Energy-Now & Beyond Now (Heike Freund, Christian Hartel, Philipp Schröder, Philipp Gerbert) | DLD 23

Thank you very much, Alesia. I hope you all enjoyed the panel before us focusing on clean energy. We now focus specifically on energy: what we do now and what we do going forward. As a brief introduction, my name is Philip Gerber. I'm the CEO of Tom Venture Labs, and we focus on bringing science and business together in 11 deep tech fields to create scalable startups. Before that, I was at the Boston Consulting Group and co-founded the Center for Climate Action, leading the climate pass for Germany, a collaboration of the entire German industry working on how to decarbonize Germany without hurting the economy. We created an excellent report that the government is now trying to implement. Alesia already mentioned our distinguished panelists. Let me frame the subject quickly: energy is totally critical for human development and our economy. It's been at the core of human civilization from antiquity to the Industrial Revolutions. People stopped thinking about it for the last 20 years, and now it's full back on the burner. There's a simple way to frame it: we tend to think of humans learning to master fire as one of the first achievements enabling civilization, but one way to frame the energy transition is that we have to wean humanity off fire. We simply have to stop burning stuff for electricity, transport, and heating, and focus on other ways to create energy. That will be one of our topics: how can we do that? I'd first like to turn to Christian Hartel. Obviously, we have a challenge: in the short term, unfortunately, Ukraine happened this year, so we also have to focus on secure energy and competitive prices. Wacker is a very interesting company because it's one of the most innovative chemical companies and at the core of sustainable innovation, but at the same time, it's a big user of energy—the second largest electricity user in Germany, I think. It needs gas as a chemical company, but it's also a leader in the Western world in producing polysilicon, which is the most important thing for solar panels and chips. Christian, when you became CEO in 2021, you probably didn't think that 2022 would be a year where you need to focus on secure and affordable energy. Perhaps you can give us a personal flavor of how it felt to go through 2022 as a CEO of a company sitting on all sides of the energy equation.

Very good. I think in private I will ask you whether you were actually scared at one point this year, but I don't want to put you on the spot here in public. Now, Philip, turning to you. You're a serial entrepreneur, you've been in the space forever. You're very famous for being one of the core people building up Sonnen, then Tesla for a long time in Europe, and now you joined or founded 1A5, focusing on execution, if I may say so. Perhaps you can tell us a little bit: what is your motivation to start again, focus on 1A5, and what is your approach and your goals?

Yeah, actually when we founded 1.5 Degrees, or 1A5, that's only 19 months ago, quite recent. The people who founded the company are all people who have been focusing on technology to enable CO2-neutral energy. Ten years ago, nobody would have thought it is not only possible to do it but also cheap. Now we've proven the electric car is available, cheaper, better. Solar electricity: a couple of years ago people would laugh at solar, now they are pretty impressed. So we've proven that, but if you look at the real progress we make, we see the execution is lagging. There is no scalable workbench to fulfill right now. In Germany, we would need 240,000 more people just in skilled labor for roofers and electricians to get close to the targets of the German government. It's the same picture across Europe, the United States, and Australia. All the developed world has the same need. We focused on doing the things that people didn't do yet: bringing out one solution out of solar, heat pump, electric charging, making it one solution on one app, one backend, and one virtual power plant to ultimately not only deliver the product but also integrate it in an environment where it has a greater purpose. We really believe that interconnection of decentralized devices is key to bring down overall cost. That's what we do. For us, 2022 has been a great year.

Very cool. We'll get back later on where you stand today. Now, Heike, you're the CEO of Marvel Fusion. It's obviously for part if you go last, but it's such a logical way to the future. You have your eyes very firmly on the future. Fusion is not exactly your garden variety of startups. Perhaps you can tell us a little bit: first, what does Marvel Fusion actually do, and what motivated you to go into such a field as a startup?

Thanks for introducing me, Philip, and also thanks to the DLD team for having me again at this conference. As a Munich-based tech company, it's always amazing to be at the DLD conference and exchange with so many great minds. So what do we do at Marvel Fusion? We are developing the ultimate clean energy solution. Fusion energy is a CO2-free, clean, and reliable energy source and could solve the energy crisis that we have, especially for the German industry. We are pursuing a laser-based approach to fusion, utilizing very short pulse, highly intense laser pulses to make the atoms fuse and release CO2-free clean energy. We have developed a very novel approach to fusion, pulling together the greatest laser scientists, physicists, engineers, and entrepreneurs here in Munich. The company was founded three years ago. We have developed this novel approach, validated it in over 2,000 experiments already, and have the ambition to bring commercial power plants to the grid within the next 10 years. And what motivated you to go in there? Good question. I won't let you off the hook. Very similar to you, I've also been in consulting before—I was with McKinsey for over 10 years—and have always worked in operations topics, a lot in the automotive and machinery industries. I was super happy at McKinsey, but then met Moritz, our CEO, at a lunch with friends, and he told me about Marvel Fusion and that they had just founded this company here in Munich. Even two and a half years back, I already knew from my work with clients that we need a lot more clean, cheap electricity here in Germany and that this industrial location is at risk, and with that all the backbone of our wealth and prosperity. Sitting there at a lunch and somebody telling me there is this ultimate clean energy solution that could solve this problem made me move and work on this solution.

Cool. Well, a physicist must also enjoy going back to the basics of physics. I think it's great to see how the next generation really addresses this problem and tries to find solutions, not only glue yourself but say how do we actually find solutions for climate action, weaning off fire for electricity, transport, and heating. If you look at the German strategy, a bit simplified, it's all wind and solar with batteries and perhaps future hydrogen as backup. Christian, is that the right direction? We've seen long periods without sun or wind, so we need a backup. It becomes expensive; you need two energy systems. Can we get energy security and competitive prices? You are both the user and the supplier, so it's a trick question, I know, but still.

Now cool. Now, Phillip, you are focused on execution, that's said, and not on Germany—in Australia, in the US. You say we need feet on the ground. It's all nice talking about solar and wind, but how do we get it in the street? I was fascinated by seeing that you had Henry Ford as one of your big idols because he innovated with a conveyor belt; he productized the execution. Now what is your conveyor belt? How do you get to scale fast to facilitate this energy production?

Yeah, I think there are two things we're working on. One is pretty simple: if you look at the processes that skilled labor around the globe is working with, they are outdated. There's lots of potential for automated planning, electric planning, logistic improvement, and also to automate processes with the customer. This is pretty simple but a lot of work. It's a bit like Amazon: you take a package or book delivered to your customer; we have to deliver technical products that have to be integrated in real buildings. So we work on this—a lot of continuous improvement, nitty-gritty stuff: CRM systems, ERP systems, automated planning. The more relevant part even is the interconnection of the assets. Because if we scale capacity, what will happen—and I think Christian touched on it—you'll have too much electricity in times where nobody needs it, and this will only get more. Just a week ago, even in the midst of the energy crisis, there was more wind electricity than needed and prices went negative. So what we need to learn is that the system needs to learn everywhere that production is followed by consumption. Right now, production is basically following our consumption. So what we build is also an operating system we call Heartbeat. The operating system is trying to match that. In order to relieve Christian as well, we need to make sure that the lack of baseload is getting smaller. How do we do that? 1.5 million homes in Europe would be sufficient with a solar system, heat pump, wallbox, and storage device to be an equivalent of 22 nuclear power plants when it comes to flexibility—basically being a decentralized storage facility capable of shifting overcapacities into areas where you have undercapacities. This is the second large topic we work on. We think we need to do both at the same time to really have impact, but that's not taking off the table that there will still be a need for baseload. We work on reducing the need, but since the need is still huge, there's plenty of room for you guys.

Very cool. I have to say, he's so modest. I have to brag a little bit for him. They are one of the fastest scalable startups—going from Norway to Australia within 19 months in a service business, that is really quite amazing. So congratulations. Now, Heike, the inevitable question: we heard about the US and the Inflation Reduction Act. They think solar is not enough; they think you need to invest in other technologies, and they are focused on hydrogen and fusion. Huge amount of money going in there. I think Spark Fusion got 1.8 billion in private investment to build a tokamak. That's very nice, but the old joke you must have heard thousands of times: fusion is always 30 years away. Let's phrase it differently. Christian just talked about the bridge. How long is a bridge, and do you have to extend it while we build it? How long is the bridge for fusion?

So I think a new era has started in fusion. Six weeks ago, beginning of December, scientists in the US showed for the first time ever that they generated energy with fusion—they got out more energy than they put into a controlled fusion process. That was a major milestone for the fusion industry because even to the last naysayers, this showed yes, you can produce energy with fusion. While this process was still super inefficient because it used laser systems that were 30 years old, it showed that the physics work. What needs to happen now is to bring it into reality. For that, we need efficient lasers, manufacturing techniques for the fuel pellets that we shoot on, and so on. All of that is engineering, industrialization. What is needed now is really a bold vision. You already mentioned the US. In the US, they now declared a bold vision of bringing fusion energy to the grid within the next 10 years. Just for this year alone, the US government committed 1.4 billion into fusion research, with 400 million already going into new laser systems. That is a very bold vision, and obviously this policy announcement will also bring along a lot more private investments. Already in the past, we saw that of the 4.6 billion invested into fusion last year, 90% were invested in the US. Of the roughly 30 private fusion companies, 21 are in the US. So you could say the US is leading that field. I think Europe now also needs to step up and make sure we stay in the game and push this. With the right ambition and vision, we have great talent here in Europe and great industrial players. We are already developing laser systems jointly with Trumpf and with Thales, and working on power plant designs with Siemens Energy. So we have the right industry players and talent here, but we need the push to also make it happen here in Europe.

Very cool. I'm persistent, as you know. So your bridge is 10 years long? Would Munich Re, if they are in the room, ensure that 10-year claim? We have fusion?

I mean, as you know, each and every timeline is dependent on the available resources. My next step is to build a demonstrator here, a tech demonstrator, because currently we don't have our own laser system. I need to go to laser systems around the world, book some time there to do an experiment—maybe four weeks there, maybe four weeks there. I need a system where I can do experiments 24/7 every day. That tech demonstrator will cost 350 million, and that's the money I need to raise now. And when? What is your time goal? When should we have it? I want to raise the money this year so that I can build it, so that I have the tech demonstrator within the next three years. Then I'm on my timeline to achieve those power plants. At the end of the day, and maybe to give a positive note, the LNG terminals just showed what is possible if you have political support. They built LNG terminals in six months. In the normal process here in Bavaria, you can't even put two bricks on each other. So I think if you have the right political support, the vision, and the will to do so, a lot is possible.

So just noted, for the camera: Heike went on record, you find her 350 million, she will build you the demonstrator in three years. Very cool. And that deserves an applause. We already heard about hydrogen, so perhaps I'll skip storage technology for a bit and focus more on how to innovate. I think it's very important we do need new solutions for scaling, driving costs down, new technologies. How do we actually get that? Let's perhaps start with Phillip. You are a serial entrepreneur, you started this, you raised money rather successfully. What are the chances for a startup to get enough feet on the ground to compete with large companies, to get enough capital? Is this a good way to innovate—founding a company and going after it, because the old are so slow? What's your vision on that? For you and for the others. We have lots of aspiring people here at DLD—they invited 50 startups. They're all looking at you and saying how they do it. What should we do? Is there a chance for startups in sustainability, or go become dentists?

I think as I mentioned earlier, obviously deep tech—if you make that comparison US to Germany—a lot more money is going into deep tech in the US because of the ecosystem there. However, I do see that ecosystem also getting better here in Europe. We raised our last round with Earlybird being our lead investor, which is a good example of a fund that does fund deep tech ideas like ours. Obviously I would wish there are a lot more Earlybirds out there that can do these investments. I know that for a lot of funds, deep tech is still difficult, but I see more and more momentum, more and more investors now going in there because that is where you can create impact, and ultimately that is also what investors want to do. Good, that was so far. Going forward, are you actually pitching to European investors or all Anglo-Saxon? 350 million is... I mean, we already have some US investors also investing in our company, so everything that you called Anglo-Saxon investors are obviously interesting for us. One thing we are seeing in discussions with our investors is we get a lot of positive response for our next investment round. However, they are also waiting for a political signal: is fusion something that is wanted in Germany and Europe? That is where we need a clear signal and a clear vision, because otherwise it will be difficult for private investors to invest into something where you don't know if there is a strong political will. That for me is even more important now, because I know with the right political signals we will get the private money.

Very cool. Now I have to say, if you're interested in the question, tomorrow morning at 9 there will be a great panel on sciencepreneurship. We just recapped great numbers. I'm so proud you're in Munich. How Munich is doing in the German ecosystem—there are great numbers, perhaps they will be announced tomorrow. Now, Christian, Wacker is a great example of a very innovative enterprise, both in terms of all the solutions you bring out in your portfolio, but also you support young companies, universities, and science. You have a great partnership with our Venture Lab. So how do you think about innovation in this sector and how to drive this forward? I think that would be great to share with the audience.

Cool, deserves an applause. Particularly because the citizens have to go with it. Sometimes you think they don't like any kind of energy—they don't like nuclear, coal, gas, wind. Anyway, we are approaching the end of the session, so you have the opportunity for one last statement. Please make it short. One sentence: what is your favorite move that would leapfrog the energy system beyond now? I'll start with Phillip.

I think to be honest, the most important thing from my perspective is to focus on what we can already do. I would not focus on all the things we need from politics or from investors. I would basically say guys, there's so much we can do already that are being done. We just need to get up and do them. Focus on what we can do now. Just do it.

Sure. Okay. Beyond doing, I think we need to do both. We need to do everything we have now, but that won't be enough in 10, 20 years from now to keep your company competitive. So we need to do everything we can do now, but also invest into the technologies that will get us to the next level. Fusion is obviously one of them for me. Building on what you just said, thinking about a world with abundant green energy is so amazing. Everything we have seen shows that humanity has always further developed with more energy. So I'm looking forward to that future with abundant green energy.

Very cool. What an inspiring panel. Let's give them an extra round of applause. Thank you very much.