When it comes to electricity usage, every business has three main questions: Where is the power coming from? That’s the supplier, the price it charges and the environmental impact of its electricity sourcing. What is the power used for? That’s the equipment and the controls installed on the premises. And how are this supply and hardware combining to deliver the best results for the business out of a given electricity bill? That’s the job of sensors and software ever more present in commercial buildings.

If you’re in the electricity industry, answering just one of these questions increasingly falls short of customers’ expectations. Businesses want to understand what happens to their electricity usage before they commit to a purchase from utilities or electrical contractors.

Two Dublin companies, ECI Energy and Acutrace, have just joined forces to answer the what and how questions with a single offering. ECI Energy was spun out of ECI Lighting, a long-established electrical supplier. Acutrace is a technology start-up specialising in stuffing buildings with devices to monitor energy consumption and other metrics and provide real-time online reports and alerts. 

ECI Energy has now bought a one-third stake in Acutrace. Both are small, emerging companies and the deal they have closed in the last few days is modest in financial terms. But it tells us a lot about the trends at work and the role Irish companies want to play in this sector. 

I caught up with ECI Energy’s chief executive Mark Connolly and Acutrace’s managing director Aidan McDonnell, who joined the call from his car parked outside a site he had just visited – a welcome sign, they said, that business is picking up after the Covid-19 slowdown.

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This month, ECI Energy made an initial investment of €225,000 to acquire one third of Acutrace. Connolly says there is “about half a million euro available in a couple of steps”, adding: “There’s a facility there to scale that up over the next few years if things are working well, which we’d be happy to do.” This includes an option for a majority stake.

“We raised funding from AIB debt funding to contribute towards this deal,” Connolly says. His company was advised by Alan Kelly of Focus Capital Partners while Patrick O’Shea of Wallace Corporate Counsel did the legal work.

In addition to ECI Energy’s investment, Enterprise Ireland has advanced loan notes to Acutrace that may be converted into 10 per cent of the company’s equity. Acutrace was already a participant in EI’s high-potential start-up programme.

“Having a partner like ECI has allowed us to negotiate with Enterprise Ireland on how we can expand into export markets,” says McDonnell, with trade fairs now preparing to re-open in Europe and taking bookings for November onwards. “It’s a complete no brainer, it’s going to work very well.”

McDonnell, who was the sole shareholder of Acutrace before the deal, has no plan to sell out in the foreseeable future. While he is confident he could have raised funds from a number of sources, he said it was not just about the money. “It’s the team, the added value of having a company like ECI Energy that has lots of contacts in the industry was the key for us,” he says.

“We can scale by hiring lots of staff and trying to get legs on the ground all over the place, but to partner up with ECI means that it immediately gives us connections in industries that we’re not necessarily in right now.”

“We’ve been profitable from the start, which is exciting.”

Mark Connolly 

McDonnell has bootstrapped Acutrace since the company launched in 2015, buying out co-founder John Lynch two years ago. The company initially offered technology to measure electricity usage in buildings, triggering demand for other metrics such as gas and water consumption or environmental factors. “Somebody operating a commercial building can go to one platform and have a diagnostic report on their entire building covering energy costs, waste management costs, sustainability metrics like rainwater harvesting, solar PV, air quality, temperature, humidity – everything in one place,” he says. 

Initial client revenue comes from the installation of meters, sensors, and infrastructure to network those devices across a building. McDonnell says Acutrace can do this through wired or wireless connections, such as the internet-of-things specialist network Sigfox or mobile phone signals.

Acutrace then collects the data, analyses it and makes it available to customers online through a software-as-a-service model. McDonnell claims clients usually achieve 20 per cent energy savings in their first year using the system, which returns their initial investment within those twelve months.

The company prides itself on the flexibility it can offer by controlling the entire process, from building surveys to software design, within its own team. McDonnell says the system can be personalised for each customer to monitor their key costs and set up alerts associated with bespoke improvement targets.

Acutrace can also collect data from existing building management systems, or export its own reports to external software such as that increasingly used by property firms and their investors to benchmark the environmental performance of their estate. “We are working with people like Aramark and CBRE who are managing large portfolios of buildings. They want those buildings scored accurately against other buildings in Dublin, but also against buildings in London, or Paris or wherever,” he said.

This interoperability caught the attention of ECI Energy’s Connolly, who has previous experience of the multiple building management systems in use across the industry. “The beauty that we have found is that Aiden’s Acutrace platform sits on top of that in a vendor-agnostic way, which I think clients really appreciate because they’re not tied in to having proprietary software onto their building or hardware,” he says.

Acutrace has won business from large building users in the public sector, such as the HSE and county councils, and private ones including Croke Park, banks and pharmaceutical companies, says McDonnell. While it is present in Ireland and in the UK, McDonnell argues its technology could be deployed further afield with installation partners fitting the hardware to be configured remotely by the team back in Dublin. 

He adds that the company has grown to employ six people and had half a million euro in revenue last year. Accounts show that it broke even in 2019. “We’re 33 per cent ahead of 2020 already this year,” he says, targeting 50 per cent revenue growth this year as a result of the tie-up.

€5 million combined turnover target

ECI Energy, for its part, hit €1 million in revenue last year from its energy savings-as-a-service business, from contracts typically signed for five years. “Together, we could grow fairly rapidly to a consolidated turnover of at least €5 million in the next couple of years,” says Connolly.

The origins of the company are rooted in ECI Lighting, a north Dublin family business established in 1960 by the father and uncle of Declan Hanratty, the company’s current chairman and majority owner. It has since grown to become a major supplier across two divisions – a specification desk working with architects to design complex lighting plans for commercial buildings, and a distribution business bringing equipment into Ireland from global manufacturers such as Sylvania, Concord, Fumagalli or Prelux LED. 

ECI has designed and supplied lighting for some of the most strikingly lit buildings in Dublin, including the glass encasing for the old Scots Church at VHI’s headquarters on Abbey St or the transparent steeple of the Pearse Lyons Distillery in the Liberties.

Connolly says he first got in touch with Hanratty and his partner in ECI, Gary Dwyer, while working in the Middle East a few years ago for the buildings energy management firm Cylon Controls. “I figured there was a significant opportunity to break into the lighting-as-a-service space for Ireland given that it was starting to make traction elsewhere,” Connolly says. “I felt that nobody in Ireland had the solid background, the reputation or the stockholding that ECI Lighting would have had, and our ability to get to site within a couple of days.”

In 2018, they formed ECI Energy, initially as part of the ECI Lighting group. “We’ve won some very large tenders in our first year in business, which is unheard of,” says Connolly. Completed projects so far include sports grounds, car parks, LED lighting in a 100,000 sq ft warehouse for Ace Express Freight and the retrofitting of hundreds of lamps at Rosemont secondary school in Sandyford. 

Under “as-a-service” contracts, ECI Energy funds all upfront costs and charges monthly fees for five to seven years. Savings from reduced electricity consumption typically exceed the cost of the fees. The company estimates that the school, for example, will be left with a net benefit of over €10,000 per year. 

Last year, ECI Energy added electric vehicle (EV) chargers to its catalogue in April, which Connolly says has led to installations being bolted onto existing lighting contracts, and solar panels in November with UK-based installer Spirit Energy, with projects now at the pricing stage. “You’re talking about potentially multiple offerings on a single service agreement, one direct debit for the client every month,” he says.

ECI Energy severed its shareholding link with ECI Lighting in December, but Hanratty and Dwyer remain its largest shareholders. Connolly now has a 25 per cent stake. The company employs four staff directly and remains close to its former parent through a supply agreement and shared offices in Dublin, Cork and Belfast.

“We’ve been profitable from the start, which is exciting,” says Connolly. “That’s probably the reason why, when a two-year-old business goes to AIB looking for a significant amount of money to invest in another business, we got the support from them.”

“We needed not just cash, we needed somebody who was in the industry, who could open doors.”

Aidan McDonnell

Having already worked with Acutrace on joint projects, direct investment in the company is a way for ECI Energy to answer the central how question more seamlessly. “Whether it’s lighting, EV, solar, the data being reported back to the client is going to be critical. So that’s where we’ve got our fourth vertical, which is energy monitoring software from Aidan,” says Connolly. “it’s still a turnkey solution with one point of contact in ECI, and we will bring all those together for a customer to sign a five- to seven-year service agreement.”

The tie-up also provides a stronger base for the two companies to expand. “If we’re going to grow and scale this business, we really need intellectual property internally and the scaling model – and Aidan’s company has both of those things,” says Connolly. 

From McDonnell’s perspective, the deal was necessary to shift from incremental growth to a boost that would propel Acutrace into export markets. “To really accelerate fast in the next two years, that’s where we needed an external investor,” he says. “And we needed not just cash, we needed somebody who was in the industry, who could open doors, and the collaboration of having an industry partner far stronger than just getting cash from a bank or an investor.”

Connolly and Hanratty are now directors of Acutrace and McDonnell has become an innovation advisor to ECI Energy’s board. “This is both teams integrating from [this] week,” says Connolly, to “drive more IP into either or both businesses.”

The combination is necessary for the two companies to remain competitive in an increasingly busy market, where Irish companies make an increasingly strong showing. Another Dublin company, Urban Volt, has just added solar-as-a-service to its offering, which already included lighting and monitoring software. As previously reported, eEnergy went down the road of an IPO in London to develop a similar business, while Crowley Carbon is a major player in the energy monitoring and analysis field globally with its own software.

Utilities themselves are increasingly bolting energy efficiency-as-a-service options onto their business contracts. In fact, McDonnell says that Acutrace already provides the software behind one such offering by a nationwide electricity supplier. 

Connolly, however, says “there’s a lot of business to go around”. He adds: “Our funding models have been sensible to date, which is in stark contrast with some of our competitors whose debt level is off the wall.”

He expects the partnership between ECI Energy and Acutrace will be in a good position to benefit from a lift in activity as construction emerges fully from Covid-19 restrictions. “The level five lockdown since Christmas has been quite horrendous for everybody, really, but construction has been particularly hit hard. So it should be quite positive from next month, I suspect”, he says.

During that period, his company has focused on outdoor projects and schools, which were accessible while students remained at home. With the renewed focus on indoor air quality as a result of the pandemic, Connolly says the education market offers good prospects to add this option in Acutrace’s monitoring systems to existing lighting projects. “There’s a strong possibility that that solution can be installed to a large number of schools over this summer,” he says.

Further reading

Climate as a service: let’s bring off-balance-sheet green transition to the masses