Jens Madrian spent many years at RWE, finally as chief financial officer at Npower. Now he has joined a ‘smart energy’ company, Reactive Technologies. In 2016 he spoke to Janet Wood about moving from a ‘big six’ company to a start-up

Jens Madrian took on a dual role as chief financial and commercial officer at Reactive Technologies on 1 June. At the time of his appointment, he described the company as “driving serious technology-enabled disruption in the market. It does this through the deployment of its cloud-based software platform”. This is Tradenergy, a management and demand-side response service based on communications industry technology.

I want to know what the company is offering: is it customer-facing or offering a technology? Madrian says it is “ultimately a sophisticated communication technology being deployed as a service to different players along the value chain of energy.

“It’s ultimately software engineering that was a core ingredient in mobile phone technology, which we are transporting over into the energy industry.” Because it is transferring, he says, it “drives the degree of technological sophistication and as a consequence it opens you up different routes to market”.

I ask what they are and he lists several: “We could work with smaller renewable energy generators to help them reduce their imbalance exposure. We could work with larger I&C [industrial and commercial] customers to help them understand their energy usage better. We could work with the grid to understand demand-side response better and to do something about it.”

Data management

The company has already worked with National Grid in a project, based in High Wycombe, that used Reactive Technologies’ platform to see how granular energy usage data can be. It identified kettles being switched on and off in participants’ homes.

Madrian says: “Why do you have that project? It doesn’t have an impact on High Wycombe’s energy use. The point is even minimal consumption is from that point via modem – a signal is sent through the grid. We can pick up this drip of water in a massive river, in a secure and reliable fashion. We did it again and again.

“In the first instance what are you learning with that? Nothing. But if I deploy it through lots of other areas it allows me to understand demand better. That is important in a world where I am National Grid and I want to provide 50% [of my flexibility] from the demand side going forward.” And equally, he says: “As a national [supplier] with hundreds of thousands of fridges, that could be very interesting.”

Madrian says granular data “is an absolute differentiator. That is actually one of the unique selling points this software engineering has”.

The common core of all the routes to market he lists, is: “We have one huge platform where we aggregate all the data and can offer intermittency services to different providers.”

That sounds as though the company has something in common with companies who aggregate small amounts of load or flexibility, such as Smartest Energy or Tempus Energy. “Where we meet is on the aggregator level. But the way we get there is very different. The technology doesn’t just enable us to aggregate but also to instantaneously control and manage that load directly, live on screen.

“This is also a function of time – you need to have a portfolio in order to allocate flexibility to some of them. We are in the first stage building up contacts with, for example, supermarkets and large industrial producers. There are ways of exploring with them the operational opportunity they have.”

It is not clear at this stage how much Reactive Technologies will provide services and how much it will licence its technology to other companies.

“We are not necessarily an energy company, we are a sophisticated communication and technology company that deploys innovation in the energy space,” Madrian explains. “One route to market is the direct route to the customer. The other is the indirect route via energy suppliers. We could license our technology to them so they could embed it as part of their package and continue the journey to the customer. I can’t honestly say which way we will go.”

The balance on imbalance

Some of the options Madrian has laid out, such as managing generators’ imbalance, suggest it will be in the energy market. I ask whether Reactive Technologies has the financial depth to take that on. Madrian says that requirement “is not as dramatic as you think. All you need to find is the price on imbalance, the rest is pretty standard”.

He adds: “The typical relationship between large customers and energy supplier and customer is not just energy but regulatory requirements, route to market, risks on imbalance, DUoS, etc – the full package.

“We are just interested in a part of that package as of now. As an offtaker of a power purchase agreement – we don’t deal with power price or ROCs. Either we provide just that component or we take the whole thing on and then let all of it out back to back.” He says Reactive Technologies’ exposure on imbalance, for a windfarm, will be £1-1.50 of a typical £80 power and ROC price.

Madrian is doing the rounds of investors in a second financing round for the company. He won’t say how much he is looking for (he says he has “forgotten”), but “it is going reasonably well, there is a decent amount of interest, we are hoping we can conclude something in the next month or two”.

I ask him who is biting and later he says: “One could imagine large energy suppliers could have an interest, private equity houses, even other industries dealing with energy demand management where we just add to their sophistication and they deploy it worldwide.”

Madrian adds: “I personally find our rationale blindingly obvious. That was for me the core reason for moving out of a corporate world into a small start-up.”

In the business

There were top-level management changes at RWE Npower last year. If that had not happened, would Madrian still be there?

He insists he has not quite left, even now, “It was my decision [to leave]. I stepped down. In August [2015]. They asked me to stay till the end of the year for handover, which I did, but even now I am still with the RWE group. I helped them with the strategic restructure.

“It was an advisory role, because I wasn’t sure I was going to stay, they were not sure if there is the right role for me, so we kept it flexible.”

But he says in the end, “I decided to opt out and just go for an adventure. I wanted to do something new. I rate RWE highly – I have been with them for a long time and I have not been famous for job-hopping. It’s time to do something that really floats my boat.

“This may be a small company and it may not be earning any money, but the opportunity I can see is just worth going for. I honestly believe it is not that risky, I would find it way more risky to invest in traditional businesses.”

The company is using Nordic telecoms technology and its technical base is in Finland. Why is it launching in the UK?

He says it is partly market – and partly personal. “There is a wealth of opportunity for us to deploy. My legacy – I have a whole bunch of contacts and I know my way around. The CEO and I both live in the UK. The whole idea is to make this work in the UK and to show what we can do and then deploy it in other markets.”

The company hopes to complete this funding round in the next month or two and sign up its first demand customer – in fact, a retailer in Europe – this summer. After that, there will be another round of funding news announcements. “Watch this space. There should be more,” says Madrian.