Jon Powers: Welcome to the experts-only podcast sponsored by CleanCapital, where we explore the intersection of energy, innovation and finance. Our host is CleanCapital’s co-founder and former federal chief sustainability officer Jon Powers. Learn how CleanCapital is revolutionizing clean energy finance, and find more episodes at CleanCapital.com, iTunes, or wherever you get your podcasts. If you like what you hear, be sure to subscribe and leave us a five star review. Jon Powers: Hi, this is Jon Powers and I’m the host of CleanCapital’s experts-only podcast where we explore the intersection of energy, innovation, and finance. You can follow us at CleanCapital.com. Today we have a really exciting conversation with the CEO and founder of Arcadia Power, Kiran Bhatraju. Kiran has a really interesting background, which we’ll talk through, but at Arcadia, they are using customer demand to disrupt the utility model and giving consumers choice in how they buy electricity. We’re going to talk more about it and you can learn more at ArcadiaPower.com. Jon Powers: Kiran, thank you so much for joining us on CleanCapital’s expert only podcast, really excited to talk to you about some of the exciting things you’ve done. As we’ve discussed before, our podcast has a focus on the intersection of energy, innovation and finance, and you’re living at that intersection as a CEO of a tech company, that’s really disrupting the way Americans are buying power. But before getting into Arcadia and the amazing work you’re doing, I want to step back and talk a little bit about your career. You grew up in Kentucky, you worked on Capitol Hill as a legislative director. How did all of this lead you into energy? How did it lead you into co-founding a company? Kiran Bhatraju: Yeah, absolutely. Thanks, Jon. I appreciate being here. Yeah, I did grow up in a small town in Eastern Kentucky, population of 6,000. Not many Indian families in Eastern Kentucky. Jon Powers: Right. Kiran Bhatraju: But my dad was a physician and he came over. At one point I think he was the only surgeon doing what he did, vascular surgery, for a 150 mile radius. Jon Powers: Wow. Kiran Bhatraju: Actually, this story has been repeated all over the south and in small towns. You had immigrant doctors come in and make lives. And my parents loved it. My mom loved the mountains and, frankly, I loved growing up there. We were one of a few Indian families in town, so you can imagine. But it was really a fascinating place to grow up. It is coal country. It’s the heart of underground. And then surface mining in the U.S. At one point the county I grew up in… Jon Powers: Did you see it firsthand growing up? Kiran Bhatraju: Yeah, absolutely. At one point, I was going to say, the county we grew up in, in Pike county, Kentucky, had more millionaires per capita than… I think it was number two, at least. Right behind Wall Street. And it mostly just on the backs of coal. And I remember in maybe sixth grade, and this just shows you how it is part of culture, our high school did a… Or I guess at that point elementary school did a field trip into a coal mine. Jon Powers: Wow. Kiran Bhatraju: Yeah, and put on the hardhats, went underground, and it is fascinating. You find out these scenes that folks are working in, when they’re underground are really four feet tall. You’re on your back. It’s scary, but you realize, this is the engine that built the country. And in a lot of ways built, what was those communities in Eastern Kentucky. Kiran Bhatraju: From a very young age, my dad worked on black lung, but some of my friend’s parents were in or around the industry. It really was the lifeblood of the region. And for me, it was just this fascinating look at, here’s… I think leaving the region, you realize so much more that this is so central to the way of life there, but outside the region, very few people even understand or can even comprehend where their electricity comes from or what the human cost is to actually producing it. Jon Powers: Yeah. I remember driving through my wife’s… My wife grew up in Northwest Pennsylvania. We were driving down on Washington one time and stopped. I won’t name them town, but, we stopped to grab lunch and the little league baseball team showed up. They were all getting their ice cream after the game. And both teams sponsored by, literally, King Cole right on the shirt. That was a total eye-opener to me, how ingrained into the community it was. Kiran Bhatraju: Yeah. And I think this conversation we’re having now about Cole misses the fact that I don’t think people are wedded to underground mining or anything like that. They’re just wedded to a way of life and a paycheck and a way to support a family. And that is what coal mining was for a century and, frankly, isn’t anymore. Jon Powers: Right. Let’s talk a little bit about… You went from that to Capitol Hill. What drove you there and what was some of the things you were working on there? Kiran Bhatraju: Yeah, I actually left college early and the Congressman… Jon Powers: On purpose? Kiran Bhatraju: Yeah. Kiran Bhatraju: No. Might have mistaken that. In retrospect should have kept that last semester before a real life hit. But no, it was an amazing opportunity. I was always interested in politics and policy. Issues of politics were always discussed at the kitchen table. My being the family of immigrants, we were the only ones here, but you’re just dealing with so much of national politics when you’re in Eastern Kentucky. And that’s just by virtue of who we were. I was always interested in big ideas and wanted to get involved in politics. And I got this amazing opportunity to work for John Yarmuth, who was a newly elected Congressman from Louisville, Kentucky. Which is basically… The district is just the city of Louisville. It was a really incredible district and really incredible Congressman to work for cause he was brand new, so it felt like a startup. And joined him as he came in to the Hill. Kiran Bhatraju: I think what people don’t realize is when you work in the house, as a legislative aid, you’re really taking on the most bizarre portfolio. I did everything from intelligence matters, to early childhood education, to energy. Right? Because there’s only so many of you on staff and there’s so much to cover and you’re on these different committees, but it was such an incredible education. I just loved it. To this day it was one of my more interesting and enjoyable jobs I’ve had. Especially with a Congressman who was amazing to work for, and was there for the right reasons and really gave us, in terms of his staff, the opportunity to work on all sorts of stuff that we wanted to work. Jon Powers: When you were transitioning, what led you to transition from the Hill? What led you to lead, really narrow into an issue? Because you worked at energy efficiency first, right? Kiran Bhatraju: Yeah. I think I left the Hill at a time which… It’s kind of odd in retrospect because president Obama had just gotten elected and we had full control in a sense on the democratic side. But something I saw just being there for a number of years was the impact you had. If you were as a new person on Capitol Hill, whether it was the congressmen or the committees, you sat on, it just took so much time. And I saw the circus up close and personally, to where it is now, which is 10 X from what I thought it was. But at the time I just saw… There was so much happening in the world of startups and your ability to have an impact through a company just seems so much more exciting and tangible. And I took the leap and with a couple of friends, started an energy efficiency company called American Efficient. Kiran Bhatraju: And I’ll say I had a bit of energy experience because I had worked on energy issues and just been on the Hill meeting and learning a lot. The rest of the folks I started the company with were newcomers to the industry, which I think is good, because you come at it with new eyes and new perspectives. It was a really exciting time to be involved in efficiency because it was at a point where utilities and really the market in general, were getting more excited about and interested in, the cheapest form of energy on the market, which is efficiency. Jon Powers: And how did that play out? how did that transition into Arcadia? Kiran Bhatraju: It was a three and a half, four year company. We raised venture capital. We tried a few different business models. Some that stuck, some didn’t, as any good startup does and learned a ton. I worked with utilities on their DSM programs, worked with retail, home Depot, and Lowe’s, and others, and getting efficient products into the hands of consumers. There’s one thing we did that was really interesting where we actually packaged energy savings and sold them on what’s called capacity markets. That was one of the more interesting, I think, groundbreaking things we did as a company and, we had a good run and some of the IP we created passed on to another company and each of us went our separate ways to work on the next thing. For me, stepping back from that experience, I wanted to work on something much more consumer facing. Kiran Bhatraju: I spent a lot of time traveling around the country, talking to utilities, understanding their goals and the pressures they have from regulators. And to me, there was just something about the fact that consumers really didn’t have options. And this was the last real, I think, consumer market where that existed. Whether it was healthcare or now you’re seeing in cable or just any industry tech was touching, you were having more and more consumer options except for energy. And there were options in rooftop solar, but as you and I know very few people can actually have a south facing roof in the state. Kiran Bhatraju: That was part of the motivation, both, that I just saw this huge trend in the industry, orienting itself more toward, what does the consumer want? Not what does the utility or regulator want on top of the fact that I thought, just personally as someone who believes in the climate fight that we’re in, the more you can get people to understand that their role in it, which is through their energy bill, the most tangible thing they do each month, that’s affecting the climate that you just might be able to change the political argument as well. Jon Powers: I want to get back to the utility stuff in a few minutes. But with that in mind, what led to Arcadia? How did you start it? Here in Washington, specifically, there is a growing tech community, but it’s still not Silicon Valley, right? What was that process? And then, in your own words, tell us more about what you’re doing. Kiran Bhatraju: Again, there were a few… And I think this is true about anyone starting a technology company, is, you look at the big trends in an industry and think, “How can I either accelerate these or ride this wave?” And what was happening in the utility world was a lot of unbundling of the old model. Utilities have franchise monopolies of their territories, right? Which is a fancy way of saying they basically own the consumer. And what we saw in the FinTech world was you had a lot of companies that were building software that was on top of the old infrastructure, that is the banks and the payment flows. And we said, “Okay, if there is a single consumer behavior that related to energy, that is the touch point where we can affect some change, it is around that monthly power bill.” Kiran Bhatraju: If we can build technology to couple that power bill with other products and services, we can take some of these big trends around consumer empowerment, around new products and services that are not just the commodity, but energy services that are at large, then we can package it all into a bill and make this service for the customer a better experience than just the local utility. And that was the big idea and it took a lot of work building the technology to make this thing work. Right now our company operates across all 50 states. We’ve got customers in pretty much every major utility territory in the country and they pay their bills through us each month. We have a really complex coordination issue that we run where we’re both ingesting payments, managing energy services, and then paying out to the utilities each month, across a hundred utilities. It’s a really dynamic platform where we are the home energy advisor for customers in all 50 states. Jon Powers: Utilities are… They’re notoriously difficult to work with, right? It sounds like you had built up some experience in your previous role. How are you finding success engaging them? How much do you actually have to engage them? What are some of the lessons that you wanted to share? Because I think if you looked out across clean tech as a whole, there’s a lot of people that will come up with the greatest toaster in the world, but they don’t have a business model and a business plan or the patience to get it out there into the market through the utilities right? Because in many cases that’s just how it’s going to play out. Kiran Bhatraju: Yeah. For those that are familiar with Opower, I think what they realized is a company that squarely put themselves on the side of the utilities because they realized if they were going to achieve their goals, utilities are the ones who, frankly, matter. Jon Powers: Right. Kiran Bhatraju: Right? They’re the ones producing power, distributing it, and have these monopolies. I think the one addition I would throw on that is, sure they are both utilities that are incredibly important to our climate problems, but the other huge entity that nobody’s really touched is just consumer demand. And utilities… They’re a tough beast to understand. Whenever I talk to friends and other industries about these franchise monopolies that want to be regulated, or that want that rate of return and don’t want anyone to mess with it, it’s a really tough concept to understand. And I think the way we approached it was, there are certain goals that the utility has, whether it’s with their regulator, even their consumer, that we can actually help them with, right? Kiran Bhatraju: They don’t want the consumer to be upset with them. They want new products and services to keep customers happy, as do the regulators. And then on the flip side of that, we knew if we could go to the consumer and entice the utility by saying, “Hey look, here are all these customers that want these services and want these products.” Because at the end of the day, until, Elon Musk builds an entirely new power grid, but no one’s going to take away that franchise poles and wires monopoly that basically every utility has. We realized early on, we’re going to have to work with them. They’re the network, they’re the platform. And we can help solve their problems as well that they have with the customer through new services. Jon Powers: You’re really dealing with, not 50 utilities for 50 states, but hundreds of utilities that are out there. As you’re having these engagements with them, have you found a tipping point where you’ve got a lot of the big players on board and then it’s just this smoother sailing or is it the same dealings every time where you start from square one trying to break into the market? Kiran Bhatraju: The first is always hardest and then from there, in an industry where they’re always looking to… They’re really tight with their peers, it was easy to get a broad swath of utilities on board. And like I said, at the end of the day, the utilities are fairly similar in their goals and their needs, and the way they’re regulated. Again, once you make that case to one, it’s fairly easy to make the case to everyone. Jon Powers: Right. I think when you look up Arcadia and you check out the work they’re doing, I think it’s exciting to see how they’re democratizing renewable energy, right? You guys are really helping to break down the current barriers. If I’m living in a place where economics rooftop solar is not going to work, I can buy into projects or have access to wind power. Let’s put on a customer hat for a second. I sit here in Northern Virginia, I live within dominion power. Why would I sign up to Arcadia?What’s the incentive for me and how disruptive is it into my day-to-day life? Kiran Bhatraju: Yeah, that’s a great question. When you think about Dominion, what they do really well is, you know the brand and they’re incredibly reliable in terms of take them into perspective, power across the world. American utilities are really incredible, and really reliable. The toughest thing for us to come into that relationship is, frankly, inertia. People pay a power bill. They pay it every month, it’s mindless. They often don’t even think about it. Kiran Bhatraju: It’s amazing. When we talk to customers and we let them know we have these energy services available to them that, one, they even knew, and this is, again, back to the inertia, that there was something else they could be doing, but two, that their power bill was even connected to this larger cause of sustainability and climate change, which is just an odd thing. Again, it’s this mindless thing that you will pay each month probably until the day you die. Part of our challenge is the behavior change. We need to show customers a lot of value and we do that in a couple of ways. Better service, entirely mobile, auto pay. We give people the option to pay by credit card, which, literally no utility in America offers credit card auto-pay. Jon Powers: Right. Kiran Bhatraju: Just simple things that you think are table stakes for any other sector. Jon Powers: And that’s not a regulatory handoff? They just haven’t figured out the simple technology solution to do it. Kiran Bhatraju: Yeah. I sat down with a few utility executives a few months back and asked them, point blank, why they haven’t done it. And they didn’t have an answer. They just said “Oh, we should look into that.” But it’s that on top of… Really the core of what we do is the energy services. Our core go-to market product is a wind energy product where we buy Green-e certified ,current year, renewable energy certificates to match your power usage. Nothing new to energy nerds, but basically matching recs to your usage kilowatt hour for kilowatt hour, across all 50 states. From there, we’ve launched a virtual power purchase agreement program. Basically a nationwide community solar program where any customer can subscribe to a panel in a project that actually gets savings off their bill from that panel, as it produces energy and revenue over 10 to 20 years. We’re going to move into on-bill financing, energy brokering, we’re getting products into the home. Jon Powers: Go back to the virtual PPA for a second. If I, here in Dominion Power, bought into that, and then I three years from now move out of Virginia back to Buffalo, New York, where I grew up, does that transfer with me? Kiran Bhatraju: Yeah, absolutely. This is one of our most exciting products when it comes to just the innovation, I think, and the lack of access. You and I both know, to do rooftop solar, you need a lot of things to line up. You need to own your home. You need to want to be there for 20 years. You need to have a south facing roof, no trees overhead, and you need to be able to have the right FICO score to potentially finance it. Jon Powers: If you live in the right state. Kiran Bhatraju: If you live in the right state. Yeah, we could talk about that for an hour. It’s a tough choice to even be able to make and for the customers to do. It’s great. They save a ton of money and it’s the right thing to do. But for the other 80% of Americans that live in apartments, don’t have that right house… Kiran Bhatraju: You might move to Buffalo to your… back home. You want that to move with you. You want it to be flexible, but you still want to make the commitment. That’s the product we created. Some of this stuff a lot of the big corporates have done when it comes to their renewable purchasing over the last few years. And also the cooperative utilities who pioneered, I think a lot of the community solar we see today. But you can get into the program for as little as one panel. Even if you live in an apartment, even if you live in Virginia where there’s no solar market. Jon Powers: Right. Kiran Bhatraju: And you just simply connect to your local utility account each month is your panel wherever it lives, let’s say it’s in DC, produces revenue and energy locally. Our platform takes that in and then shoots it as a bill credit off your bill. And then if you move, for example, to upstate New York, you just… Jon Powers: Who wouldn’t want to live in Buffalo? Kiran Bhatraju: Right, let’s be honest. Or Kentucky, right? Jon Powers: Right. Or Kentucky. Kiran Bhatraju: You just link your local utility account and we’ll start sending savings to your new utility. It’s really divorcing the actual energy asset on your roof, but rather just connecting it to the thing that it’s affecting, which is your power bill and what you pay every month. Jon Powers: Yeah. I challenge our listeners to go to ArcadiaPower.com and check it out. I think you will have won having done this. And having played with it a little bit, the customer service is great though. They’ll engage. They’ll also help answer these questions for you. But one thing I wanted to talk to you about, because we’re talking about the intersection of energy, innovation and finance is really you’re building a tech company, right? Kiran Bhatraju: That’s right. Jon Powers: How do you balance, from a management perspective, building an outward facing team for sales, with the engineers versus the marketing? You’ve got so many different things and verticals you’ve got to hit on. Could you can talk about that management challenge? Kiran Bhatraju: Yeah, absolutely. I tell people the energy stuff is the easy stuff. The energy piece… If people really peel back the products we’re offering customers, none of this is relatively new. On-bill financing has been around for a while. Renewable certificates have been around for 20 years, virtual power purchase agreements. In fact, the fortune 500 has been doing this for a long time. Like I said, some cooperative utilities have done this. We’re just making it easy for the customer to access through new tools and channels, which is all digital. And that’s really the skill we bring; that’s really the power of the platform we’re building. We are a tech company. We provide all the self-service tools. Kiran Bhatraju: Again, going back to what I was saying earlier, this is table stakes across any other sector. Basic, mobile, accessibility, payments, someone picks up the phone when you call. All the things that you really expect from a modern consumer service. We just raised a $6 million series A. Jon Powers: Congratulations. Kiran Bhatraju: Yeah. We’re super excited. It’s led by energy impact partners up in New York, who’s fund backed by some of the largest utilities in the country. And we’re really trying to scale up our ability to deploy technology, to really amplify the experience and the products. Not just, “Hey, we’re going to sell you a solar panel.” But, “You’re going to be able to log in, go to your dashboard, see maybe even a live stream of your panel, but then be able to see exactly how much power produced yesterday versus, last week” and really make the whole experience more modern, more accessible, more tangible. Which is really tough with energy because very few people understand this stuff. Jon Powers: Yeah, absolutely. Kiran Bhatraju: I think the tech can actually just make it more accessible and make it easier for consumers to latch onto. Jon Powers: I could be talking to you about this all day. This is fascinating, but since we want to keep it limited, I wanted to… I usually end most of my interviews with the same question, right? You’ve established yourself well in your career. I think you’ve had a really interesting direction in growth, I think, as a person and also from a professional perspective. If you could go back and sit down with yourself, whether it be coming out of high school in Kentucky or graduating college, what advice would you give? Kiran Bhatraju: Look, I have no regrets. I love running this company. I love being in this sector because I think what we’re doing in energy is so important for future generations. I would just tell myself to have… not be so serious. Kiran Bhatraju: I think right out of college a lot of high achievers wanted to do a lot really quickly and enjoy the moment a bit more. But I’ve latched on to every opportunity that’s come my way and I think that’s been a positive thing. I made a lot of mistakes too, but really excited about where we are as a company and where we’re going to be. Jon Powers: That’s great. Congratulations, and thank you so much for joining us at CleanCapital’s experts-only podcast. Kiran Bhatraju: Thanks Jon. Jon Powers: I’d like to thank Kiran Bhatraju for joining us. You can go to ArcadiaPower.com to learn more about the great work they’re doing and follow us at CleanCapital.com to continue to learn more about what we’re doing at the experts-only podcast. If you have any ideas for folks we should be interviewing, please send them our way. And I’d like to thank our producers, Lorene Glickman and Emily Connor, for their hard work. We couldn’t do this without you. And let you know that we will be back again soon with a future installment and look forward to continuing our conversation.