:05
Or? Well, I mean, so, so So first, you know, like, we are entrepreneurs, you know, so we’ve created this company from from zero. So I’m one of the two co founders. And so if I look at the long journey over the years, what are the three main accomplishment? The first one would be the positioning? You know, it was always great to have the feel that we are the, at the right place, at the right moment. And I think the positioning of the company is basically what what we did, right, I think at the very beginning, so I think we’ve established this tech urbanisation as a service model quite early on to help our clients as we said, to reduce their operating costs and to slash their carbon emissions by 70%. So so the thing is, like, here, you know, we’ve been showing from very early on our very strong commitment to reducing environmental impact and promote sustainable energy use. The second accomplishment for me is, is really the expansion in the leadership in renewable energy. So positive zero has become a leader in this distributed energy resources that encompass you know, like all of what we do. Today with more than 200 clients, 200 megawatts in operations and the presence in four countries UAE, Saudi Bahrain and Oman. We are the front runner in this field by far. And we provide Vyas sustainable energy solutions on the One Stop Shop approach, which I think is also unique, showing the role in transforming the energy landscape in the Middle East that we want to play. The second one is of course, strategic partnership and growth in the recent $400 million investment from Blackrock is really like a big achievement for us. And, and underscores the significant growth and potential of our company. This partnership, of course, validates our business model, but also enable us you know, like to further expense and innovate. So this is also like a great achievement for us. Now,

James Taylor 8:07
you’re talking about really this great expansion we’re seeing just now in kind of sustainable finance and your company’s at the vanguard of that here in the region. Paint a picture for us, who is a, an ideal client, are the kind of clients often kind of come to you, where are they in their sustainability journey? What are they looking to do to achieve?

David Auriau 8:26
Well, there’s no one answer to that question. So first, we we focus on commercial and industrial clients, primarily, if not only, so, all of our clients come from various sectors, they have their various, I would say, you know, size, you know, like, so if I were to mention some of our clients, it ranged from DP World, ami rates. Now yield in some other like smaller companies, in other fields, like in the logistics business in the retail business landmark group is one of our big clients, for instance. So I think that we don’t have one particular type of clients that we focused on is is a broad, you know, range of clients, that wants to decarbonize their operations, and for that, this is across sectors. So, so the idea to come back to the questions the ideal client for us is someone who has a sustainability agenda, someone who has already went through the efforts of like, understanding of like, what sustainability could bring in his business and and what value we can create. So So this enables, you know, like to skip you know, like this education process that that we need to do so that that’s, that’s number one. Number two, of course, we have finances for us, you know, like we acting as a bank. So ideal clients are people that are financially very strong. So for instance, the world you know, like having a car A rating, you know, like an ideal clients, but actually, like we’ve developed our own credit metrics, so that we are able to onboard, even clients that don’t have, you know, like, necessarily, you know, the size, or the credibility, financial credibility of DP World. And, and lastly, of course, we want to make sure that we deal with clients that understand the nature of our business, it’s, it’s very new to them, you know, like to embark into a journey like us. So what we do we finance infrastructure, if you wish, you know, like, so our contracts are like, you know, 1015 20 years, for most of our clients, the longest, the longest contract they’ve ever signed was maybe six months or one year. So, you know, like, we wish to, of course, know like to make sure that we have clients that are ready to embrace the complexity, which there is always a complexity in anything we do. So the complexity of like, embarking into a long term agreement. And, but more and more clients actually have no problem with that. And they can get support from from third parties, you know, like to do so.

James Taylor 11:08
It’s interesting, I asked, now, we speak a lot to a lot of different industries, different types of companies. And often they were there as part of that helping the education piece and talking about the why, and giving examples of how different companies are decarbonizing in different ways. But the thing that often gets stuck, is the data piece. Often there’s they’re not collecting any data, so they don’t know in terms of benchmarking, and then we’ve had some other guests on the show to talk about that. And then the plan, the action will, how do we achieve this vision, these goals, these numbers, here in this region, you have a lot of large family businesses who that one of the good things about Germany about those businesses, they have slightly longer timeframes that are thinking from a strategic standpoint, does that does that benefit a company like yours in terms of them, these kinds of companies being open to having that longer timeframe and not just being so focused on kind of quarter to quarter? Yes,

David Auriau 11:59
so we talked about two things here. First, you talk about data, so And second, about about long term perspective. So data, what we see, I mean, like, the, there’s a lot of changes in the markets, you know, we’ve started this business about seven, eight years back, and, and in those short period of time, we’ve seen tremendous changes in our clients. So first of all, a lot of our clients that are beginning, you know, like, I had no ideas about what they consume, where they consume, you know, like, and even what they could do. And if I fast forward today, you know, like, a lot of our clients have now recruited, you know, ahead of sustainability, people that have the different profiles, different expertise, that are able to interact with us more meaningfully. And of course, you know, like, shorten, you know, like the decision making process, making sure that we can go to a to putting in place No, like those, those solutions quicker. So that is one, of course, no luck, the long term perspective is is needed in anything we do. And I will tell you, a family offices have usually in this long term perspective, but we’ll see large corporations as well have put in place extremely ambitious sustainability targets, as part of their strategy. And, and they have a roadmap. And those roadmaps are not a one year roadmap, this is you know, like a 510 20 year roadmap, a number of our clients. private institutions have now sustainability roadmaps approved by their boards. And even for some of them to go net zero with the next 10 years or 20 years. And Net Zero actually is a big commitment.

Alison Burns 13:46
It’s amazing. And talking about energy generation, and, and bringing in those companies to to have that sustainability conversation. And we’re in the land of sunshine. So the solar power is there, what do you see as the is the the solar applications that you offer, that have the most potential? And how do you convince or, or bring with you, the companies and organizations to help them steer away from fossil fuels so that the fossil fuels remain in the ground?

David Auriau 14:18
That’s, so let’s start with the beginning of the question. And and, you know, a few years ago, well, before we start this business, or at the time where we started this business, we realized that although there is an abundance of sunshine in this region, where we were landing in Dubai, or in the other region, or other cities in the region, you know, you go you look through the window, and you can’t see any sort of rooftop where if you do this experience in any other airports in the world, even you know, like where ascension is less than here, you will see at least one salary.

James Taylor 14:50
In fact, we just we just came back from the Maldives and the airport now all around the airport. They have all the solar rooftops on the roads and everything you’ve got you guys so look, there’s a lot of solar What was going on there? So,

David Auriau 15:00
of course, I think the main trigger is that you need to have a strong leadership. And, and of course, you know, leadership in the UAE is very strong and sham hammered, in particular, you know, made a commitment that by 2030, you know, we should have solar rooftop on every roof. So I think this is the first you know, like, you know, reason is that you need to do to set a direction, and that direction is being set by by the leadership. But, but the adoption of that, in all directions is driven really simply by cost. If we were more expensive than what they have currently, we wouldn’t be able to actually like to or to offer what we do. So I think that the main driver for all of our clients all across is one cost, and then sustainability.

James Taylor 15:43
So you just kind of you mentioned this kind of idea of leadership, and is different here in this part of the world, because you do have vision 2030 Vision 2040, there’s all different vision of visions, you have that from the top, one of the parts of the vision here in the UAE is in place like Abu Dhabi, where they’re investing heavily in artificial intelligence, you’ve got Falcon, these new AI training models and different things happening here. But AI, the data centers that run them require huge amounts of cooling. So one of the things that your company also does is cooling as a service. So I’d love to know about a bit more about that, and where you see the potential for that technology.

David Auriau 16:20
And thank you for asking the question, we believe cooling the service, we were the very first people to bring that concept into the region. And I think today, we are probably the first people to have system in operations using this model. So let’s, let’s try to dissect what cooling as a service is all about. So here, if you look at the UAE for instance, you have basically two markets or two segment of the market, the first one is district cooling. So district cooling is basically a big cooling plant, which provide the chilled water to a district to a number of buildings at the same time. So here, you know, like you have, you know, investors that, you know, finance and build and operate big district cooling plants, and provide chilled water over long run. And, you know, the building owners, you know, are entering to a long term cooling service agreement, committing to buy cooling water for the next 25 or 30 years at a certain tariff. So so that’s, you know, district cooling, and then you know, like, and this represents about 20% of the market in the UAE. And 80% of the market is the people that are not connected to district cooling, that will maybe will never be connected to district cooling because you know, buildings are in place, and it will be in the two owners probably like to build, you know, district cooling for for them. And this is a big market that we’re trying to address, we focus on that market, how for the first time, we can tell, or we can offer to those building owners the possibility of having their cooling assets financed by a third party. So if you look at you know, like the similarities with district cooling, district cooling is like a third party finance, the plants enter into long term agreement with a customer based on a certain tariff structure. So here’s the same, so we go to the building owners, and we tell them like, don’t allocate any capital to your calling assets, we’re going to do it on your behalf, in return, you will enter into a long term agreement with us usually, like 15 year cooling service agreement, in which we agree at the outset for the tariff. And the tariff is basically you know, like a capacity charge, and then it comes consumption charged in a very similar fashion that you will have for district cooling. And then you know, like, here, we aligned, you know, the interests of all the parties here, I will not necessarily choose no like the cheapest equipment in order to reduce the cost, I will look you know, look at the equipment that brings the maximum value over the over the next 15 years. So usually basically, Mike, my capex, you know, will be higher than the capex that they would have spent themselves because they will have maybe have a shorter, you know, like a perspective. So here, you know, same you know, like for the operations, we operate those assets ourselves. So, of course, if I don’t know price, I can’t sell chilled water, if I don’t sell a water, it impact my revenues. So my alignment to provide a service in a seamless way is higher than if I were just a service provider and then if it doesn’t work, then I can come The day after or the week after it doesn’t really matter. So here you know, it’s a little enlightenment between all of the parties making sure that the clients one that’s enough to allocate capital second can save money, it must be cheaper than what they have. And for us, you know, is making sure that we can operate you know, as efficiently as possible those those assets so that we can generate a return on investment and maybe more

Alison Burns 19:54
amazing. It’s, it sounds complex, but the Engineering me wants to ask more questions, but I think we need another half a day for that.

David Auriau 20:05
Maybe it sounds complex, but but we believe this is you know, energy efficiency is by far, you know, the biggest market we operate in why because everything is inefficient around us, nothing has been built efficiently because there is no incentive to build efficient Yeah. So, the thing is like, this should be the biggest market it is not, and why it is not, because we believe there is frictions in the system. frictions means that you put you put it is too complex, you know, like, when you talk to a client, who has an expertise elsewhere, you know, talking about energy efficiency is really like, you know, based on engineering and complex systems and solutions, you know, like and calculations. And, of course, this is complex for many clients. And this is probably one of the main reason why the energy efficiency market is not as big as it should be. For us cooling the service is making it cheaper, simpler, sorry, simpler in the sense that we’re telling them, You, you don’t have to bother with that you have to agree on the tariff is me. So in a very similar fashion, that you have electricity coming to your house, you don’t know how the power plant works, no, he is the same, you don’t need to know all the other cooling assets works, this is our job. But what you care is the tariff, yes. So you secure in your head, your race for the next 15 years, by agreeing a tariff with a third party provider, us and making sure that all of the risks technicality, the operating risk, and everything is in the hands of someone else. So it may looks or sounds complex. But from a from a business standpoint, you know, it’s a lot simpler for the clients who have today to handle everything from, you know, taking the risk of design risks, the construction risks, operating risks, and the end of financial risk themselves, they are shifting everything away from to, to us. And at the same time, you know, like they can hedge their risk for the next 15 years. So in practice, it’s meant to be simply,

Alison Burns 22:02
well, that’s great, because you take the complexity out of it, so people don’t have to worry. So that’s your job. Yeah, exactly. So what would you say is the hardest part of your job.

David Auriau 22:12
So the hardest part of my of my job is, is to ensure speed and scale for our business. The, and again, to do so, I will come back to the point we’ve just discussed, if you want to make yourself you know, like, attractive, and so that you can grow faster, you need to make it simpler. So that is a no brainer. You know, it’s so so that’s why we remove, you know, like, the necessity to allocate capital, you know, remove, you know, like any risk construction risk aversion risk, so we try, you know, like to make it, you know, like, from a contractual standpoint, from a risk standpoint, as simple as possible, so that, you know, the adoption of what we do, could could go faster. So, so really like, my, my main, my main what, what keeps me awake at night, yeah, you know, it’s really like our can make it simpler and simpler. And even, you know, like, we aim to try to, to have one single contract all across for all of the verticals, and I hope we’ll be able to achieve that. And, and so that means that whenever we have in place, a contract was a client, there is no need to have a second contract for the second vertical. And the third contract for the third vertical, we could have one contract used, you know, like for all of the different, you know, solutions that we have to offer. And, and we believe that this simplifications of our models will enable us to grow faster and bigger. Rate. simplification

James Taylor 23:39
is one of the hardest things is often not explored. Also, especially for lawyers, especially the lawyers especially. So let’s start as we start to finish up here quickfire questions for you. We would, if you were to leave our audience with maybe with one kind of idea, one can a key takeaway that they should take from the kind of work you’re doing and the kind of way that you’re helping your clients? What would the idea be? Sure,

David Auriau 24:04
I mean, as you could, as you, as you, as you tell, told the audience you know, like in the introduction, I come from the commercial power world. So never, ever would have thought 25 years after that the world will look like like it is so. So today, I think that the number one thought that I could leave with the listeners is that we are experiencing an energy revolution that has the potential to improve our lives, while having positive impacts on the environment, economy and society. And this is really like drivers on on the day to day, you know, like in everything we do we believe that we we work for for a great purpose. Great.

Alison Burns 24:46
And then just final question from me. And it’s a big one, but in a few words. What do you envisage as an ethical and sustainable future one that you’d be proud to leave for future generations?

David Auriau 24:59
Yeah, sure, it’s a good question. Thank you. So I believe that an ethical and sustainable future I’m visiting the world where renewable energy sources are at the center. And this drives several transformative changes. Number one, we believe that energy generation, we become decentralized, flexible and connected. I think this is the first big change that we anticipate. It’s it’s already happening. And where communities and businesses will be able to produce and manage their own clean energy, and rely less, you know, like, from the grid. The second point would be a widespread energy efficiency and clean mobility. As I said, energy efficiency should be the biggest market, it isn’t necessary, if not menagerie to achieve all of the systemic targets, that governments or companies have set to address energy efficiency. So we see energy efficiency being prioritized all across sectors, and, of course, transportation to go electric. So reducing, of course, environmental impact. The last one is of course, making sure that economic activities align with environmental sustainability, and with more investment into green technologies or practices. So in conclusion, I think this vision aims to leave a future generation to lead future generations to a boil, where environmental sustainability and economic prosperity coexist and securing a greener planet for all. So that’s basically it. And

James Taylor 26:42
if people want to learn more about you more about your business, and maybe reach out to you, we were there. In a situation we’re talking about, about some of these clients earlier. What’s the best way for them to do this?

Unknown Speaker 26:53
Well, we

David Auriau 26:54
are we are present on all the social medias. So you will see positive zero on LinkedIn on Twitter, on on Instagram, you know, like so I think that’s a you can drop us you know, a message, you know, not on any of the social medias. Or if you identify, you know, like the right person on LinkedIn. Of course, you know, like, if you send them a message, you will get an answer.

James Taylor 27:15
Well, David, thank you so much for being a guest on the ethical future, interviewing today. Thank you. If you’re considering making sustainability or ESG, one of the themes for your next conference, your event, or perhaps a company retreat, then why not invite Alison and myself to be your keynote speakers or event MCs. We’ve delivered really inspiring keynote programs for some of the world’s largest organizations from all different kinds of industries. Now, the ethical futurist keynote will take your audience on a journey to discover how the world’s most ethical and sustainable companies are really innovating in their industries. So if you’d like to learn more about booking Alison night as the ethical futures for your next event, then simply head to the ethicalfuturists.com/speaking, that’s the ethicalfuturists.com/speaking To schedule a call to discuss with us your next event. We’re delighted that you listen to this podcast. And we really thank you if you could just take a moment now to subscribe to this podcast on your favorite podcast platform. Also, while you’re there, why don’t give us a five star rating and leave us a review. It would really mean a lot to Allison and I so for me, James Taylor, and we Alison Burns. Thanks for listening to The Ethical Futurists podcast.