THE PROFILE: DNA ENERGY’S DANIEL BARBER
If Daniel Barber, co-founder of DNA Energy, didn’t exist, we’d want to invent him as a net zero and clean energy thought experiment.
He’s the ultra-commercial corporate-world animal, a former investment banker and finance sector recruiter in the UK who’s reinvented himself as an energy technology startup and scale-up guy.
Now, he’s found his way into arguably the toughest gig in the energy transition, trying to integrate buildings with electricity grids, making energy demand flexible almost instantaneously.
Barber has just spent a quarter of the past year in the US, searching for a big breakthrough for Australian homegrown ingenuity.
Here’s our Q&A to get inside the man and his mission.
Who are you, and how has life brought you here?
I’m not an engineer or technically qualified in any way and have never been on the tools. I have a more corporate background. I left school at 16, this was in the UK, and I managed to snag a job at Ernst & Young working in expatriate tax, which was quite random. Then I got an opportunity to work on the trading floor in London, the futures and bonds trading floor, which led me to Lehman Brothers. That was amazing.
This is well before the Global Financial Crisis (GFC, 2008)?
Hah, that wasn’t me. I was working for Lehman Brothers for eight years, from 1993 to 2001. There will never be anything like it again. Anyone who’s lived through those times – trading, investment banking, in the ‘90s in the UK – it was just incredible.
But nothing lasts forever?
A series of events led me to not wanting to do it anymore and I just kind of fell into recruitment, which a lot of people do as an in-between when they don’t know what to do. It seemed like fun. You have a good laugh, have a good social time, and earn some decent money.
Then you moved to Australia?
I set up my first business in 2008 in Australia. I’d just moved over here with my now wife Zoe, and my role was made redundant. Zoe was about 39 weeks pregnant and as it turned out, ironically, I’d taken the worldly decision to start my own recruitment business about three months before Lehmans crashed (a key tipping point for the GFC). That was a struggle, obviously, and wasn’t great fun. In about 2012, I had an opportunity, completely randomly, to work with a friend on a hybrid PV-thermal solar panel technology.
So that was your introduction to the energy world?
Yeah. I just got deeper and deeper into the whole area. Suddenly we were travelling to Turkey, which was where the manufacturer was. We were successful in commercialising the product. But ultimately, the timing was wrong.
Nonetheless, you, the corporate investment guy, were hooked?
I would never have described myself previously as a greenie; it just wasn’t on my radar. I suddenly got really interested in technology and interested in climate from a logical pragmatic sense. Like, “Oh, this is not good”. I had two kids by then and thought, “the future is bleak”, right?
Ultimately, it comes down to a commercial decision. What’s my cost of electricity? For companies, it’s not an emotional decision. It’s not an “I want to save the world” decision. It’s bang for buck.
What happened at nu-tility?
The idea was to be an intermediary between corporates and renewables, which at the time wasn’t really done. When you’re a corporate you have a bunch of stuff you want to do better, but you don’t really want to be talking to the solar guy and the lighting guy or the HVAC guy, and all that kind of stuff. So, we bridged that gap.
How did your latest start up DNA Energy, which you co-founded with Darren Cardy come about?
I left nu-tility for a whole bunch of reasons. While I was there, we had this demand response and demand management idea floating around. But it’s really bloody hard, right? We’d gone through a whole bunch of stuff working with big outfits like Schneider and Honeywell, and they couldn’t quite get their heads around doing relatively small bits in C&I buildings. Where it’s not half a million or a million dollar system, it’s a $20,000 system. We also met our fair share of mad inventors with some amazing products who didn’t quite understand that it’s got to be commercial too.
You are the commercial guy, and Darren is the technical one?
Yes. Commercial guys often don’t understand the tech and tech guys often don’t understand it’s got to make sense on the bottom dollar. So, Darren and I cooked up this idea around “if we’re going to do this, what does it need to be?” Then we stumbled across this piece of wireless hardware, and then we did a pilot site with an aggregator and realised that we shouldn’t be giving them all of our IP. So, we built software, which we got hugely wrong, and then rebuilt it and got it right. And then we got exclusivity around this supply of hardware and evolved it and evolved it and evolved and evolved it. It’s not doing now what we thought it would do. It’s much more powerful.
It sounds like the right time, right place, right technology
It’s not even five years since we started the company, but what the industry is now and what it wants is so different. We thought we’d be heroes by saving some kilowatt hours and riding the ESG train, which we also do, but probably hadn’t imagined the problems with grid constraints and the flow on effect of all those things. You’ve got constrained areas where there’s no juice, and we’ve done a couple of sites where there was just no option to upgrade any of the supply for two or three years.
The wholesale spot price also wasn’t as volatile then as it is now, and the revenue opportunities are immense in that space. The ESG thing was there, but CEOs hadn’t come out and said, “We’ll be net zero by 2025 or 2030”, and then the head of sustainability goes, “How are we going to do that?”.
What changed in the past five years?
Phenomenal. We had this really cool idea without really knowing where it was gonna go. Then five years later, you turn around and it’s like, well, that’s not what we thought, it’s incredible.
We always knew but hadn’t really appreciated the value of data. If we’re at a site with 50 aircon systems and solar and batteries and mains and distribution boards, we are measuring every single phase on every single asset every second, and that’s a lot of data. If I’m honest with you, we do some good stuff with data, but we’ve got a long way to go.
You’ve talked about software and data, but with energy management, there’s a lot of hardware involved
Yes, there’s the software. But often there needs to be some hardware. A few years ago there was such an aggressive market push to get out of hardware and do software or APIs only. Energy management companies liked the business model and thought, “I don’t have to deal with hardware so that’s the best way to do it, I can get subscription-only customers which means I can price it based on value, not on cost”, which is a big thing. But it doesn’t work as you miss too much of the energy management opportunity, so we had the reverse idea, completely the opposite.
You mean the reality in the built environment that there are many different hardwares, with different brands and different eras of equipment?
Yes. It’s going to be 20 or 30 years until a business can only buy the grid-connected HVAC option. That is future-future stuff.
Spoiler alert, you go on to the roof of a shopping centre, and there’s 30 condensers there, with nine different manufacturers. You’ll have some that are brand new, and some that are 20 years old. And the reason for that, and this won’t change for a long time, is when a building’s built, it’s built to the lowest price point.
Chief financial officers don’t just say, “We’re going to change everything for the best, most expensive thing because that’s cool”. It just doesn’t happen. Until people are dropping dead in the street because of climate change, then that’s not going to happen.
So, yeah, we got fixated by hardware, but smart hardware, adaptable hardware that was meaningful and that we could get data from.
Which, perhaps counterintuitively, leads back to software –but dumbed down
We turn hardware into digitised nodes, so it doesn’t matter what the asset is downstream, what is in the cloud, it’s just load, storage or generation. That was the bridge that took us a while to get right, understanding that you have to be obsessed with hardware, but you have to turn it into generic software because the user doesn’t need to know that it’s this or that kind of aircon unit, it just needs to be this load in that state or on that feeder. That’s all the software should care about.
This is about overcoming the challenges of integration and interoperability of different technologies and appliances, but doing it site by site
Yes, and you can’t learn it from a book, you’ve got to be in the field, living the experiences and going through it. After you do hundreds of them you start to learn. As a country, Australia is healthily obsessed with solar, wind and batteries, but commercial building loads are the elephant in the room; it’s the many single commercial buildings that are the single biggest problem globally.
You focus on commercial and industrial (C&I) buildings. Do you end up just competing with solar and batteries that keep falling in cost?
We don’t want to compete with batteries, we want to work with batteries and augment them. Say you spent $1 million on solar and $2 million on batteries, you should probably spend another $50,000 or $60,000 on controlling the building load because the bang for buck, and the augmentation of your charging and discharge strategy, will be on steroids.
What’s going to unlock that market?
The two things that we thought were blockers we’ve taken steps to address. One of them is having a funded model. The other piece is working with energy retailers, and it took us a long time to work out how to work with the retailers.
We’re now integrated with one energy retailer’s trading room and trading HVAC on the wholesale price arbitrage market. A spot price update comes in every five minutes from AEMO, hits their server, hits our server, and if a trigger price has been reached it hits the control system and the aircon units within about a second.
So, we’re lopping off hundreds of kilowatts of load at a site for much, much less money than batteries. And again, we’re not trying to do that two-hour duration thing. It’s more like a five -,10- or
20-minute duration. But the idea that you would have an aircon system randomly on at an aged care site, that’s trading in the energy markets, it’s pretty cool and it’s all automated. It’s all straight through.
There’s no human interaction, lots of software and cool stuff to protect everyone from things going wrong. That’s grid integration and market integration in action.
Is that the secret sauce?
A fully spot-market integrated system. Yep. And we’ve been running that for a year. There’s been no mishaps. Everyone’s risk is offset. Everyone’s making money and the end user is using less energy. It’s a real true win-win-win for absolutely everybody.
What about regulatory changes like mandatory climate-related financial information reporting and the extension of NABERS, are those impactful things?
Look at a macro level, everything helps, of course. I’d like to think that versus when we started, more people genuinely want to make change.
But most ESG and sustainability managers have financial shackles around them. They want to do some amazing stuff and have some amazing conversations, but it’s got to make sense economically or it won’t get signed off. We’re trying to make it a CFO discussion.
You’re not just talking about doing the old energy management things a bit smarter with new tools; you’re talking about really doing new things
We’re actually doing it, and we use that term a lot internally. A lot of companies say they’re doing energy management, but they’re doing energy monitoring and incident reporting. They’re not managing anything.
They’re giving amazing datasets, and really cool UIs, yet really only informing someone to then say, “What do I do about this?”.
We bridge that gap. We’re really actually going to do it and we’ll show you what we’ve done afterwards. And we can quantify what that is. And for me, that’s missing in the market over here. I often reference the US because they’re just so far ahead of us in that kind of stuff. And they are doing it, not necessarily with our level of our technology, but achieving a lot more in terms of outcomes.
I know you don’t want to get into party politics, but if you look at the political environment in Australia, with increasing uncertainty about the energy transition and whether it will be renewables-led or otherwise, does that hurt the marketplace?
Great question. I would like to think that the private sector, superannuation funds and shareholders and mandates and all that kind of stuff will mitigate a lot of the risk. I’ve got to say, politically, I very rarely make comments, but I’m fairly dismayed at most political situations globally.
But I would like to think there’s enough money behind it. I said this to a mate of mine a couple of weeks ago. He’s a complete cynic about climate change and he’s like, “We’re doing all these things wrong”. And I’m saying, “It doesn’t matter what you think about it, it’s just happening. When the super funds are behind it, and when the largest fund managers in the world are behind it, that’s just what’s happening. So, get on board.”