Copenhagen-based startup Reel catches €2.3 million to power a renewable Europe

Reeling in one of Denmark’s largest pre-seed investments ever, climate tech startup Reel has picked up €2.3 million. The Copenhagen-based team is on a mission to transform electricity procurement, encouraging the renewable energy transition. 

Europe is on an ambitious journey – with the end destination of Net Zero. Based on the guidelines and promises set out, there is still a long way to go before we get there, and time is running out. Reaching Net Zero is also not simply an aspiration, an ‘it would be nice’, but rather, it’s essential for our society and planet. In the race to get there, startups and tech innovators are paving the way and giving vital solutions to companies and governments alike. 

Copenhagen-based startup Reel is one such startup. The climate tech team are setting out to fight climate change by transforming electricity procurement, offering a way for companies to buy electricity on commercially attractive terms. In addition, Reel ties companies’ electricity procurement directly to the construction of new solar and wind parks – so the renewable energy transition is further supported. The startup just raised €2.3 million in pre-seed funding.

The round was led by  UVC Partners, a venture capital fund focused on European early-stage B2B startups, with participation from The Footprint Firm, a sustainability-devoted investment company, North-East Family Office, a global private multi-family office, and a group of energy specialists and experienced founders such as the chairman of InCommodities, Bo Wase, the co-founder of Netlify, Christian Bach, and the co-founder of inspired, Jürgen Mayerhofer.

The need for companies to reduce their environmental footprint has never been higher. And the urgency to move towards renewable, sustainable sources has been made all the more apparent in the current context of record-high and volatile prices. 

CEO and Co-Founder, Jon Sigvert explained how this is one of the driving forces behind the need to move to sustainable energy:

“Electricity is one of the main sources of CO₂ emissions globally. Total electricity demand is expected to double within this decade² and consequently, renewable energy generation needs to increase drastically. Governmental subsidies are phased out³, and the renewable energy transition is now driven by consumer demand. At the same time, the current energy crisis has emphasised the urgency for companies to ensure financial certainty through their electricity procurement. Reel empowers companies to drive the transition in an easy and financially attractive way.”

Founded in 2020, Reel has developed a solution based on an emerging type of renewable energy contract, called Power Purchase Agreement (PPA). PPAs are signed between renewable energy developers and companies buying electricity for a long-term period at a fixed price. Renewable energy developers use PPAs to secure financing for the construction of new solar and wind parks, and companies are credited for the addition of new renewable energy while securing attractive electricity pricing. Until recently, PPAs were exclusively available for the 1% largest companies due to a number of constraints related to the size of electricity consumption, credit rating and legal expertise.

But Reel is making PPAs available to all companies in a monumental step forward that will enable more companies to support the energy transition. The startup is simplifying legal complexity and optimising the parameters needed to sign PPAs. The solution is based on large amounts of data on factors such as electricity consumption and credit rating. On top of that, Reel provides automated CO₂ reporting out of the box.

According to Christian Randløv Schmidt, CTO and co-founder of Reel, using technology to transform electricity procurement has great potential:

“We are operating in a sector that is extremely conservative and old-fashioned. The optimisation potential is huge and by realising this potential, we can create immense value for both our customers and the climate. What we are trying to achieve is akin to how the technology-driven challenger banks have transformed the conservative financial sector in the past decade – but instead of only optimising for profit, we also optimise for climate impact.”

Commercial and industrial sectors are reported to account for two-thirds of total global electricity consumption. So, there is clearly an urgent need for an off-the-shelf electricity procurement solution, available to all companies – and it’s evident that this will have an immense impact on reducing emissions and powering a society built on a new form of energy. Reel has developed a system that is rooted in climate science – breaking with the prevailing status quo and offering a viable approach. 

Anders Kjemtrup, CCO and co-founder, explained: “Conventional ‘green’ electricity contracts are based on certificates that allow you to claim that you use carbon-free electricity. However, these certificates do not actually lead to new CO₂ reductions. This is hugely problematic as CO₂ reduction efforts are overestimated and we risk falling short of the Paris Agreement. In addition, it is commercially unattractive as companies pay extra for the certificates. Our PPA solution solves for all of these issues, and allows all companies – big and small – to help accelerate the renewable energy transition.”

This fresh funding boost will be used by the climate innovators to scale up operations and launch the software in Denmark. Launching as a certified electricity provider in Denmark in the fall of 2022, the company sets out to be the go-to green electricity provider by offering a full-service solution with the delivery of electricity, reporting on CO₂ accounting, and advice on climate communication.

Jon Sigvert added: “Companies are increasingly aware of their carbon footprint and are implementing measures to take responsibility for their impact on the climate. This is a promising development, but to effectively solve the climate crisis in time, these intentions need to be converted into actual CO₂ reductions. And that is what we help companies to ensure.”