sonnen: Transforming the energy sector along the Triple Top Line

Transformation from battery manufacturer to energy supplier of

the future - A perfect example of the Triple Top Line approach

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sonnen is one of the world’s leading manufacturers of battery systems for the storage of photovoltaic electricity for private households. Back in 2014, MVP was among the first investors of the company based in Wildpoldsried, Germany. In 2019, sonnen was acquired by Shell, which together with sonnen aims to become the world’s leading energy service provider by 2030. For the cleantech sector in Europe, the takeover was one of the most successful venture capital exits ever.

Key factors for sonnen’s success were the ongoing willingness to transform its product, business model, and team, as well as a business strategy based on the Triple Top Line concept. This ultimately led to significant changes in the energy market. And it makes sonnen a Transformative Technology in the best sense of the word and a perfect example to illustrate our investment strategy.

 

Transformation of product and business model

The first sonnenBatteries offered customers the opportunity to store self-produced PV electricity and to use it in times without sufficient sunlight. The company’s growth in the early years was proof that the sonnenBatterie was one of the best products on the market (Improvement of the Value Chain).

From the very beginning, however, the sonnen team understood the sonnenBatterie as the platform on which further products and services could be offered. The possibility of connecting all sonnenBatteries via the Internet of Things (IoT) enabled sonnenBatterie customers to share self-produced and stored electricity, which was the starting point for the sonnenCommunity. By that, today’s centrally structured value chain from electricity production in large power plants to the consumption at the end customer is eliminated by decentralized production and storage (Enhancement of the Value Chain).

With the next expansion stage of the sonnen business model, sonnenNow, customers will be offered a complete package consisting of a photovoltaic system, a sonnenBatterie and clean electricity, without any investment costs for the customer. This means that sonnen offers a Power-as-a-Service solution instead of a hardware product. A revolutionary step, which is only known from the software sector so far, or in the first tentative steps in the mobility sector. sonnen thus transforms the entire value chain of power supply (Reconstruction of the Value Chain) and becomes the energy utility of the future.

Transformation of the team

sonnen has continuously strengthened its team and adapted it to the requirements of the company’s development from its foundation to the present day. In the first years the focus was on product development and sales. In the following years, the supply chain and production team also had to be expanded. With the introduction of the sonnen Community, the interconnection of sonnenBatteries, the establishment of an own software team was necessary. And for the last step, the establishment of sonnen as the energy utility of the future, a team of experts with many years of experience in the energy markets was set up. With the growth from the small founding team around Christoph Ostermann and Torsten Stiefenhofer to a medium-sized company with several hundred employees, the organization, including finance, HR, marketing, had to be continuously expanded.

To successfully manage this substantial transformation of the team organization in just a few years is one of the essential success factors for the rapid scaling of start-ups – sonnen has mastered this excellently.

 

Focus on Triple Top Line growth

sonnen’s slogan “clean and affordable energy for everybody” illustratively reflects that the company follows a business strategy, which considers not only economic growth but also social equity and sustainable environmentally friendly product development. From the very beginning, sonnen’s primary goal has been to make more renewable energy available to private customers, and thus make a contribution to an ecologically sustainable energy supply (Ecology). The new approach of making the sonnen solution accessible to customers without investment costs ensures social Equity. Combining these two aspects with a highly scalable business model, sonnen was also able to achieve extraordinary economic growth (Economy).

With this consistent pursuit of the Triple Top Line concept, sonnen shows that growth and economic success do not require compromises with regard to environmental benefit and social equity, but that all three aspects reinforce each other positively. It was decisive for the outstanding development of sonnen and ultimately for the takeover by Shell. (Read more about our Triple Top Line investment strategy)


What's "driving the eco-industrial revolution" about?

Climate change has entered a new phase. Alarming signals of an ever more rapid change in the biosphere are increasing. And scientists highlight that earth may have already passed several climate change tipping points which has irreversible effects, such as the loss of the Amazon rainforest and the great ice sheets of Antarctica and Greenland.  At the same time, it is becoming a decisive political factor with hundreds of thousands of young people pioneering a new extra-parliamentary climate opposition.

 

…it’s about decoupling economic growth from environmental pollution

As the world’s population is rising to over 9 billion people in 2050, countries of the South and the East are becoming increasingly industrialized, and cities continue to grow, global economic output will roughly double in the next 30 years. Over the same period, greenhouse gas (GHG) emissions will have to fall dramatically in order to reach the GHG reduction targets set by governments. For the EU, the binding target is a cut by at least 40% compared to 1990 levels by 2030. This puts a great burden on the economy. However, the question is not whether the global economy will continue to grow. The key question is whether we can decouple value creation from environmental pollution.

The recipe is nothing less than a new industrial revolution with an impact similar to the invention of the steam engine, industrial steal making, or the automobile: the eco-industrial revolution.

In essence, it is about a threefold transformation of the old industrial society: firstly, a complete shift from fossil energy sources to renewable energies; secondly, a continuous increase in resource efficiency to generate more value from fewer raw materials and energy; and thirdly, the transition to a circular economy in which the productivity of resources is increased.

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…it’s about fostering the transformative power of technology

Similar as the first industrial revolution was triggered by the invention of the stream engine, also the eco-industrial revolution will be driven by technological innovations and their expansion. However, this time, we require technologies that allow a rethinking of existing value chains to reduce CO2 emissions along the entire process of value creation.

At MVP, we call such technologies that (I) improve, (II) enhance, or (III) reconstruct existing value chains Transformative Technologies. They trigger fundamental changes and paradigm shifts in existing business areas in short time frames. To some degree, Transformative Technologies can also be viewed as disruptive. However, rather than the disruptive “destroy and build new” approach, Transformative Technologies may also enable developing new enhanced solutions using existing infrastructure whenever possible. They are the basis for shaping the future and have an extraordinary growth potential. Identifying these opportunities and financing appropriate technologies and solutions is one of the strategic cornerstones of MVP’s Venture Capital investment approach.

…it’s about leveraging total value potential

Our focus is on driving change in the most CO2 intensive sectors and financing businesses that can have a huge impact in achieving decarbonization of the incumbent industry. To make it clear: it’s not about limiting economic growth in favor of ecological sustainability. We are firmly convinced that economic growth and ecological sustainability are not tradeoffs, but in contrast mutually reinforcing factors. With investments in companies like sonnen we were able to verify this thesis in the past. Even more, companies and business models, which do not take into account ecological responsibility, will not be successful anymore or disappear completely.

Therefore, we integrate the concept of Triple Top Line value creation in our investment strategy to leverage the full transformative potential of a technology. Rather than balancing economical, ecological and societal targets, this approach focuses on employing their dynamic interplay to generate value. (Read more about our Triple Top Line strategy here)

Driving the industrial revolution is the core philosophy of our investment approach. In fact, that’s what we’ve been doing at MVP for over 15 years now. With this experience and the capital entrusted to us, we back pioneering entrepreneurs and become sparring partners for ambitious teams to create the business leaders of tomorrow.