Reel raises €2.3M to transform electricity procurement and accelerate the renewable energy transition
The Copenhagen-based climate tech company will use the capital infusion to unlock a new way for companies to buy electricity on commercially attractive terms while driving the transition to a society powered entirely by renewable energy
Reel’s founding team. From left: Anders Meldgaard Kjemtrup (CCO), Christian Randløv Schmidt (CTO) and Jon Sigvert (CEO)
Securing one of the largest pre-seed investments in Danish history from a consortium of European investors, Reel sets out to fight climate change by transforming electricity procurement. Reel offers a new way for companies to buy electricity on commercially attractive terms while contributing to the renewable energy transition. Reel ties companies’ electricity procurement directly to the construction of new solar and wind parks.
The pre-seed round is led by UVC Partners, a venture capital fund focused on European early-stage B2B startups, with participation from The Footprint Firm, a sustainability-devoted investment company, North-East Family Office, a global private multi-family office, and a group of energy specialists and experienced founders such as the chairman of InCommodities, Bo Wase, and the co-founder of Netlify, Christian Bach.
With an ever increasing focus on companies’ environmental footprint combined with record-high and volatile electricity prices, the need for solutions that accelerates the green transition while ensuring financial certainty for companies has never been more urgent. According to Jon Sigvert, CEO and co-founder of Reel, the company sets out to solve this need:
“Electricity is one of the main sources of CO₂ emissions globally¹. Total electricity demand is expected to double within this decade² and consequently, renewable energy generation needs to increase drastically. Governmental subsidies are phased out³, and the renewable energy transition is now driven by consumer demand. At the same time, the energy crisis has emphasised the urgency for companies to ensure financial certainty through their electricity procurement. Reel empowers companies to drive the transition in an easy and financially attractive way.”
Transforming electricity procurement with technology
Reel’s solution is based on an emerging type of renewable energy contract, called Power Purchase Agreement (PPA). PPAs are signed between renewable energy developers and companies buying electricity for a long-term period at a fixed price. Renewable energy developers use PPAs to secure financing for the construction of new solar and wind parks, and companies are credited for the addition of new renewable energy, while securing attractive electricity pricing. Until recently, PPAs were exclusively available for the 1% largest companies due to a number of constraints related to size of electricity consumption, credit rating and legal expertise.
Reel has developed a software solution that makes PPAs available to all companies by simplifying legal complexity and optimising the parameters needed to sign PPAs. The solution is based on large amounts of data on factors such as electricity consumption and credit rating. On top of that, Reel provides automated CO₂ reporting out of the box. According to Christian Randløv Schmidt, CTO and co-founder of Reel, using technology to transform electricity procurement has great potential:
“We are operating in a sector that is extremely conservative and old-fashioned. The optimisation potential is huge and by realising this potential, we can create immense value for both our customers and the climate. What we are trying to achieve is akin to how the technology-driven challenger banks have transformed the conservative financial sector in the past decade - but instead of only optimising for profit, we also optimise for climate impact.”
Turning green intentions into actual CO₂ reductions
Reel’s solution is rooted in climate science and breaks with the criticised system of green certificates currently used for green electricity procurement. According to Anders Kjemtrup, CCO and co-founder of Reel, changing the way electricity is bought, used, and reported needs to be front and centre in the fight against climate change:
“Conventional ‘green’ electricity contracts are based on certificates that allow you to claim that you use carbon-free electricity. However, these certificates do not actually lead to new CO₂ reductions⁴. This is hugely problematic as CO₂ reduction efforts are overestimated and we risk falling short of the Paris Agreement. In addition, it is commercially unattractive as companies pay extra for the certificates. Our PPA solution solves for all of these issues, and allows all companies - big and small - to help accelerate the renewable energy transition.”
With the commercial and industrial sectors accounting for two-thirds of total global electricity consumption⁵, there is an urgent need for an off-the-shelf electricity procurement solution, available to all companies, that effectively reduces emissions. According to Jon Sigvert, companies’ green intentions are already present but need to be turned into actual CO₂ reductions:
“Companies are increasingly aware of their carbon footprint⁶ and are implementing measures to take responsibility for their impact on the climate. This is a promising development, but to effectively solve the climate crisis in time, these intentions need to be converted into actual CO₂ reductions. And that is what we help companies to ensure.”
Europe’s go-to green electricity provider
The company will use the capital infusion to scale up its operations and launch its solution in full scale in its initial market, Denmark. Launching as a certified electricity provider in Denmark in the fall of 2022, the company sets out to be the go-to green electricity provider by offering a full-service solution with delivery of electricity, reporting on CO₂ accounting, and advice on climate communication. According to Alexander Kiltz, Principal at lead investor UVC Partners, Reel is in a prime position to transform electricity procurement globally:
“We are excited to partner with Reel to change the way companies are procuring electricity and to support the transition to truly green and renewable energy. We are impressed by the team's ability and journey to date to execute such a sophisticated business model. With this significant funding round, Reel will be in a prime position to conquer and expand the European PPA market and beyond.”
About Reel
Reel is a Copenhagen-based climate tech startup. The startup solves one of the most prevailing problems in the transition to a society powered entirely by renewable energy: Electricity procurement is broken and most companies cannot sign electricity contracts that effectively drive the renewable energy transition (so-called Power Purchase Agreements - PPAs). Reel transforms electricity procurement by enabling all companies to sign PPAs. This way, the startup ties their customers’ electricity demand directly to the construction of new solar and wind parks, while offering attractive electricity pricing.
About UVC Partners
UVC Partners is a Munich- and Berlin-based early-stage venture capital firm that invests in European B2B startups in the areas of enterprise software, industrial technologies, and mobility. The fund typically invests between € 0.5m - 10m initially and up to € 30m in total per company. Portfolio companies benefit from the extensive investment and exit experience of the management team as well as from the close cooperation with UnternehmerTUM, Europe’s leading innovation, and business creation center. With over 300 employees and more than 100 industry partners, UnternehmerTUM can draw from many years of experience in establishing young companies. This cooperation enables UVC Partners to offer startups unique access to talent, industry customers, and other financial partners.
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