New Biz Model Fires Up Home Heating Market

Thermondo has moved from being a straight technology-enabled heating provider to an energy market disrupter with a focus on heat. The next step will be leveraging its algorithms and technology to transform itself into a digital residential energy services platform.

Thermondo, a Berlin-based company providing end-to-end service for residential heating, is one of those companies. Philipp Pausder is founder and managing director. Cleantech Concepts had the chance to sit down with him at the Cleantech Forum in January, and later on we caught up with him by phone for an update.

Anticipating that the energy market will become increasingly decentralized as homeowners generate and store their own power, Thermondo has taken on the role of third-party heating provider and energy broker, shouldering the entire process of helping the customer achieve a better heating solution. This includes helping households with the planning, financing and installation of home heating systems. Thermondo employs close to 300 people across 50 cities in Germany.

In 2016 the company introduced the heat lease product Thermondo365, a full-service managed heat solution for homeowners, that has no up-front costs.

CC: How did you develop this business model that takes on the entire process of helping homeowners with more efficient heating solutions?

Pausder: We have been working on our concept since 2012, and we launched the first product in 2013. We started the company because – as we find in every developed country — the consumer heating market is an underserved segment. Industrial processed heat is efficient but households are not. As a result the consumer marketplace is super-fragmented. Now we are changing that. Our intent is to bring transparency and transactions to the marketplace. The first step was an algorithm enabling transfer pricing, and the generation of transactions. We then realized that this alone did not work, so we signed up partners to carry out the installation. However, they were not reliable as service providers. Therefore we decided to become installers ourselves. We are now an end-to-end service provider, and we own the customer relationship and the installed base.

CC: Isn’t an end-to-end solution pretty expensive to maintain and organize?

Pausder: Not really. What we do is we mitigate fixed costs. Based on our experience and data analysis, we have a clear understanding of lead times, we know our installation capacity, we know the radius of the team, we know the target dates, and know how and when to generate that lead. We have two tools: lead generation and pricing. Ultimately we will be like an airline, with dynamic pricing. We have two software engines. Manfred is our software algorithm. Diego is our second engine, a specific project management suite for scheduling and planning. On a business level this produces two cost benefits. First, we can scale and educate salespeople using software. Second, the software produces a bill of quantity — we can be an inventory-free company, using just-in-time delivery. Installers have android tablets with an app for themselves and for the customers, the customers can easily sign, and we can tap into wholesale info using our ordering software. We know immediately about hardware availability for sales opportunities.

For the full Q&A including discussion of the company's next steps, visit Cleantech Concepts.

Tom Breunig is publisher at Cleantech Concepts, an online magazine and market research firm tracking cleantech R&D.