Reshape Energy is placing its money on a more comprehensive strategy to hasten the built environment’s decarbonization. The startup was established in May 2024 in Munich, Germany, and is run by a group of people with experience growing energy companies, such as Octopus Energy’s German division and Verivox, a website that compares energy prices. Its primary goal is to offer energy system upgrades to commercial real estate owners that control a variety of buildings.
Climate change is mostly caused by carbon emissions from building heating. Thus, a crucial component of achieving climate objectives is quickening the switch to lower-carbon heat management technologies like solar panels and heat pumps. This is the reason why building owners in Europe are under a lot of regulatory pressure to modernize their energy systems.
Installing low-carbon solutions might be slowed down, though, by the difficulty in obtaining the specialized expertise needed to complete these energy upgrade projects or even just comprehend what must be done to optimize a certain building.
As it scales the strategy, Reshape Energy hopes that a one-stop-shop model will assist to release some of the system’s friction. The company is starting in the German market but plans to extend throughout Europe.
Tackling energy upgrade inertia
Benjamin Stanzl, CEO and co-founder, tells TechCrunch that when the founders were considering how to set up a company that targets commercial buildings with energy upgrades, one of the main questions they asked themselves was, “Why isn’t enough happening?”
“There has been significant progress in [energy upgrades for] single-family dwellings. But it’s incredibly slow when you look at commercial real estate, which is what we really focus on,” he says. “The ‘do nothing’ option is unquestionably the biggest [competitive] threat.”
He argues that the sector’s slow adoption is due to a number of factors, not just one missing component that might be fixed by, example, a new piece of technology, but rather the systemic difficulty of coordinating all the many components required to complete such projects efficiently holding back the pace of change.
He contends that “the complexity of carrying out these projects is unbelievably high.” “Commercial property owners simply lack the necessary skills. And since it’s not their primary business, some of them don’t even want to deal with it.
Stanzl adds that since the building industry depends so much on trust, a lack of it can potentially impede development.
By purchasing already-existing businesses in the industry to bring critical competencies and client relations in-house, the startup is overcoming this energy upgrade resistance and bolstering an energy optimization-as-a-service offering.
Covering every phase of a project is the goal, from preliminary evaluations and identifying requirements to the installation of new equipment and continuing upkeep and servicing. When clients choose to spread out the upfront costs of installing new energy systems, financing is also an option.
The business thinks it can leverage trusted customer connections and achieve efficiencies of scale by addressing the entire chain of requirements for an energy improvement. According to Stanzl, it is departing from the compartmentalized process that more commonly defines the industry.
According to him, the business has so far taken on a few more piecemeal energy upgrade project work, linked to the capabilities it has acquired internally. However, as they continue to develop the firm, the goal is to keep expanding what it can offer and strive toward taking on projects with a lot more moving components and considerably higher complexity, such district heating installations.
Funding injection
Reshape has already expanded its product line through a few acquisitions. There will be more in the future, and the business will use a portion of its recent €5 million investment round—its first external capital raise—for this.
By acquiring smaller, frequently local businesses, it can expedite the acquisition of new clients, tap into the networks and connections that these other companies have accumulated over the years, and onboard critical personnel to complete projects. According to Stanzl, an acquisition model also grants it complete authority over the location and manner of skill deployment.
He said of the companies Reshape has acquired, “They have served hundreds, if not thousands [of customers] over the life of these businesses.” Thus far, it has acquired an energy consultancy firm and a commercial solar planning, installation and maintenance company.
He continues by outlining their plan to increase project delivery efficiency by combining risk and trust, saying, “The control piece is critical, because we do need these companies to work together — and we need them to use common systems and common technology.”
In what is roughly referred to as a seed round, the founders are putting their money where their mouth is by donating a portion of their personal funds to the €5 million raise. Even while Stanzl claims they aren’t sure a traditional venture investment model is right for them, he suggests that other strategies, including private equity, might be more appropriate.
Vireo Ventures, PostScriptum Ventures, and a few other industry insiders are among the other investors in the round.
Different models
Following Russia’s 2022 invasion of Ukraine and the ensuing surge in gas prices, energy upgrading firms have flourished in Germany in recent years. However, Stanzl notes that the initial surge of energy upgrade work that followed that shock has “definitely calmed down,” with a large portion of that activity concentrating on single-family houses.
According to him, the industry’s players are more motivated to break out of their ruts and adopt a more coordinated strategy while providing the upcoming enhancements. Consequently, it makes it possible to address more difficult problems, such as improvements in commercial real estate.
“If you don’t know what a building’s electrical infrastructure is, you can’t deploy a heat pump, right? And if you do, you can suddenly learn that your customer needs to upgrade their transformer or something similar after promising them a ton of savings. Then all of your savings are lost,” he advises.
“I think a lot of people are realizing that it’s no longer enough to just sort of focus on their little silo.”
Compared to some other strategies, such as purchasing real estate to renovate through the modernization of its energy infrastructure, Reshape’s concept of providing building owners with energy optimization services appears to be more capital efficient.
For instance, the German startup Reneo just concluded a €600 million fundraising round to develop a new decarbonization strategy that includes purchasing target real estate to upgrade. On the other hand, Reshape is still only a service provider and has much lower startup costs than Reneo, which is positioned to profit from any rise in real estate value due to its ownership structure.
Stanzl claims that as they were growing the company, they did think about becoming property owners, which would have required them to provide services like property and tenant management, but they ultimately felt that this was not vital to the energy transition purpose. Additionally, he notes that owners of commercial real estate can be reluctant to sell their buildings — which would have created barriers to scaling.
Improving building insulation is another factor that is frequently linked to energy transitions since it can improve the performance of energy systems. When asked about it, Stanzl responds that although they are able to supply it, they don’t “necessarily seek it out” because doing so could make the project more complicated.
Additionally, they have made the firm decision to stay out of making cosmetic upgrades.
“You do realize that we’re energy focused? He underlines, “We want to examine the energy fabric and the energy infrastructure. Therefore, the problems [for the target clients] are greater How can the waste heat be put to use? In addition to the cooling loads, how can that be optimized? This is less important than “how do you insulate the walls?”