Following the Paris Climate Agreement, signed in December 2015, industrial nations have been urgently seeking ways to meet their legally binding commitments to Co2 reductions. The US has reported to the United Nations Framework Convention on Climate Change (UNFCC) that it will reduce emissions by 26-28% below 2005 levels by 2025. China has pledged that its emissions will peak by 2030, if not earlier. To achieve these targets, Co2 cuts must be made in every sector of the economy. According to the United States Environmental Protection Agency, 25% of 2010 global greenhouse gas emissions are the result of burning coal, natural gas and oil for electricity and heat, while 6% emissions result for to on-site energy generation.
The adoption of energy saving measures is crucial to bringing down emissions. A roadmap commissioned by the European Climate Foundation indicates that energy savings have the potential to cover half of the EU’s 80% emission reduction target for 2050. This anticipation has led to exponential growth among energy saving companies. Figures from the International Energy Agency estimate that the Global energy saving market is worth at least $310bn a year. But there are still barriers to the adoption of energy saving measures. Energy efficiency requires substantial upfront investment that only leads to savings in the long term. The founder of Taiwanese Factory Planet, Apu Hung, has found a way to tackle this problem.
Prior to establishing Factory Planet, Apu accumulated over 10 years of experience at AU Optronics (AUO), the Taiwanese electronics manufacturer. In his last few years at the company, he worked in the energy saving department, which later split into a separate business unit. Apu and a few colleagues at AUO ultimately decided to leave and start their own business. Several large Taiwanese manufacturers are already engaged in the field of energy efficiency. These include Chunghwa Telecom, AUO, Tatung, BenQ, and Delta Electronics. When asked why he decided to join the battle as a smaller player, Hung said “Very often, the key to winning is in the details.” The point is to not compete with competitors over technical strengths, but to focus on resolving the key problems of major customers.
The challenge: building energy saving systems at zero cost
Factory Planet found that the greatest deterrent keeping the managers of factories and office buildings from adopting energy savings systems was the fear of overinvesting without any promised return. To arrive definitively at this conclusion, however, took Factory Planet close to a year and 150 rejections, recalls Hung.
“Dismantling client fear” became Factory Planet’s main challenge. Hung implemented a simple but effective response: there are no upfront charges for the cost of setting up a system; clients are only charged once they have benefited financially from the services.
Three principles have helped Factory Plant to win over its client base:
1. Every minute of energy savings benefits is calculated, establishing transparency and trust.
2. Never argue with clients when they question grey areas.
3. When a client dislikes the energy savings system, Factory Planet removes it immediately without charging any installation costs.
Hung states that their business model allows clients to first experience and enjoy the energy saving benefits, before paying for the service.
Factory Planet’s energy saving systems currently cover all areas of energy savings, apart from lighting. This includes water, electricity, natural gas and petroleum. The resulting data is analyzed in the cloud. Apu Hung predicts that once factories or office towers adopt the systems, they can save up to 30% of their electricity costs. Factory Planet charges a proportion of the resulting savings.
Photo by Business Next
【Quick Startup Q&A】
Q1. What is the current revenue model of your service?
Our revenue is drawn from the actual financial savings that result from our services.
Q2. Since starting the business, what are the three things that you’ve done well?
If we’d done everything well, we’d be rich by now! But the best thing has been our business model and the fact that it removes clients’ inhibitions.
Q3. What has entrepreneurship taught you? Can you share some thoughts you’ve had since starting your own business?
There are so many! The one lesson might be that...constantly challenging yourself is the only way to survive. Now it’s quite easy for me to get to the core of something and see a user’s pains and problems, but that’s just a sense I’ve acquired now. It’s very difficult to explain.
Team Information/Company Profile
Company Name: Factory Planet Ltd.
Service/Product Name: Green sustainable energy service
Founded: March 22, 2013