[Game Changer] Energy software startup stitches together power market

Industry

Published: 25 Jun. 2023, 06:00 Updated: 04 Jul. 2023, 09:10

[Game Changer] Energy software startup stitches together power market

ENlighten CEO Lee Young-ho speaks during an interview with the Korea JoongAng Daily at the company's office in southern Seoul on June 9. [PARK SANG-MOON]

As solar power starts to make real economic sense, more players, especially small-sized firms or the self-employed, are entering the power generation market with their own solar farms.

But those first entering the energy business often face a myriad of challenges, from financing to the operation of solar plants.

This is where ENlighten, an energy software startup, steps in with its "Baljeon-King" mobile app, a solar plant management service.

ENlighten, which is working with Naver, Hanwha Solutions and SK Telecom, completed Series C funding round last year, and has so far raised 44.5 billion won ($34.7 million) in total. Its sales were 53.2 billion won in 2022.

Korea has solar power generation capacity of about 21,300 megawatts, or 21 gigawatts, a significant jump from about 6,000 megawatts five years ago.

As of May, ENlighten was providing its service to solar plant owners with a combined capacity of 5 gigawatts, representing some 20 percent of the country's solar capacity. This is the largest market share for renewable asset management services.

"What is noteworthy about the local solar sector is that there are so many small-scale players in the market, which inevitably pushes up the cost of each project," said Lee Young-ho, ENlighten CEO.

"That is why we are putting together all these smaller operators with our service to create economies of scale."

Founded in 2016, ENlighten brings solar power plants of varying sizes scattered across the country into one integrated platform, where its clients can operate and monitor their solar plants and also estimate the power output of their plant.

Of all solar power plants nationwide, "more than 80 percent have a generation capacity of less than 1 megawatt, and over half of the total have less than 100-kilowatt capacity," according to Lee. Solar modules installed on top of a medium-sized building, for example, generally have a capacity of about 100 kilowatts.

"Smaller solar power plants with less than 3-megawatt capacity are our main target customers," he said.

The company's business covers a wide variety of services across the solar power value chain, from financial consulting in the early phase of the project, to operation and maintenance (O&M) services and virtual power plant operation.

A virtual power plant is a network of decentralized power generators.

Because distributed energy sources such as solar plants are spread out in various locations and mostly run by smaller, individual operators, a centralized management system makes electricity supply from the solar plants to the power grid more predictable and controllable, and therefore stable.

A graduate of Seoul National University, Lee has a background in electrical engineering and mathematics, and worked for a financial firm with expertise in energy-related project development.

The Korea JoongAng Daily sat down with Lee for an interview on June 9 at ENlighten's headquarters in Gangnam District, southern Seoul, to hear about the company's journey and ambitions.

This interview has been edited for length and clarity.

Q. ENlighten covers a wide range of business areas across the renewables sector. Could you give an overview of your company's portfolio?

A. What ENlighten is ultimately trying to do is electricity trading, enabling a simpler way of buying and selling power. We found that it would be a great strength in doing such energy business if we could put together distributed energy sources scattered in the country, which have been mostly solar power plants.

In order to do that, we had to make it easier for power plant operators, construction companies and solar module suppliers to do their business, and that is why we began to add new services addressing each need.

In a nutshell, our job is to help our clients in building, managing and operating solar power plants.

ENlighten's ″Baljeon-King″ mobile app [SCREEN CAPTURE]

What motivated you to enter the renewables business in 2016?

I worked at a financial firm for about 9 years, involved mainly in energy businesses, and therefore have been closely monitoring the power market. And through time, I could feel that the market was continuously changing.

The local electricity market had been largely stagnant in the 2000s, after the growth through the 1990s. But by the time I founded ENlighten, I'd been often told that the market is heading to a rapid change.

Currently, state-run Korea Electric Power Corporation (Kepco) is the sole distributor of electricity, purchasing electricity at a wholesale price and supplying it to retail users. But in the case of renewables, the power suppliers and users can directly trade renewable energy through a power purchase agreement (PPA).

Such a shift in the market was happening gradually. With new opportunities coming up, I decided to bring in a number of electricity producers, based on the idea that gathering all these small operators together would cut the cost of building and managing the plants down to the level of the larger-scale counterparts.

When we first began the business as SolarConnect back then, our main focus was on finance, because that was where people had been struggling the most.

Many clients, including plant owners, construction companies and panel suppliers, came to us, and about 3 to 4 years after the founding, we launched a mobile service.

I think there are largely two reasons the clients are using our service.

First, we, as a platform provider, hold a massive amount of data. We collect all the real-time data and automatically analyze whether any irregularities are found.

Second, because of the economies of scale that we established through our service, we can provide products and services at a significantly cheaper price for solar plant owners.

ENlighten made an entrance into the electric vehicle (EV) charging service last year. What is your company's strength in the EV charging market compared to its rivals?

First of all, one of the most important concepts in our business is grid parity, which means that the cost of electricity production using renewable sources is equal to that of traditionally cheaper energy sources, namely fossil fuels.

Following the recent electricity rate increases, solar power gained bigger cost-competitiveness in terms of production.

In EV charging, the service providers need to pay Kepco for the electricity they are using, which in return makes the service more expensive in line with the higher electricity rates.

But since solar energy is reaching grid parity, and with that EV charging services, we will be able to hold an enormous advantage in terms of price.

The point which we are focusing on is providing the cheapest electricity possible for the customers using our EV charging service.

How did the recent energy crisis, which has been triggered by the Ukrainian war, affect the local renewables market in terms of reaching grid parity?

In countries like Germany, solar power already reached grid parity. So the Ukraine war and the subsequent energy crisis affected Korea in a different way, because electricity was too cheap in Korea before, and the cost situation pressured Kepco to push up electricity rates.

One factor that also contributed to the arrival of grid parity in Korea was RE100.

Large companies that are aiming to replace electricity from fossil fuels with renewables are now expecting the electricity rate to continue to rise above the level they are paying for renewable electricity through the PPA deals. That makes the companies think that industrial electricity may become more expensive than the price of renewable electricity in the long run.

ENlighten signed a third-party PPA agreement with Naver last year. How did that happen?

It took about one and a half years for us to arrange the PPA with Naver.

Our main mission is to connect solar power plants with those who are in need of renewable energy, such as Naver. While gathering the energy suppliers wasn't that hard, since we already have about 20 percent market share, on the other side of the deal is the buyer. It took a significant time for us to arrange the details, especially because it was Korea's first third-party PPA deal ever.

With the signing of the deal, we are supplying a significant portion of the electricity that runs Naver's 1784 headquarters building from the power plants registered on our platform. Other companies, including a semiconductor company, a chemical company and a consumer-goods company, are also working with us in order to achieve the RE100 mission.

Renewable curtailment, which is shutting down power generation in order to avoid the power grid being overloaded with excessive electricity supply, recently became an issue in Korea. How does ENlighten's service address that?

ENlighten can play a role as a power brokerage, which provides an estimation on the electricity generation output of the solar power plants gathered on our platform using machine learning technology.

By enhancing the predictability of each power plant's generation output, we can avoid the need for excessive expansion of the grid capacity.

Therefore, the government is trying to collect the distributed energy sources together to analyze the data and further develop the output forecast technology. I think ENlight may continue to contribute to that aspect.

Do you have a plan for overseas expansion?

First, we are eyeing the Japanese market.

Japan deployed renewable energy at a much faster pace than Korea, with a much bigger solar capacity.

Since we have established a leading position in the domestic market over the past six years, I hope to apply our capabilities in the Japanese market as well. I believe it will offer a huge opportunity.

More detailed plans for overseas expansion are likely to take shape in the latter half of the year, I think.

And the Southeast Asian market also has massive potential, since the region has a lot of islands, as well as solar resources.

What is ENlighten's ultimate goal?

I think it can be summed up as becoming an energy-as-a-service company.

Consumers won't need to own or manage power generation facilities in order to use electricity. With just one call to us, we will be able to arrange everything, from installation to operation, and all you need to do is to just use the electricity as if you are using a mobile subscription service.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]