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32 minute read
So far, most of our episodes have focused on HVAC companies. Today, we branch out, interviewing Fortunat Mueller, co-founder and CEO of ReVision Energy. ReVision started out as a solar company, but over time has become an "energy transition company." A major part of their business is installing heat pumps. In this episode, we dig into what it means to be an energy transition company. Fortunat explains how and why ReVision got into HVAC, and in particular why they focus exclusively on heat pumps. He lays out why solar and heat pumps fit naturally into a single business model, and why ReVision's many offerings perfectly meet the energy transition experience that is most comfortable for homeowners. Few homeowners want to do it all in one go. Instead, they'd rather tackle it piece by piece over the course of many years.
Fortunat shares a lot, such as:
- How ReVision evolved over time
- How companies are built, not from one big idea, but from countless smaller decisions over years that work together to create something great
- ReVision's focus on training as a competitive advantage when there is a dramatic shortage of tradespeople
- How heat pumps perform in the real world, even in climates as brutal as Maine's
- How heat pump technology has evolved and improved over time
- What an ESOP is and why it's a competitive advantage...
- ... And lots more
Whether you're a solar company thinking about getting into heat pumps -- or if you're an HVAC company wondering how your competition is evolving -- you'll get a lot out of this episode.
Show notes
Transcript
[00:00:00] Fortunat Mueller: And the good news is, we're there. That's the big thing that changed, five, six years ago. Solar is the cheapest way to make electricity almost everywhere on the planet. And heat pumps are the best way to turn that electricity into comfort. So you put those things together and it's amazing.
[00:00:25] Ed Smith: Welcome to The Heat Pump Podcast. Our goal is to make sure the transition to heat pumps goes well for everyone. Homeowners, contractors, and the planet. We cover all topics related to heat pumps, the science, the technology, the business, and the policy. Today we have Fortunat Mueller co-founder and CEO of ReVision Energy. ReVision started out as a solar installer. Over time, they branched out to support homeowners and everything they need to do to completely electrify their homes. ReVision is now 500 people all across New England. ReVision is an incredibly innovative company. Fortunat describes many of the risks they've taken, including the decision to shut down the standard HVAC division and focused entirely on heat pumps. Most of our episodes so far have been with folks who are solidly HVAC companies. Revision is a great example of a new competitor in the HVAC space. A solar company who sees heat pumps as a natural extension of their original solar business. If you're a solar company thinking about expanding into heat pumps, you'll love this episode. And if you're an HVAC company wondering about how your competition is changing, you'll also love this episode. Enjoy the show.
[00:01:30] Ed Smith: Welcome to the heat pump podcast, where we tell the stories of entrepreneurs who are leading the charge to home electrification. I'm Ed Smith
[00:01:39] Eric Fitz: And I'm Eric Fitz. We are co founders of Amply Energy, and I'm excited to say I'm actually recording from a hotel room at the, Building Science Summer Camp. It's the, 26th annual, meeting of a bunch of building science nerds.
[00:01:55] Ed Smith: And today we have Fortunat Mueller founder and CEO of ReVision Energy in New England. ReVision is a remarkable business. Rather than me introduce ReVision, I'll let Fortunat introduce himself. Fortunat tell us about the business you've built.
[00:02:07] Fortunat Mueller: Yeah. Thanks Ed. Thanks, Eric. ReVision calls ourselves a solar company because it's shorthand and people understand it. But we're really a clean energy transition company, and we have been since the beginning. The way we talk about our work, our mission, is to make life better by building a just and equitable electric future. And so we are providing all the technologies, all the solutions, or many of the solutions that a homeowner needs to get fossil fuels entirely out of their lives. Today our business on the residential side installs. Solar PV, energy storage, heat pumps, heat pump water heaters, electric vehicle charging, and fresh air ventilation systems.
Between those things, we can help a homeowner, bit by bit, eliminate all the places where they use fossil fuels in their lives. the bulk of our business today is PV, and that was not true 20 years ago when we started. When we started. We did a little bit of everything,
[00:03:04] Fortunat Mueller: Partially by necessity and partially because we didn't yet know what the answer to decarbonization was. In 2005, solar hot water was about 50 percent of our business. The balance of our business was a combination of wood and wood pellet boilers. PV, some on grid, some off grid, small wind, some on grid, some off grid, and then for a time, even, propane and gas heating and hot water heating,when those were emerging technologies, when, high efficiency wall hung gas boilers were still brand new in the U.S. and you couldn't find a contractor to install them, we were installing them.
As an incremental improvement over oil, and over time, mix of offerings we get, we provide to customers has changed, but our North star, the idea that our business is here to help decarbonize Northern New England, has remained the same.
[00:03:52] Ed Smith: What states are you in?
[00:03:54] Fortunat Mueller: ReVision started in Maine, in 2003. we have seven offices across three states. So we have two offices here in Maine, two in New Hampshire and three in Massachusetts, and we also work in Vermont. So we work across the sort of four Northern New England states.
[00:04:10] Ed Smith: How many employees do you guys have?
[00:04:15] Fortunat Mueller: just over 500 co owners, and I should say our residential business, is one of our three lines of business,we have a commercial business, Those commercial projects range in scale from. 20 or 40 kilowatts on the roof of a small business or a corner store, to larger community scale projects, which are, 7, 8 megawatts at a time, 20, 25 acres of panels in a field somewhere. and then our 3rd line of business is a service business, service in O& M, where we provide ongoing service both on the residential and commercial side. 500 is a, that's a big business. I actually didn't realize it was quite that big. That's awesome.
[00:04:48] Fortunat Mueller: it's really been a incredible journey and, we think of ourselves as still very much in the early innings of this overall project, The work we're doing, for better, for worse is going to go on till at least 2050 and probably beyond given the pace that we're at today. the business is Unrecognizable today from what it was five years ago. And it was unrecognizable five years ago from five years before. So we've been really lucky, to meet the market. In the place where it is and to see continued opportunity for growth.
[00:05:17] Eric Fitz: Yeah, it's been amazing seeing, watching the growth. I've been in Maine for quite some time and, I'm lucky. I've, I was actually a ReVision customer for one of those, wall hung condensing gas boilers,those were the thing. And then I was lucky to work with Fortunat and his team, for a town, capped landfill solar project. We installed a 650 kilowatt system we looked at a lot of different companies across New England and it was clear that ReVision was the right company to, to help the town. it's incredible the business that you've helped build. Can you tell a bit more of the origin story?
[00:05:48] Fortunat Mueller: have a little bit of mixed feelings about the sort of culture of lionization of the origin story and the founder that exists, in our ecosystem and the story of the ecosystem in general, because,while we have a very cool story, both individually and as a group. I'm a believer in,the flywheel concept that Jim Collins, I think popularized in, in good to great,
[00:06:09] Ed Smith: Good to great. Yeah.
[00:06:10] Fortunat Mueller: true that exceptional businesses. Are the result of many hundreds of tiny choices all aligned with a mission and values made over time in a consistent way by lots of different people and even those businesses that look like overnight successes or, eureka moments. what appears to be, inspiration or good luck is actually mostly hard work. now it's true that, I think, lucky to meet the folks who were my co founders at the right time in the right place, and grounding vision for ReVision the world needs to move off fossil fuels and New England should lead, and that the way we wanted to do it was on the contracting side that, the sort of the actual work of turning wrenches and putting clean energy systems in the field, is not the easiest part of this work and is not the sort of hyperscaler part of this work. But it's absolutely critical, You can, print all the paper in the world and write all the reports in the world, or even push around sort of financial objects. Ultimately, we need to get clean energy systems in the ground,
It seems goofy to say, we started out saying we're going to, Bring a level of trade, professionalism to the clean energy space. 'cause now the solar industry is a giant industry and there are, huge electrical contracting companies and civil contracting companies, based just around building clean energy.
But in 2003, that was not the case, If you wanted a solar system you picked up the phone. probably were not getting a licensed contractor. You were getting, a homesteader who had done it for himself and his brother in law and was willing to do it for you. so part of our vision at the time was, we're going to bring a sort of a new trades professionalism to this clean energy space. We're going to focus relentlessly on legendary customer service and technical excellence. We're going to build a reputation and build a suite of products and solutions for customers, that are going to be durable over time.
[00:08:10] Eric Fitz: Love that. lot of people think that ideas are like the, a very important thing for a foundational aspect of a company. Maybe the vision is, but like ideas are cheap. And it is about this execution.
These lots of little decisions that lead to really amazing things. And it's so cool to see what you've been a part of and that you've got a team of people around you that help make that happen.
Yeah, I should say you probably would get a different, maybe a more inspirational founding story. If you talk to my co founder, Phil Coop, one of the cool things about our partnership is that. He is an inspiring storyteller and visionary. I'm a sort of boring Swiss engineer operations guy who likes nuts and bolts. And so together we have been, I think at times effective, in doing both those things, right? We were very clear on where our North star is. We're very clear on what makes us get up in the morning and what lights our fire. And we're focused on being a little bit better today than we were yesterday. Systematizing so that we can continue to scale our impact in the world.
[00:09:15] Ed Smith: Eric and I have a similar dynamic, although we find it depends on whose world we're in, who's the cynic and who's the optimist or who's the visionary and who's the executor. But the power of a co founder is huge and it's really about the grind. It's about what are you doing every day? What's the most important thing to get done today?
And how do you do it? And I like your point about don't lionize the founderBut from 2003 and professionalizing solar to now 500 employees and in all of the northern New England states, What are some of the, major moments of decisions that you guys could have broken left or broken right, where you broke the way you broke and has landed you here.
[00:09:58] Fortunat Mueller: one that comes to mind is our decision to continue to expand outside of Maine in 2007, we had two offices here in Maine, one in the mid coast and one in the Portland area. And we decided to open an office down in New Hampshire. Frankly driven as much by the realities of the challenges of the renewable energy business in Maine at that time as any grand vision. We said, Hey, this business is more robust and resilient if it spans a couple of different jurisdictions, right? Different utilities, different political dynamics, And by the way, we think there are lots of customers in New Hampshire who need the things we're really good at. And so that decision, had implications in terms of, obviously who we serve and who we hire and who is on our team. But it also meant that for the first time we were, Operating in places where co founders weren't every single day. It foundational for us in building a culture of distributed leadership. Where we expect and encourage every one of our now co owners, at that point, employees, to feel a sense of ownership over the things that we are doing, to be aligned, to be making good decisions on behalf of customers and each other all the time.
The other one I think we put in our first heat pump in, 2008, and that was still pretty early days for cold climate heat pumps, and there was not a
[00:11:19] Ed Smith: I was gonna say what make, who is the manufacturer on that?
[00:11:22] Fortunat Mueller: Daikin,
[00:11:24] Ed Smith: Okay,
[00:11:25] Fortunat Mueller: it was a was a net zero house, that was really, showcase for a whole bunch of emerging technologies. It had PV, it had solar hot water, it had heat pumps and an HRV. Had a, like a big energy brain. But shortly thereafter, it was probably about two years after that, we decided we should stay in the heating business, but we think we have to get out of the propane business. We're telling people we're putting in these big, these high quality boilers, they're going to last 20 years. It doesn't feel defensible putting in an appliance that will still be burning fossil fuels in 2030. we have to shut off the supply of new heating systems. Now we'll keep servicing existing ones and extending their lives when it's appropriate. But we're not going to sign a new customer up for a 20 year relationship with fossil fuels in 2010. that was a big decision at that time. At that time, it was not an insignificant chunk of our work, and we've gotten pretty good at it. And we had pretty good members of the team as well as customers who were committed to that line of work. And so we had a bunch of work to do in shifting their skills and their responsibilities to what we felt was the heating technology of the future, which I don't have to sell you guys on refrigeration based heat pumps,
Which is basically like magic and have the benefitthat they have this symbiotic relationship with the transition of our grid to renewable energy,And this thing we call beneficial electrification that is itself a flywheel, That is add more cheap renewables, heat pumps get better, add more load, enables more cheap renewables and so on. And so when we had that realization, that was huge for our business. It was one of the first times when we really looked at our mission and said, we need to let this thing drive the choices we make in our business. and that has been the way we tried to make every hard choice ever since.
And it's been incredible and how powerful it is. That's a guiding force for us.
[00:13:17] Eric Fitz: Wow. Love that.
[00:13:18] Ed Smith: a lot of folks wouldn't make that sort of decision. I'm curious how you sold that to your, at that point, employees, but also to homeowners. In the states you operate in,
The idea of heat pumps as primary heating in 2010 is pretty cutting edge and far out there.
What was that customer communication exercise like?
[00:13:40] Fortunat Mueller: Yeah. From the beginning, our business has done a lot of, education, if you were selling solar in 2003, were introducing people to the very idea that you could make electricity from the sun or that it was, that it's viable at terrestrial costs and it's not just a, sort of space program technology.
And again, sitting here in 2024, it's hard to even remember, those days, and everything we were doing felt like science fiction to most of our customers. And so most of our work, most of our sales work, and most of our sort of marketing work was just education work, In the 1st, eight or 10 years of ReVision, we would go talk to any group who would have us anywhere in the state of Maine and New Hampshire, libraries, schools, chess clubs, whatever it is, anyone who would have us, anyone who could collect three or four people in a roomAnd the conversation about heating electrification was much the same, we cannot continue to burn things for heat for long. We all know that when we burn things for heat, we're throwing trash into the atmosphere, which will eventually come back to bite us,And so we have to think about what is the way we're going to heat our homes in the climates we live in, in a way that is sustainable and durable.
And by the way, really importantly, in a way that is also affordable, Because if it is, sustainable ecologically, but not economically, it's not going to happen, to your point, there was a lot of customer education to do a lot of skepticism among customers. And our heat pump business grew very slowly for a long time. As a result, we were doing mostly supplemental heat, mostly one and two heat pumps in house that still kept their oil boiling.
We said we're not gonna replace all your fuel use, but we might replace 70 percent of it with one or two heat pumps. That's pretty great. And then by the time your boiler dies, we'll have a whole house solution for you. And it's true that we do we've seen just in the last couple of years, Maine and now Massachusetts, shift their programs from supplemental heat to whole home heating solutions, because they're making the same realization that we made at that time, which is we actually have to rip boilers out of houses if we want to get where we need to be in terms of ending the use of fossil fuels in homes.
[00:15:52] Eric Fitz: for those earliest customers, how did you get them to be like, okay, let's do this.
Let's go to even the supplemental heat.
[00:15:58] Fortunat Mueller: I think the earliest heat pump customers were folks building new high performance homes. And so they already understood the whole assignment, And this was, a tool in their toolbox, but pretty quickly, Maine was an innovator, in driving heat pump adoption in cold climates. between 2008 and 2016, accelerated, heat pump adoption, pretty significantly. I think the stat was well over 80 percent of homes in Maine heated with number two fuel oil,
[00:16:26] Eric Fitz: Yep.
[00:16:27] Fortunat Mueller: which is both filthy and expensive. It runs inefficiently.
It has a long and, supply chain in many cases,and so it was not so hard to make the economic case for heat pumps as a supplemental, heating solution. You say, your house burns 800 gallons of oil. We think we can easily get rid of, 200 just by getting rid of the summertime load, taking domestic hot water off the boiler and get rid of another 200.
Two three hundred with a heat pump and you'll be left with burning a hundred or two hundred gallons of oil a year. How would you like to reduce the volatility of that particular part of your energy budget? Because that's the other thing about the delivered fossil fuels is they're unregulated and so they're very volatile. And as you guys know, talking to Customers, the magnitude of the cost is really important, but the predictability of the cost is also really important. And we had a few price shocks in those days, right? Where oil went from buck 20 to three and a half bucks a gallon. And all of a sudden, it's putting. Real pressure on household budgets. And so the idea of, Hey, I can reduce my exposure to that volatility. While, having a superior heating product, Oh, by the way, I get a really good air conditioner for free. It turns out that isn't that hard of a sale
Once you get to the kitchen table and you can have this conversation with the customer, really the challenges.
[00:17:48] Ed Smith: So then for your heat pump business today, what challenges do you face? Like it's grown gradually over time, but you're doing more volume now. what's the next challenge? Or hurdle to overcome for the next phase of your heat pump business.
[00:18:03] Fortunat Mueller: I would say all of our businesses,share a challenge in that, the pool of licensed trades people, in the states where we work is shrinking, not growing at a time when we needed to be growing dramatically. And this is a sort of subset of the larger demographic challenges of Northern New England, in the trades in particular.
We need a lot of electricians. We need a lot of refrigeration techs and heating techs, and plumbers. And today, most of the people who have those skills and those licenses are in their fifties and sixties and are getting close to the end of their career. So continuing to scale the workforce and to train, people to install and then service these systems, is definitely one of one of the constraints.
And we've seen a lot of really good work, across the New England States in the last handful of years, in some cases supported by, pandemic recovery money around building, workforce development, training pipelines, and that is starting to help. And that feels like really useful work. The other challenge, Ed, I would say is that, There are significant, powerful forces who are very committed to the status quo.
And, And in the case of home heating, that means burning, gas, oil and propane, right? The folks who are selling gas oil and propane, and I don't mean the mom and pops who are driving delivery truck, but the folks who are selling, gas oil and propane at the global scale, are not going without a fight,
And we've seen this for the last decade with, the propane dealers association and the Maine oil dealers association, relentlessly spreading misinformation about heat pumps to try to slow the adoption of the technology.
And, happily, I think we are reaching the point where enough People have real experience with he pumps in their homes.
And so that we're starting to build that, referral and consumer confidence. But that's a consistent challenge in all the businesses we face, That the fossil fuels are amazing. They created the sort of the biggest step change in quality of life for humanity ever. and also created. the most disgusting concentration of wealth and power ever. And so it's not surprising that there is inertia as you try to transition away from those systems.
[00:20:18] Ed Smith: Those are two good challenges. I want to talk about both of them. I want to double back to the first one. Cause ReVision, your approach to training is both unique and impressive. And maybe it's not unique in that. I think lots of people would want to do what you've done, but I don't know anyone who's pulled it off at the scale you guys have, would you tell us about your approach? To training the next generation of folks you want in the field wearing, your branded logo gear,
[00:20:44] Fortunat Mueller: Maybe 10 years ago, I think we, we had this realization that, that the skilled licensed trades people doing this work are going to be one of the constraintson the pace of the energy transition. We're impatient about that pace, right? We understand we're going too slow and we need to go faster. For all the reasons that I don't have to tell you guys about, at that time we were sending, licensure requirements in particular for solar, were getting tighter, and also in the, in the heating business. At that time we were sending, a couple of dozen of our team members, To, community college, nights and weekends in order to get the academic credentials they need in order to sit for their, for the license for tests, the feedback we heard from them was this is awesome.
We're grateful you're paying for our tuition and that you are giving us this path towards a career and towards higher earnings. But it's also really challenging, right? We work long days out on the roof, in the field, in the basement, then we got to roll home and get home by four in order to go to class.
And then I don't get home till seven or whatever it is. Is there some better way we can do this? And so what we started to try to do is to figure out what it would look like. If ReVision were the training entity, if we ran our own apprentice program, and, that the unions have been doing this forever,
The unions have. On the job training and academics that go side by side and you earn while you learn, and you get credit for the hours you spend in the field. And so we developed our own electrical apprentice program, about eight years ago, and started encouraging our, installers to enroll in that rather than in, in the community college.
That way we can shape the program both in terms of content, but especially in terms of time. So we can load up the academic program in the winter when we're a little bit slower and do more of the on the job stuff in the summer when we're a little bit more busy, we can, Take the time to make sure that people are learning, not just the code minimum, but really the best way to do all the things that we do, we pride ourselves on, as I said before, on technical excellence, and that has been really a game changer for us in terms of our ability to attract and then retain, the best and the brightest, Field employees for all of our teams. As I said, we started with the electrical apprentice program, but over the last handful of years we have built, for other apprentice programs. And so now we run inside ReVision, in what we call the ReVision energy training center, we run an apprentice program for, design professionals. We run an apprentice program for customer service, one for. Technical sales and one for managers in addition to our electrical apprentice program. And we also run a handful of pre apprentice programs with community groups looking upstream, not at folks who are not yet ReVision employees and co owners, but helping create the upstream funnel in particular for populations who have been historically marginalized or left out of the trades. So women, people of color, returning citizens, because again, we need a lot of, clean energy professionals over the next two decades. And it's really important that workforce reflect our community broadly. And so we're trying to do what we can to help accomplish that goal.
[00:24:00] Eric Fitz: So we've got a good lay of the land of your business, today, roughly speaking on the residential side, are heat pumps, is it half your business? Like how's that moving,
[00:24:11] Fortunat Mueller: Today about quarter of our solar projects have a heat pump installed at the same time, some additional, fraction of our solar customers come back and add a heat pump at a later date. And today the heat pump projects are smaller in dollar size than the solar projects, on average.
And heat pumps make up something like. 10 or 15 percent of our residential revenue, a slightly higher fraction of our, hours and installers because they're a little bit more labor heavy, and growing. whenever we go meet with a customer, regardless of why they call us, we always talk to them about the whole home electrification journey. And we realized that some customers will do that in one giant project
But most customers will do that over the course of, a decade. And that's been my own experience at my house. I put in a solar water system in I put in a PV system in 2008. I put in a gas boiler in 2007 and then a heat pump in 2012 and then another heat pump in 2015 and a EV charger and an energy storage and on.
And over time, my house will be, fully net zero and fully electrified. And that's the same experience that a lot of our customers have. We try to help them understand the sort of overall trajectory in the arc and in context of the overall economy wide transition from fossil fuels to clean energy,Our whole planet has to move from burning stuff for energy to using renewable energy that comes for free from this incredible nuclear reactor that comes up every morning in the east. And We do that sort of the low hanging fruit first, and then we chip away at it over time and in the residential context, I think frequently that takes, 3-5-10 years to do, especially when it comes to heating, because in the case of heating whole house heating. people are waiting until, their existing system is at the end of its life. It's still, today, a pretty big challenge to ask somebody to replace a, perfectly fine working, heating system. Although increasingly people are doing that.
[00:26:21] Eric Fitz: Got it.
[00:26:21] Ed Smith: you only do heat pump installs in the context of a. Solar project, or would you if a customer just wanted to heat pump, would you just do a heat pump?
[00:26:30] Fortunat Mueller: We do, heat pumps standalone also.
[00:26:32] Ed Smith: You do. Okay.
[00:26:35] Fortunat Mueller: but the bulk of our heat pump projects, go along with the solar project or for an existing solar customer.Makes sense,
[00:26:41] Eric Fitz: it. I'd love to hear an example, a homeowner, they're interested in say one or both, heat pumps and solar, where does your design process look like?
How do you manage all those pieces?
[00:26:52] Fortunat Mueller: We have a sort of menu of choices that we think makes sense for the vast majority of homeowners.
We try to help guide them through, what makes sense at what time. What's the problem you're trying to solve? What's the itch you're trying to scratch. And depending on where that is, that might be where you start. But again, we try to talk about the big picture from the sort of planetary big picture down to the household big picture, And help them see all the different pieces. Now, technically for our, solar design specialists, our sales team, it's a complicated sale. compared to selling just a straight solar system, there's a lot more to it. And we ask more of that team than I think a lot of, Solar only companies would
How are you helping your technical sales folks who are in the field to like. Put this together.
[00:27:35] Ed Smith: Practically have you put any tools in the hands of your sales and design team to make sure. The nuts and bolts of the design, like all tied together, like other software tools you're using to make their lives easier, faster, more accurate.
[00:27:51] Fortunat Mueller: we're constantly trying to evolve the suite of software tools that is available both to the sales team as well as to the design team. one of our challenges was to think about how do we present this package to a customer in a way that makes some coherent sense,
You may think of them as four different projects, and you may even do them at four different periods in time, but we want to think of them as a single package in terms of, both comfort and energy use and environmental impact. But in particular, in terms of economics. from the business side, one of the benefits of the way that we do this work is that by selling more than one project to a customer, we have the opportunity to develop a deeper relationship with them.
And so one of the things we worked really hard on is. Is a series of tools on the financial side, because the finances ultimately have to work for customers, to show them the combined economic impact of any combination and permutation of different projects.
Hey, if you do small solar and an EV charger, it looks like this. If you do large solar and a battery and a heat pump water heater, it looks like this, with all the complexities of, state rebates, utility rate changes and rate classes, tax credits and, so that's three states and eight or nine different utility territories and, 10 or 12 different products.
That's a pretty, challenging, complicated, multidimensional proposal tool There's no off the shelf product that does that, And so we ultimately have to build that thing and we build it, in Excel, honestly, at the end of the day, that is, that helps the customer understand for my particular financial situation.
What does this look like? What are the environmental impacts of this series of choices and what are the economic impacts? this is particularly important as, especially as the project grow, more and more customers are going to finance these projects, They are ultimately replacing cost with capital cost,
When we talk about, solar projects, that's essentially what we're doing, We're pre buying energy for 30 years, and so you're, you're replacing an ongoing monthly electric bill or an monthly gasoline or fuel bill. an upfront investment in a clean energy system and the heat pumps and whatnot. And for most people, realistically, that's going to mean they're going to borrow some chunk of the money to do that, Few people are sitting on 20, 000, 50, 000, 60, 000 to do this in their homes. But it makes sense to do on borrowed money because in most cases, the savings instantly, Are larger than the costs,
Over any reasonable term, the cost of making a loan payment is lower than the cost of your previous fuel bill or previous electricity bill. And I can say that to you, but most of our customers would like me to prove that to them. And so that's ultimately what this tool does is to say, you tell me what you think the future price of oil is going to be in New Hampshire in the next 5 years, or you tell me what you think electricity prices from the grid are going to be in the next 5 years.
We'll build that into this model for you. And I'll tell you what it costs to replace it with clean energy. And I'll tell you what it costs to finance. Or you tell me what it costs to finance if you want to take this to your local credit union or your bank. And we'll figure out together what combination of projects pays for itself. Because ultimately in the early days in 2005, most of our projects were not paying for themselves, They were true believers. I'm in that camp. I did do solar. My solar, my first solar system was when solar cost 9 a watt.
There's no economic, actually now probably has paid for itself in the meantime because electricity has gotten more expensive, but at the time there was no line of sight to a sort of economically rational reason to do that. But if we want to get to a hundred percent clean energy, we want to get that.
All the households in New England replacing boilers with heat pumps and replacing dirty electricity with clean electricity, got to be cheaper. so we have to be able to show them it's cheaper. And the good news is, we're there. That's the big thing that changed, five, six years ago. Solar is the cheapest way to make electricity almost everywhere on the planet. And heat pumps are the best way to turn that electricity into comfort. so you put those things together and it's amazing.
[00:31:53] Ed Smith: I love how the story that you've just told of you're thinking about the home as a system from a technical perspective, but you're also managing kind of these layers, I'll call it the decisions that have to happen for a homeowner and you're right there with that customer walking them through each piece.
[00:32:11] Eric Fitz: And that you've listened to the, what their problems are, what their challenges are, you're mapping the right solutions. And, if they have questions, if they want to tweak the model because they feel differently than maybe what your baseline assumption is, you're like, great, let's look at that scenario.
And. We'll talk about it and we'll look at the trade offs and, what a way to build trust with your customers and ultimately land on a solution. That's going to truly work for them, for their financial situation, for the unique quirks of their own home. It's really fantastic.
[00:32:40] Ed Smith: This is a divide I'm noticing. We've got some customers who are solar installers getting into heat pumps, and we've got some customers who are HVAC and they're just straight down the middle.
When we talk about forecasting. The finances of a heat pump, not just, borrowing to do it, but what's it going to pay back folks in the HVAC world are very uncomfortable with this idea because they don't want the homeowner to come back later and say, Hey, it didn't play out the way you want it to.
And folks in the solar space. Of course we have to do that because solar has been doing that for what, 15 years.
[00:33:15] Fortunat Mueller: Right.
[00:33:17] Ed Smith: What do you think about how that plays out in the future between those two camps of how you have to talk to homeowners about their new whole home heat pump system?
[00:33:29] Fortunat Mueller: Yeah, obviously at some point, heat pumps are the only choice, You get into, a town where there's a, no more gas hookups and then you're no longer making the case against an alternative. But in the meantime, we are always selling against the status quo.
In most cases, the status quo is burning gas or oil for heat. Not every customer is, economically driven. But most every customer has to clear some economic hurdle, It has to make sense. They may or may not be doing it for economic reasons, but they have to understand the economics. I think many traditional heating contractors who have just been selling like for like replacements have never had that conversation the closest approximation they've had to that conversation is. I got two boiler choices. One is 88 percent AFUE and one is 90 percent AFUE.
This one's 400 more. Maybe it'll pay for itself over the next 10 years. A thing. Whereas, home performance contractors, solar contractors, or holistic energy, modelers, are doing that all the time, And architects also, we, r 30 costs 1 percent more than R 16.
And here's what it looks like on an energy model. But it asks you to have a crystal ball and to look at the future. some of it is math, The math is easy. But the prediction of future energy prices, even people who do just that for a living, do it very poorly, So one of the ways we try to do that is, Is to index against historical energy prices. That's some, you can say, this is roughly what electricity has done over the last decade. We reasonably believe it might look similar in the future. Or here's what the smartest people in the world say about the price of oil over the next decade.
But we should be humble and acknowledge that we will almost certainly be wrong. And so we have found letting the customer participate in that conversation is also really useful. What has been your experience with the cost of heating of oil over the last 10 years? And what do you think it's going to do? And we'll build that into the model. That way, if they are wrong, as we will all be wrong, it's at least we were wrong together and they had a say in it. I think, you don't have to be a, international energy agency, PhD to say, Fossil fuels are finite polluting. even if we don't do a perfect job of capturing the external costs of burning them, each additional, gallon of oil, barrel of oil is harder to extract than the last. And it comes to renewable energy, each additional unit of energy that we collect is actually easier than to extract than the last. You're you're in a race of, technology against extraction, technology is going to win. And I think we have enough examples of that now in the world that, that's not a hard case to make to homeowners.
[00:36:18] Eric Fitz: So Fortunat. Maine, New Hampshire, Massachusetts, these are some, you got climate zone five, climate zone six. You got some real challenging cold weather conditions. Can you talk about, heat pump performance in New England?
[00:36:33] Fortunat Mueller: I'd say a decade ago, the jury was really still out on whether, heat pumps would perform effectively in the climate that we're in. In southern Maine, a design day is a minus six degree Fahrenheit day. And in northern Maine, it's more like minus 15. Those are serious outside temperatures and really high heat loads. 20 years ago, heat pump wouldn't do it, They wouldn't do it. the central heat pumps, they would either switch over to gas or switch over to resistive electric heat. Our experience in the last, six, eight, 10 years with, with inverter driven, especially mini split, cold climate heat pumps is that they are, if anything, overperforming their specifications,
The first generation of Mitsubishi cold climate heat pump we're installing said they would work down to, I think it was minus five at the time. And we saw those units cruise right through minus 10 and minus 12 a number of times with no hiccup in performance. Of course, there's a COP hit, when it's cold outside. But one of the things that's really important for people to understand is, if if you look at the bin data, how many hours do we actually spend at those extreme conditions? It's very infrequent. Now, that doesn't mean that heat pump still has to work there, but the performance there is not all that important.
It's the performance over the year that you care about primarily. And each, every other year, for a long time, we were a Fujitsu installer and more recently we've been a Mitsubishi installer. And it's been fun watching those two companies. One up each other in terms of performance each of the last, seven or eight years, and a number of others to, just everybody's product is getting better and more reliable and more capable.
Maine now has over 100, 000, cold climate heat pumps installed and lots of validation from customers who say these things just work. And even in places where they were installed that supplemental heat, Where people are using them as primary heat, where people have shut down their oil boilers and stopped using their oil boilers.
[00:38:29] Eric Fitz: it's so important. You mentioned the temperature bins, particularly for the, those design day temperatures. in a place like Maine, we're often hitting those temperatures at four o'clock in the morning. for a dozen hours a year. And, so yes, we follow, manual J, manual S procedures around design day, looking at the performance of the equipment across the rest of the year, where there's many hundreds of more hours that the equipment's, operating is so important.
[00:38:58] Fortunat Mueller: Yeah, and the residential HVAC industry has generations of habit of grossly oversizing heating equipment. Partly that's because fossil fuel equipment doesn't actually scale down all that well and in many cases isn't modulating at all. It's not at all infrequent for us to go into a house that has a hundred thousand BTU boiler.
Yeah. That has a designed a heat load of 30, 000, 40, 000 BTUs.
And it's not because they just did a, deep energy retrofit. That's always been the case. They just have always had a boiler that is three times bigger than it has to be.
[00:39:33] Eric Fitz: Totally. And it's tricky too, because a nominal capacity fossil boiler. 20, 30 years ago had a much lower efficiency, but if someone came in and just they swapped like for based on nominal capacity and not looking carefully, hey, my AFUE is now closer to condensing boiler, I'm getting like 85, 90%.
All of a sudden the actual capacity of the equipment is significantly higher. So now you're oversized even more. So it's it's gotten worse, just by not paying attention to those details.
[00:40:01] Fortunat Mueller: absolutely.
[00:40:03] Ed Smith: Fortunat It has been so interesting to interact with some of your sales team who always refer to their colleagues as co owners. And so I know you all did an ESOP in the last handful of years. I'd love to know, could you tell folks what that is?
Why you did it and what impact you've seen it have on your team.
[00:40:22] Fortunat Mueller: we may have to come back and do a whole nother hour on
[00:40:24] Ed Smith: Okay,
[00:40:24] Fortunat Mueller: ownership,
[00:40:25] Ed Smith: great
[00:40:26] Fortunat Mueller: try to do a
[00:40:26] Ed Smith: deal.
[00:40:27] Fortunat Mueller: In, in 2016, 2017, ReVision was owned by four of us. And we were thinking about what is the future of this business?
what's the future ownership of this business look like? And one of the things that's always been important to us is that the owners are active in the business and that the folks doing the work are the folks who see the upside of the business as well. And so for us, the transition to employership was really a natural transition at that time, my cofounders and I are all different ages and different stages in our careers.
And as we thought about our, transition one by one out of the business over the course of a couple of decades, we said, how can we imagine transitioning this business in a way that continues to live into those values that the folks doing the work should be the ones with the equity? And at that time we discovered which is a particular form of employee ownership. ESOP stands for Employee Stock Ownership Plan and is actually among the employee ownership structures is one of the more regulated. An ESOP is actually a qualified retirement plan. So ReVision is currently owned as of 2017, ReVision is owned 100 percent by an ESOP trust.
So the trust owns all the shares of the company and it owns them on behalf of the current employees of the company. And so we sold the business to the trust who bought it from us over time, with retained earnings. And now the trust owns the business outright and allocate shares every year to anybody who meets the requirements. And all of our co owners, in addition to, 401k and other retirement savings, have an ESOP account and they get shares every year. And those shares grow in value. If the ReVision, if the company does well, and when they leave, the trust buys those shares back. And so it becomes another leg of, of a retirement. So that's the mechanics of it. That's the sort of financial pieces of it. Equally important is the idea that everybody at ReVision has an ownership interest, and we talk a ton with all of our teams about ownership mindset. And what does it mean to show up like an owner? of the phrases we use a lot is think like a customer, act like an owner. And you guys who deal with a lot of small business owners, there's a thing about, an owner of a small business, can't walk by a problem, see a problem and not do something about it. And we are, really working hard to build a company where that is true 500 deep. That's not to say everybody is in everybody's business and we make every decision, by voice vote of 500 people. But that everyone feels that level of commitment to continuous improvement and customer service excellence. You see a customer who is not delighted, you figure out what it will take to make them delighted.
You see a co owner who's struggling, you figure out what it will take to lift them up. and the power of that head, when you do that right, is like magic. It's like rocket fuel for a company. I am totally convinced that this is the right way for every business ultimately to be created. When the employees. the business are totally aligned in that sort of delivery of excellence for the customer. How can you not be successful?
[00:43:39] Ed Smith: Fortunate. This has been just been amazing. We
Thank you.
[00:43:42] Eric Fitz: wrap up the, the podcast with just a couple of, tactical recommendations. For someone out there, who's thinking about, building the next ReVision, starting a solar company, starting a heat pump business. What are some tangible resources that you'd recommend that they check out?
[00:43:58] Fortunat Mueller: to be a good advice giver on energy issues for homeowners you need to understand the contextfor heating contractors and solar contractors to understand building science is really important. I think for any of those, trades to also understand the sort of big picture energy transition questions, like what is the grid going to look like in the future?
What is our energy system going to look like in the future? It's also really important because it helps you make better decisions and guide your customers towards better decisions.
[00:44:27] Ed Smith: And on those two, where, like, where would they go to learn more either about building science or the big picture, like magazines, books, websites, Associations. Where would you point someone?
[00:44:39] Fortunat Mueller: yeah, one organization I'm fond of is, NESEA, the Northeast Sustainable Energy Association, which is a, almost 50 year old organization here in New England, that I love because it's the place that I gather with people. Building energy professionals, across a whole range of different parts of this ecosystem.
So there are, urban planners and architects and installation contractors and solar contractors and EV charge manufacturers, as opposed to going to a, going to an HVAC trade show and you're talking to a bunch of other HVAC people. I was for a long time on the board of NESEA and I think it's a wonderful organization and, really committed to. Sharing and lifting the overall quality of the contractors. One of the things I think is pretty special about NESEA is their focus on sharing failures as well as sharing successes. many times you go to a trade show and it's basically a bunch of, marketing flyers. And NESEA, they're real on the ground professionals describing what they did wrong, which is invaluable. And then, In the digital space, there are a number of, really good podcasts. Obviously this is one of them. And everyone who is not subscribed should be subscribed. But bigger picture stuff. Roberts, who used to write for Vox and now runs a podcast called Volts, has fascinating guests on
[00:45:53] Ed Smith: Yeah, he's great.
[00:45:54] Fortunat Mueller: aspects of the energy transition. He's done a bunch of heat pump episodes. He's had a bunch of, I think he's wonderful and I'm a regular listener. Canary Media is a, print media, I guess digital media, where a number of, really great energy journalists have congregated in writing about interesting stuff all the time.
So those are a couple recommendations people
That was awesome. Great. Fortunat, thank you so much for being on the heat pump podcast. This was awesome. Thank you.
[00:46:23] Eric outro: thanks for listening to The Heat Pump Podcast. It is a production of Amply Energy. And just a reminder that the opinions voice, were those of our guests or us, depending on who was talking. If you like what you've heard and haven't subscribed, please subscribe in your favorite podcast platform. We'd love to hear from you.
So feel free to reach out. You can reach us once again at hello@amply.Energy. No .com, just .energy. Thanks a lot.
