An interview with Patrick Maloney, Founder & CEO, Inspire | November.06.2018
For years, we’ve heard about the utility of the future, a consumer-centric company that lets consumers “stream” clean energy into their homes as easily as they stream movies to their TVs. Patrick Maloney is bringing that reality home for thousands of customers through his startup, Inspire.
Today, customers in seven Midwestern and Northeastern states can sign up for Inspire, which offers customers all the energy they need for one flat monthly subscription price, based on an analysis of a home’s specific energy needs. Inspire’s customers’ energy is still delivered by their utility, and their energy use is fully offset by renewable energy credits sourced from wind and solar power.
Inspire has gone one step further with Smart Energy. Consumers can combine intelligent climate control, energy management services, and 100% clean energy in one flat monthly subscription service to increase the energy efficiency of their home and reduce environmental impact. As efficiency improves, customers receive rewards.
“There have been massive changes in consumer demographics and preferences,” Maloney says. “Nearly nine in 10 Americans believe clean energy is important to our future. At the same time, nearly every home has become digitally connected over the past 10 years. We realized that by creating a business model that capitalizes on these converging trends, we could create a groundswell of change.”
Though Maloney once sold a startup to a major utility, he has grown skeptical about the ability of utilities to lead that groundswell on their own. “It’s often difficult for traditional energy companies to take big technology risks when their investor base expects consistent returns,” Maloney says. Furthermore, many are incentivized to utilize their legacy infrastructure investments and are often heavily regulated.
“You couldn’t go to an energy conference in the past 10 or 15 years without hearing utility executives talk about the ‘utility of the future,’ how they would deliver the full connected-home experience and power it with clean energy,” Maloney says. “But no one was actually doing it…. I became convinced that the way to make it happen was to build it from scratch—to start as an impact-focused consumer technology company that streams clean energy into the home and delivers more value as more technology is integrated.”
Maloney launched Inspire from an incubator in 2014, which was a difficult time for cleantech startups. Orrick partner Andrew Erskine, who met Maloney in 2013, said investors found Maloney appealing due to his clear vision and extensive industry experience. The business model was also less capital-intensive than cleantech peers focused on infrastructure or hardware solutions.
Based in Santa Monica with offices in Philadelphia, Inspire got a vote of confidence earlier this year from a big player, Shell Energy North America, which will provide the company with a revolving credit facility for energy trading, working capital, and growth. Inspire currently has over 125,000 members, and Shell’s backing will allow them to grow to over 1 million.
One of Inspire’s first priorities was to build a proprietary data platform that constructs personalized subscription offerings for each member. “Our data platform allows us to take in data from many sources to create the only business model in energy where the incentives of the consumer, company, and planet are perfectly aligned,” Maloney says.
Taking this a step further, delivering intelligent climate control into customers’ homes improves their overall experience and also “gives us access to data that continually improves our ability to help our members optimize their home’s performance,” Maloney says. “This is the triple bottom line: the better our technology gets, the more we’re able to decrease energy consumption and share value with our members, which avoids environmental impact.”
The energy sector is brimming with major players, from long-timers like utilities, major oil companies, and traditional energy companies to newcomers like big consumer tech and software companies. Maloney believes his startup has the unique ability to bridge the worlds of smart home technologies and clean energy.
None of the big consumer technology firms that are competing to dominate the “connected home” are energy companies at heart, he observes. “We’re licensed by the federal government and states as a utility, and we’re trading commodities every day. We own both sides of the market—the customer experience and the actual energy supply—so we’re in a unique position through financial and business model innovation to optimize both sides and create an incredible amount of value.” —Richard Sine
Consumers are showing a growing interest in understanding where their energy comes from. That bodes well for renewable energy production as well as for the growth of companies like Inspire, says Paul Zarnowiecki, an Orrick partner with a specialty in renewable power projects.
The number of wind and solar energy projects in the U.S. has been on a long-term upward trend, Zarnowiecki says. This despite the ups and downs of the economy, changing tax incentives, and the shifting priorities of political leaders.
Why? Many states have maintained aggressive standards or goals for renewable energy production. Many large companies have established their own environmental goals and invested in renewable energy to reach them. Then there’s the growing interest of consumers.
Federal tax credits for renewable energy are set to phase out over the next few years. But the cost of producing solar and wind energy is declining to the point where their price is competitive with conventional energy in some areas, Zarnowiecki says.
Orrick’s nationwide renewables practice is one of three ranked at the highest level by both Chambers and Legal 500. The team has seen it all, says Zarnowiecki, who has advised on thousands of megawatts of U.S. wind and solar projects and transactions. “I see the interest in consumer choice and visibility continuing to grow as the technology improves and [energy sector] deregulation increases over time,” he adds. —R.S.