Business Model Innovation: arbnco

Introduction

To achieve net zero carbon emissions, we need to improve energy efficiency amongst the 5.7m SMEs across the UK.

Scottish proptech firm arbnco has been awarded funding for the Government innovation competition “Boosting Access for SMEs to Energy Efficiency” to developing a Digital Energy Efficiency Platform.

Energy Systems Catapult will be providing arbnco with Business Model Innovation support to find a sustainable model that facilitates investment in energy efficiency retrofit/refurbishment projects by SMEs in the UK.

The Challenge and Opportunity

Small and medium-sized enterprises (SMEs) account for 99% of businesses in the UK and are responsible for over 50% of energy use.

The Department for Business, Energy and Industrial Strategy launched the Boosting Access for SMEs to Energy Efficiency (BASEE) competition to accelerate the growth of the energy services market for SMEs by driving down transaction costs and promoting third party investment in small-scale energy efficiency projects. BASEE is making available £6m of funding for innovative, scalable business models or solutions that facilitate investment for small energy efficiency retrofit/refurbishment projects in commercial and industrial buildings in the UK.

The Innovation

arbnco is a building modelling and simulation company, based in Glasgow, that uses pioneering technology to manage Indoor Environmental Quality, scope energy efficiency retrofit, assess renewable deployment and stress-test building design for climate change.

Active across multiple sectors, arbnco are a leading software providers to the UK real estate market, enabling some of the world’s largest property investors to make better and quicker decisions regarding the performance and regulatory compliance of commercial property.

Arbnco’s Digital Energy Efficiency Platform (DEEP) is aiming to eliminate the common barriers SMEs face in tackling energy efficiency, such as high upfront and transactional costs, economies of scale and difficulties accessing finance.

DEEP will utilise arbnco’s proprietary software, arbn estates, which centralises building data sets and delivers bespoke retrofit strategies tailored to each individual building.

The platform will generate a bespoke list of energy efficiency measures for SMEs, including costs and finance options, and a business case for implementing energy efficiency.

The platform will also allow potential aggregators to build portfolios of energy efficiency improvement measures across local regions, sectors or improvement types. It is envisioned that projects could be grouped together to achieve economies of scale and favourable financial terms for SMEs. arbnco will work with manufacturers and specialist financial firms to pool together retrofit projects, for example combining ten £20,000 lighting projects to create a £2m retrofit project.

Our Approach

Energy Systems Catapult is providing expertise to the BASEE project in the form of support from our Business Model Innovation capability.

Initially the Catapult will explore the overall feasibility of the current business model that arbnco has in place, including segmenting the target market and looking at the value proposition they are offering potential customers.

That means customers from both ends of the value chain: the manufacturers and installers of the energy efficiency products that arbnco wants to promote, and the small businesses that will ultimately procure those products to have installed.

We will then explore alternative options for the business model, from basic match-making through to a full-service platform including financing.

arbnco and the Catapult will work with a stakeholder group to develop the platform through a series of interviews and surveys to fully understand the issues SMEs face in implementing energy efficiency measures.  The stakeholder group includes the Federation of Small Businesses, Durham Council, Bridgend County Borough Council, Capitas Finance, Cyan Finance and the GC Business Growth Hub.