What’s it all about?
Addressing the heating issue through geothermal energy, even at a domestic level. I’ve seen Dandelion growing, and raising funds and thought it is a technology we haven’t yet covered on the podcast, so I was delighted when Michael agreed to join me and tell his, and their story, and how heat pumps are one more solution in our armoury.
About Michael Sachse:
Michael Sachse is an experienced executive who has previously scaled start-ups through periods of rapid growth. Sachse was previously CEO of Stardog, an Entrepreneur-in-Residence at NEA, and Chief Marketing Officer at Opower, where he helped to guide the company through its IPO and acquisition by Oracle.
About Dandelion Energy:
Dandelion Energy’s mission is to enable the widespread adoption of geothermal. The company offers homeowners affordable geothermal heating & cooling systems as an alternative to gas, oil, propane, or electric heating. Originally conceived at X, Alphabet’s innovation lab, Dandelion is now an independent company offering geothermal heating and cooling systems to homeowners, starting in the Northeastern US. The team brings leadership experience from X and SolarCity, and shares a personal commitment to mitigate climate change by making renewable technologies more accessible.
Dandelion’s modern geothermal heat pump systems provide efficient heating, air conditioning, and warm water at significant savings over older fossil fuel burning devices. Dandelion systems eliminate the risk of carbon monoxide poisoning, improve indoor air quality, and allow people to reduce their home’s #1 source of harmful carbon pollution.
Social links:
- Michael Sachse on LinkedIn: https://www.linkedin.com/in/michael-sachse/
- Dandelion Energy Website: https://dandelionenergy.com/
- Dandelion Energyon Twitter https://twitter.com/DandelionEnergy
- Dandelion Energy on LinkedIn: https://www.linkedin.com/company/dandelion-geothermal/
About Hyperion Executive Search:
Hyperion are a specialist executive search firm working with some of the most innovative cleantech companies in the world, helping to find extraordinary talent to enable their growth and success. Partnering with leading cleantech VCs, as well as directly with founders and entrepreneurs in the sector. With our clients we are transforming business and growing a strong and prosperous cleantech economy.
If you want to grow your team, or move forward your career, visit www.hyperionsearch.com, or email info@hyperionsearch.com
EPISODE LINKS
- David’s Fundraising page for Muscular Dystrophy – https://www.justgiving.com/fundraising/david-hunt42
- Dandelion- How Geothermal works and installs – https://dandelionenergy.com/how-geothermal-works
- The Weirdest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous – https://www.amazon.co.uk/Weirdest-People-World-Psychologically-Particularly/dp/1846147964/ref=sr_1_1?dchild=1&keywords=Joseph+Henrich&qid=1618934866&s=audible&sr=1-1-catcorr
- Dan Carlin’s Hardcore History – https://open.spotify.com/show/72qiPaoDRf8HkGKEChvG5q
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David Hunt 0:31
Hello, I’m David Hunt, CEO and founder of Hyperion executive search and your host for the leading clean tech podcast. Now before we start the episode, I’m going to do something I’m pretty uncomfortable with but please bear with me. As a parent, you will know that you will do anything for your kids. Now my son Alex has an incurable muscle wasting condition called muscular dystrophy. And I try and raise funds to help find a cure where I can. And this time I’m cycling 50 miles from Liverpool to Chester and back again on July the fourth. If you can spare a few pounds dollars or euros, I’ll put a link to my justgiving page on the website for this episode. Please forgive me for asking, but I’m sure you appreciate it do anything for Alex. And if you can support that’s really appreciated, but equally clearly, no obligation on anyone’s behalf. But I thought I’d just throw that in and see if anyone can support this. Now let’s get on to business. This week we look at geothermal energy for the home. As I speak with Michael saksi, CEO of dandelion energy. Michael is an experienced executive who has previously scaled startups through periods of rapid growth. He was previously the CEO of stardock, and was entrepreneur in residence for the FDA and Chief Marketing Officer for opower. Low power, where he helped guide the company through its IPO and acquisition by Oracle. I hope that you enjoy the episode. Hello, Michael, it’s good to have you with us to share your story and to discuss geothermal or ground source heat pumps is perhaps the better known in Europe at least. And it’s somewhat surprising given my passion for the electrification of pretty much everything, including heat, wherever possible that you’re our first guest from a geothermal company. So I’m really keen to talk about your technology and dig into that. So welcome to the podcast.
Michael Sachse 2:19
Thanks so much for having me, David.
David Hunt 2:22
Now, I’m always intrigued as much by persons or an entrepreneurs story as I am by the technology. And on the podcast, we sort of delve into both of those things. And it’s customary for us to start with a little bit of your backstory. Now. We’ve had other guests in the past who’ve come out of Google moonshot factory. And so I’m keen to hear a little bit about the genesis of dandelion as a company, but more importantly, I guess a little bit of your backstory in terms of how you came to find yourself in clean tech and how you came to join the team at dandelion energy.
Michael Sachse 2:54
Yeah. You know, sometimes people ask me for career advice, and I’m not sure I’m qualified to give it because I’ve followed such a circuitous route. So I joined dandelion, a little over a year ago, came in, because Kathy or founder, wanted someone to deal with the unrest, the unfortunate day to day logistics of running a company like this. But my story is, you know, I’m a lawyer by training, went to law school, came out of law school, worked at a law firm decided that it was too long and apprenticeship and too little responsibility ended up. I also, I should say, grew up in Washington, DC, where I am now and I’m the child of two bonafide do gooders. And so that was always sort of in my DNA. You left the practice of law to run communications on a political campaign, which was a good proxy for the the chaos and excitement of startups, and then joined a company called opower right after that, where I knew the founders and powers energy efficiency analytics for utilities and b2b b2c company. Your your UK audience may know us from some of the stuff we’ve done with Aeon there and was there for a long time, we’ve managed to take it public and sold it to Oracle. And for me, that was a tremendous education and both how fun it can be to grow a business but also you know, the, the challenges and the peculiar patterns of doing it in the clean energy space. Yeah, and And then after that I became an entrepreneur and residents that NEA a venture firm that had invested in opower. And they also invested in dandelion, and, and started to get to know Kathy and the team and just was incredibly excited about the potential for what the company’s doing.
David Hunt 5:21
Right? Right. So, ya know, it’s always interesting to talk about those journeys, for for entrepreneurs, CEOs, founders, and they’re rarely they’re sort of the linear paths that they might teach you in, in college. But yeah, I think it’s always those, as you touched on, they’re the sort of the learnings along the way help you as, as you join this crazy, clean tech world. And we’ll cover a little bit more about sort of the the business side of things. But yeah, I’d like to sort of start by looking at the the technology, or at least a broader sense of things, because there’s so much focus in finance at the moment going towards renewable electricity, batteries, and the grid, and mobility transitions. And that’s brilliant, all of that is very good. But so much of our climate impact is due to heating. So just wanted to perhaps get a little feel from yourself, Michael, in terms of why you feel that despite it being perhaps one of the biggest challenges, he gets a lot less focus, particularly in the mainstream.
Michael Sachse 6:15
Yeah. Well, you know, you know, I think that there’s a, well, the psychology of it, I’m not sure. But you know, my guess is that people assume the world is getting hotter. And sometimes think that means we’re not going to need heat, I don’t know. But, you know, it really is an ignored area. And really, so for dandelion, that was very much the start of the company, there’s so much effort going into renewable sources of electricity, which are terrific, except for the fact that electric heating tends to be quite inefficient. And so we started to look at geothermal as a way, or ground source heat pumps as a way to really address sustainable heating. And, you know, I think one of the things that is telling is that, you know, they’re, you know, it’s an older technology that we feel like we’ve optimised quite a bit. But, you know, there really aren’t a lot of competitors for, you know, efficient, sustainable heat in colder climates. And so, you know, that’s, that’s one of the things that, you know, we’ve been so excited about within the business is we just really think that, while there may be, you know, if you’re in, I don’t know, that temporary part of California, you know, there may be multiple solutions, we really think that for colder climates, where a lot of us live, that, you know, geothermal is gonna be a big part of what we do. Yeah,
David Hunt 7:55
yeah. And I think sometimes people lose track of the fact as well, because clearly, there are some parts of the world we’re getting warmer is really a big issue, the UK being one of them. But even in hotter climates, and you know, talking to the friends down in sort of Texas, and but but geothermal and heat pumps generally are good for cooling, as well as heating, which perhaps we’ll touch on when we look at more into your technology.
Michael Sachse 8:16
That’s right. So your geothermal, the the way we think about it is, it eliminates 80% of the energy needed to heat a home. But it also eliminates 30% of the energy needed to cool a home. And, you know, we’ve seen, frankly, a lot of developers, even in places like Texas, start to incorporate geothermal into their communities. And it’s a big part, in our view of the future resiliency of the grid that, you know, I think one of the things people sometimes overlook is, you know, in many ways, geothermal is an energy efficiency technology. And the best thing that we’re we can do really is going to be to reduce the amount of energy we need, across the board. And geothermal potentially has a very large role to play.
David Hunt 9:12
Sony does that. But this look at certainly it’s sort of geothermal or ground source, depending on which part of the world you’re in. And increasingly, air source heat pumps as well, which perhaps we’ll touch on in terms of potential competitive technology have been installed that a pretty good rate in certain parts of Europe less so in UK, certainly more so funny enough in Scandinavia and sort of continental Europe. What’s the the market like in the US? Is this an established technology? Or what’s the sort of the base level of understanding an interest in in geothermal?
Michael Sachse 9:40
Yeah, so I would say it’s, you know, it’s a it’s a newer market in some ways. It’s so for a long time. This has been something that if you lived in a rural area, where perhaps you have a lot of land and we’re okay with, you know, a latticework of trenches, that geothermal might be a good option. Or it was something that, frankly, if you were very wealthy, you might consider largely for reasons of sustainability and signalling rather than cost. And so what we’ve really been focused on is making geothermal more affordable. So that it is the, you know, the type of decision that pencils out, make sense from a financial point of view. And then for us, the the area we’ve focused, has really been on retrofitting homes that use fuel oil and propane. And I’m always shocked by how many there are. So in the northeast of the United States, there are 5.6 million homes that use fuel oil and propane for heat. Just in New York, Connecticut and Massachusetts. There are 2.6 million homes. And so you’re really what we’ve been focused on is convincing those consumers that, you know, there’s a cheaper, cleaner, more sustainable option that can add value to their homes.
David Hunt 11:11
Yeah, yeah, no, absolutely. Certainly, I know, in the UK, from my limited experience with heat pumps, there’s, there’s large areas of the UK and obviously some parts of rural continental Europe as well, where people are again, using propane LNG or oil, you know, heating oil. And apart from environmental costs, which is significant at just the financial costs is nothing to sneeze that.
Michael Sachse 11:29
That’s right. And and like, you know, one, we haven’t encountered many customers who tell us things like, Oh, I really loved my fuel oil company. And I came here to part ways with them. So yeah, it’s inconvenient, as well. And I actually think that it’s something that is changing at a macro level, because 20 years ago, our response to you know, the statement, well, there are a lot of homes with fuel oil, or propane would be we’ll look, we’re just going to extend the natural gas grid to them. And we’ll make those investments. And, you know, and that will be their source of heating. And I think that there’s been a rethink of that, which has been really, frankly, constructive. And the rethink has been both on the part of utilities and on the part of their regulators, because the utilities expect to get earn a rate of return on those assets for 80 to 100 years. And it begs the question, well, are we still going to be using fossil fuels to heat our homes and 80 to 100 years?
David Hunt 12:33
Yeah, let’s hope not. So we have a pretty savvy audience on the on the podcast here, but it’d be really good if you could share a little bit of the technology about geothermal broadly, and how specifically or how the deadline product or system is different and how you’ve been able to reduce costs and the ease of installation?
Michael Sachse 12:52
Yeah, so. So geothermal, and you know, this is where the ground source heat pumps term can be more precise. You know, so there is a version of geothermal that’s utility scale, you go down seven, seven kilometres to find a pocket in the Earth’s magma. That’s not what we do, what we’re doing is we’re using the constant temperature of the earth, which is about 50 to 55 degrees Fahrenheit. And using that as a source of heat exchange, so we drill a small hole in the backyard, it goes on average, about 370 feet down into the earth, or in three quarter inches in diameter. And we insert into that an HDPE pipe filled with water and glycol, and that serves as a source of heat exchange. And so the idea is that in the wintertime, when it’s cold out, you’re bringing up that 50 to 55 degree temperature, and then it connects to the ground source heat pump inside the home. And then the ground source heat pump, you know, uses compression to heat the air further and distributed throughout the home. And then it operates in the reverse in the summer brings the heat out of the home and down into the ground and then brings that cool air or that cool water back up. So you know, that’s kind of the basics of what geothermal is it’s a very frankly, stable system. Because the temperature of the ground is stable. This it’s not a lot of moving parts. And then you the way we looked at it, we really looked at three parts of the problem. Your first is that the amount of loop you need, the amount of the ground loop is really it’s a direct result of how conductive the soil is. Yeah, you know, mud or granite or, you know different kinds of shale are gonna have different conductivities. And so if you can know how conductive the soil is, you can be more precise about the amount of loop you put in. And, you know, many contractors for reasons that I totally understand just really oversize these systems because they don’t know what’s in the ground. And that drives the cost way up. So we’ve gotten very good and understood at anticipating what type of soil conditions we’re going to find. Second is about the equipment. You because the status quo in the industry had been more either commercial jobs or you know, affluent residential or rural residential, the equipment is just massive that they’d been using, you’re talking waterwell rigs that are 50,000 pounds have a 43 foot turning radius. And so that’s not going to be welcomed in most, most back. And so we’ve really shrunk the equipment down to make it so that we can access a more typical suburban home. And so that’s been a big part of what we brought to the market. And then the third part that’s really critical is we only instal heat pumps that have monitoring capabilities, that, you know, that is there Internet of Things, you know, data is coming off of them. And that’s, that’s important for a number of reasons. Yeah, it’s important today, because it allows us to, you know, improve our own modelling and make sure we’re doing things correctly, it allows us when a customer needs service to respond quickly. And sometimes we’re able to say, Well, you know, it looks like the airflow is a little low, when was the last time you change the air filter. But then, you know, the, the thing that I think is going to be really important about that is it’s going to unlock in the future. Third Party ownership models, which have been a big part of the solar industry success. So we’re sort of laying the groundwork for that.
David Hunt 17:20
Yeah, no, that makes a lot of sense. And it was interesting. I’ll touch on in a moment that when I had my solar business that we would often be able to tell people that had a problem before they knew it themselves in their home by the by this monitoring and preventive, which really surprised that surprised a lot of them. So touching on that, again, some of the audience will know that my formula I did start a renewable installation, renewable energy and storage and EPC business, mostly, we were focused on solar and small wind, but we did occasionally instal air source heat pumps, for for for clients, rock, not ground source. For some of the reasons you just you just touched on in terms of the difficulty in the size of the equipment. But if we look at the difference, or what are the pros and cons, potentially, between the geothermal, or ground source heat pump versus an air source heat pump, because we do get a lot of traction? Or do start to see more of these kind of AC looking boxes outside a lot more homes these days? What are the pros and cons in your mind of the two options?
Michael Sachse 18:14
Yeah, well, I mean, let me start by saying, I am a fan of electrification generally. And so you know, I don’t have any quarrel with air source heat pumps. And, you know, I think that can be the right choice in a lot of places, and for a lot of homes.
David Hunt 18:31
The,
Michael Sachse 18:31
we look at it a couple of ways. So like, so the air source heat pumps are cheaper to instal, because you don’t have to worry about the ground blue, that’s a big factor. So you know, that, that means your upfront cost is going to be this going to be lower. ground source, heat pumps tend to have greater efficiency over the long term, because they can use the ground loop as a source of heat exchange. So you know, over the long run, you’re obviously climate dependent. We think for many, many homes, ground sources, potentially, you know, a better investment. And then, you know, really where I think that becomes dramatic is around winter peaks in particular. So the reason for the increased efficiency of ground source via air source and the reason I mentioned it around winter in particular is just because the delta and temperature is greatest. So, you know, the hottest day is the difference in temperature between your desired in home temperature is just much less than the coldest day and the difference in temperature. And so, ground source heat pumps or air source heat pumps can can surprise people in a negative way is that when it gets really cold, they have to augment their heat with essentially electric resistance heating inside the air source heat pumps, so in a colder climate, on the coldest days, you know, it’s going to be running as a mix of electric resistance and air source, which is going to reduce the efficiency. So, you know, with that said, like, you know, I think in a lot of places, it’s going to be a terrific solution. And, and I want to see them get traction, because I think advances and air source heat pumps are gonna only help us. But at the same time, I think particularly in colder climates for retrofits ground source, it’s gonna make sense. And then more broadly and new construction when you have the chance to get the infrastructure in the ground early. You know, I think ground source has been underutilised. Yeah,
David Hunt 20:51
yeah, no, it’s interesting point, you pick about the sort of the Delta or the median temperature, which is interesting, because as you say, heat pumps are tremendously efficient. But where you have the gap is significantly higher in terms of ambient air temperature versus ambient ground temperature. The additional work, obviously affects the efficiency. But yeah, it’s great to see that both technologies have their place, but with the installation, ease or the ease or installation. And also, I think drilling down, because one of the issues that we came across and often was the thought or the consumers sort of research showing that in terms of loops, there was the ability to essentially create a permafrost and for the for the soil not to regenerate its heat, which clearly is much more difficult or perhaps even impossible in a, in a drill, or in a sort of a drought solution.
Michael Sachse 21:44
What you know, that’s
Unknown Speaker 21:45
so we’ve,
Michael Sachse 21:48
we’ve encountered that concern, I would say, not so much from homeowners, but more from, you know, engineers and that. Yeah, that’s actually one of the things we’ve really investigated and are constantly looking at, because, you know, I think, you know, a lot of the equations that are used for sizing, ground loops, typically assume a more commercial setup, where you may have a lot of ground loops that are close to each other, and, perhaps, therefore have greater potential to impact the the temperature of the soil on an ongoing basis. Whereas with residential, we think, you know, again, we don’t model it this way out of conservatism, but we think that’s less likely because you’re looking at one to two boreholes and so the likelihood, therefore, is that you’re not permanently changing the soil temperature, but it is, it is something we are quite curious about. Yeah,
David Hunt 22:53
yeah. Yeah. Cool. Okay. So returning a little bit back to, to your story and to the business as a whole, many, if not, most of our guests are founders in the businesses, they run, but you’d like many of our guests, or some of our guests also have sort of come in the CEO into an established or in early stage was still in the established team. So aside from the small matter of a global pandemic, what were the greatest challenges since you came into the business? At the start of 2020?
Michael Sachse 23:20
Yeah, you know, so like, I think the, the way it was a weird dandelion was in 2019. is we had been successful in proving that this was something people wanted, that we could sell this. And that, frankly, we could sell it at a rate that would outstrip our ability to actually instal these systems. And so the thing we’ve been most focused on is really been just increasing our operational capacity. And so that has been a question really, of, you know, for us, number one, really, number one, two, and three is increasing the amount of drilling that we’re able to do, increasing the efficiency of the drilling. But then also, you know, obviously, like doing more heat pump installations faster at a higher quality level. And then the third thing that we’ve really focused on over the last year has just been really bringing a lot of customer centricity to the business. It’s very natural. When you design something and instal it to feel like well, you know, look, we got it. We did it right. We did it the right way all our numbers pencilled out and, you know, one of the things that we’ve sort of accepted within the business is that there’s just no such thing as a three star review when you’re changing. The heating and cooling of someone’s home, they’re either going to love you or they’re going to hate you. And so it’s actually kind of liberating to know that, because then it’s like, okay, as soon as they’re concerned, you have to be responsive and thoughtful and take it seriously. And that’s, that’s made a big difference for us.
David Hunt 25:19
Yeah, yeah. So bringing that to the table, I guess the other thing is, again, during the pandemic, the management of the team of the noble how large the organisation was when you joined, but that clearly has been a struggle for most people, not least of which, when you come in fresh into a business, and on top of that you were fundraising last year, or I guess you were sort of involved in that, because there was around the close out earlier this year. So how did you balance those hats was the those other three factors were playing underneath as well?
Michael Sachse 25:44
Yeah, you know, like, so the, the being virtual part was, was difficult, but I feel like we got used to it. It’s like, I think in particular, for the managers within the company, it’s, we’ve, I think we’ve all gotten better at zoom, and all gotten better at, you know, like, now, the idea of someone joining a video conference called with their camera off seems like almost offensive, you know, it’s like, we all know the value of the nonverbal communication. We’ve also just put a priority on spending time together virtually. So like, just like teams having unstructured time. And it’s not the same as being in person, but it helps because I think the thing you most risk losing is kind of the half thought, right? Like, the thing that’s like, it’s someone doesn’t really have the full idea, but they have a concern, or they have the seed of an idea. And, you know, getting those expressed, I think is really important. And so that’s yet that’s something we’ve really tried to find ways to enable. And then, you know, within, within our crews. It’s been a challenge, frankly, because, you know, they’re they’re having to wear masks, and we have people in person, and we have had some cases of COVID. that have not been great. So thankfully, everyone’s come out the other end healthy. But you know, that’s certainly been a challenge. And then you’re on the fundraising side. So yeah, that was, yeah, a big part of what we did in the second half of the year. And, or at least what I did. And, you know, there too, you can get to know people via video, like, I still haven’t, we were very lucky to, to get an investment from breakthrough energy ventures. I feel like I know Libby and Matt, who led the investment pretty well, but I’ve never met them in person. So I suppose I don’t know how tall they are. But I you know, I think, frankly, we’re at a very lucky time. And I hope it’s not a lucky time, I hope it’s a permanent time and clean tech where there’s legitimate interest in the space from investors. You know, you know, I like you, you know, I’ve done this enough to know that like, you know, clean tech was hot a decade ago. And then it wasn’t hot. And in fact, it was the opposite of hot, it was like no one wanted to touch it. And I hope it stays hot, because I think we really need it. But I think the thing that’s encouraging is I think investors have come to the conclusion that there’s just going to be fundamental change in how energy is delivered. And that’s such a massive part of the economy, that they’d be fools not to invest in it.
David Hunt 28:48
Yeah, yeah. And we’ve seen a very strong deal flow. Once the first few months of the pandemic got out of the way where people were clearly preserving cash and looking after their portfolio companies. I think from last summer onwards, we saw that the deal flow being turned back on and if anything accelerated because of the drivers that will perhaps touch on in a moment. But yeah, a lot of VCs in particular are committed to clean tech now, and as you say, see it more so long term rather than a short term opportunity? Which is clearly exactly what it is and what it needs to be to avoid those peaks and troughs and booms and bust we saw she say about 1012 years ago. You’ve obviously raised that cash. Now there’s a lot of ways that you can do with money. Uh, Do you have plans to internationalise the business or adapt the business model to maybe licenced your technologies overseas or what’s the sort of the growth trajectory? Like?
Michael Sachse 29:40
Yeah, so I think internationalisation like I joke, we’re, we’re just aspiring to become regional. So, you know, we would love to, you know, to be able to have that business grow internationally. I think that’s some distance in the future for us unless you include Canada’s International. But, you know, I think there are a few things we’re really focused on. So like, you know, one is yes, you what I did what I refer to as, like an asset light business model where we’re not doing all the labour ourselves, and so that we’re handing a playbook to others, that’s something we want to develop. Second is new construction. So Gnar is one of our investors, they’re the largest home builder in the US, we’re very interested in, you know, seeing if we can sort of find the right value proposition for folks who are building new homes, whether it’s, you know, 10 homes at a time, or 100 homes at a time, you know, then third is really on the financing side. So, you know, if you look at solar, third party ownership models have just been a big part of how they really proved the asset class and got to much better financing rates. So, you know, that’s something that we plan to launch, probably next year that we’re building again, we’re putting the Yep, getting everything in order for it this year, and quite bullish on that. And then the last thing is really, we want to focus just on some fundamental r&d around the heat pump itself. And in particular, we’re very interested in seeing if we can create a heat pump that, you know, to the, you know, to, to a home that’s being retrofitted looks a lot more like a furnace. And you know, what I mean by that is really like, you know, distributes air at a similar velocity and temperature. Because, you know, we find that for a lot of homes that you’re could potentially be retrofit the ductwork is, is a barrier. And so that’s, I don’t know if we’ll succeed on that. But that’s something we’re, we’re really excited to explore.
David Hunt 32:09
Interesting. Yeah, I’m not sure why the market is, again, in again, not as much in the UK, but certainly in Scandinavia, in large parts of Europe. underfloor heating is has always, regardless of the source of that heat has been something which is quite prevalent, and works clearly very well for any form of heat pump, is that the case in the us is that that thing,
Michael Sachse 32:28
there’s some of it, it tends to be kind of a luxury product. And the thing that there’s more of an end that tends to be water is usually what is conducting the heat. The the the thing that there is more of is just hot water radiators. And that’s another thing that we’re interested in being able to offer.
David Hunt 32:53
Right, right. Back to the optimism around clean tech, is something clearly we share us, hopefully the most of our audience, but particularly at the moment we’ve seen in the Europe in the EU, Green Deal stimulus packages and of course, with the new Biden ministration, lots of really positive noises, both around stimulus package, and of course, the infrastructure plan, which Fingers crossed those through the Senate. What do you hope to see from a public policy perspective to support geothermal or heat pumps in the US and beyond?
Michael Sachse 33:25
Yeah, first of all, like, I’m, I’m a little bit of a sceptic by nature. And so it is, it’s like wearing these uncomfortable, but actually quite soft and well fitting clothes of an optimist around policy right now. It’s, it’s, it’s, I’m experiencing a little cognitive dissonance, but be experiencing it. So, you know, for for geothermal, there are a couple of things that are critical, you know, one is that ITC, which has their the investment tax credit, which has been, you know, a really, I think, successful policy initiative in the US. And so, we want to see that extended so that it’s not two years here, two years there, and there’s talk of doing it for 10 years, we think that would be terrific. The administration has also talked about doing the EITC where the tax credit itself can be eligible for a rebate or direct payment. And that’s important too, because it like not every home and not every household is going to be tax credit eligible. And so, you know, one of the things that say sunrun has done, for instance, is they’ve figured out how to monetize the tax equity. But that tax equity, about 20% of it, you know, goes to the bankers who are, you know, executing those transactions, and so there’s a lot of value lost. Along the way, so we think that could be good. The third thing, which is a rather specific point for geothermal is, we want to see parity under Section 48. A, and that’s really for, again, about the third party ownership. So reasons. I don’t fully understand why it was set up this way. But you know, if for a customer today, you get a 26%, tax credit for solar, you also get a 26% tax credit for geothermal. But if you’re a third party, like the company or a builder, for solar, it’s 26%. For geothermal, it’s 10%. That has, that’s a big difference. And that really changes the incentives for those who would you maybe to offer a specific example, like Lamar has told us? You know, we want to sell a home, we don’t want to sell a home and a tax credit. Yeah. And so, you know, for, for, in order to, you know, I think that third party ownership can help make it really simpler for customers. So those are the big things, we’re focused on around the ITC, I think there’s going to be a lot of other potentially really beneficial stuff that may come out as well. You know, in particular, I’m thinking of workforce retraining, I think one of the, one of the challenges
Unknown Speaker 36:33
that,
Michael Sachse 36:35
frankly, liberals have had is that, you know, workforce, like, what happens to good jobs has always just been this like, you know, magical, unanswered question. We have, you know, classic blue collar jobs that we need skilled labourers to do, and they pay well. And, you know, I’m hopeful there’s gonna be some investment and, you know, and developing those skills for those people.
David Hunt 37:04
Yeah, I mean, that’s hopes. And we’ve all seen globally, for reasons in and around the pandemic, so many jobs impacted negatively. But I think it’s really important that we can take this opportunity to actually say, rescale, and put people to work and give them the opportunity to work in areas where there’s a, obviously a future and be a good living to be had. And certainly, one of the benefits, I think of clean technologies broadly are that we can be cost comparative, but equally, we can employ more people. I mean, it doesn’t take that many people to be running a dirty or fossil fuel plant, relatively speaking to the output. So yeah, I think jobs in the US and across the world really is a factor, which hopefully people will actually say seize the opportunity to connect those dots. Well, then,
Michael Sachse 37:53
you know, I mean, I feel like one of the awful ironies of our business is the single hardest role for us to hire is a driller. And you would think that like in the US, that would be like the easiest role, because there are all these, like oil and gas drillers who are out of work right now. And we could put them to work. But it really is the most challenging role. And it’s such a good example of, you know, the skills gap is very small. And it’s more about like awareness and nothing to them. And, you know, I think that’s exactly I think there’s a lot to be gained with focus in that area. Yeah,
David Hunt 38:33
yeah, no huge amounts of optimism and positivity. And I think broadly, last year, I think we’re challenging all of us, for all of us, but not just the pandemic, but clearly, shall we say, some of the administration’s in the US and around the world, we’re not necessarily on the side of the Paris Agreement, and a lot of good stuff. So hopefully, this is more optimistic, really touched on, you know, fundraising for yourselves and other companies as turned on. So let’s hope there’s good cause to be broadly optimistic that we can take some big leaps and fall forward in terms of the the energy and mobility transitions. Are you broadly? Positive, negative? Where do you stand on the sort of us getting to a point where we can really, I guess, avoid some of the worst catastrophes that we’ve seen some of in California, for example, and elsewhere around the world?
Michael Sachse 39:22
I would guess my answer to that is that I try not to allow pessimism to set in because I think that that’s just, you know, such a dangerous place to be. I don’t accept that. The that this change is inevitable. And I think that we have all the tools at our disposal, I hope to remedy it. And so I guess I would say that I am sort of quite deliberately optimistic about it. I think we don’t have a choice but to be optimist. Cuz I think you get pessimistic then. Then you know, it’s gonna happen. Right. I mean, pessimism just leads to, you know, I think it can lead to resignation and I really think we can we can make a difference here.
David Hunt 40:18
Yeah, no absolutely one of the things I love about this podcast on the worker there obviously with Hyperion is just working with clean tech companies who are able to make an impact, as you say, I think the technologies, clearly they will improve, and there will be new ones coming down the line. But with what we have at the moment, we can do this. It’s just a case of entrepreneurs and founders and VCs and everybody playing their part. And obviously, some policy Whoa, help along the way would not go without appreciation. It’s been really great to talk to you, Michael. Finally, I love to read a great deal and do a lot of listening to podcast, as you’d expect. Are there any either books, podcasts, thought leaders, media of any description that has inspired you or continues to inspire you in your journey?
Michael Sachse 40:59
Yeah, you know, I
think,
well,
so like, I like I’m, I’m a sucker for macro histories. And I really enjoyed the weirdest people in the world. It which is, is a book about how the West is sort of psychologically peculiar. And all that part of why I found it inspiring is it. It’s so much of what we take, as, you know, assumptions, like things didn’t seem natural to us are in fact, just like cultural, cultural ramifications. And so so I’ve really enjoyed that. On the podcast front. My recommendation is it and admittedly it may be a very male one is I really loved Dan Carlin’s hardcore history, and I’m not a military history buff at all. But what I, you know, sort of similar to what I mentioned with the weirdest people in the world, he does a wonderful job of sort of approaching things from first principles and asking how did people end up in this situation? And I feel like we don’t ask those questions enough.
David Hunt 42:23
Yeah, no, I think critical thinking someone that’s very much a miss these days. So really appreciate those couple of recommendations, we’ll put those on the episode page for on the website for this episode, along with obviously links to download. And there’s a really cool video, actually, that I did look at earlier on your website around, you know, one of your installations. So for people to have a look at how your rigs a slightly different and how you’ve been able to do installations, as you said those more sort of compact area. So we’ll put links to all of that on the on the podcast web page. And really enjoy talking to you. I hope you continued success and hope to see you reaching beyond regional elsewhere in the US and beyond. But geothermal clearly is something which we need to we need to throw everything at this problem, but we and it’s another great tool in our armoury. So appreciate you sharing your thoughts with us. Well, thanks, David. I’ve
Michael Sachse 43:10
really enjoyed the conversation and, and I appreciate what you do. So keep doing it.
David Hunt 43:20
Thank you for listening. Hope you enjoyed that foray into geothermal and heat pumps. Please do keep your feedback and suggestions coming and thank you to those of you who have been writing reviews. If you haven’t, and you have five minutes to spare. Any review or recommendation is very much appreciated to keep podcasts out there and keep our stories and keep the cleantech world informed of some of the things that are going on. As ever really appreciate your time and you’re subscribing to the podcast. I hope to speak to you again soon.