Berlin-based climate startup ecoworks is using digital technologies, AI and industrial robots to tackle a huge and critical problem: Energy inefficient buildings.
Around three-quarters of buildings in Europe are deemed energy inefficient, per the startup, while around half of the 315 million residential units in the region have energy performance ratings of E or worse. Yet the continent has a goal of reaching net zero emissions by 2050. Which means millions and millions of existing buildings, whether residential apartments, office blocks or public buildings like schools and hospitals, are going to need some form of renovation, at the very least, if we’re to tackle the legacy of past construction practices and decarbonize our built environment.
This also needs to happen quickly if humans are to stand a chance of avoiding catastrophic levels of global heating. Indeed, the pace required for the necessary transformations of existing buildings is a far faster clip than the constructions industry typically moves. Relying on traditional players in the sector to overhaul their processes would be hopeless, ecoworks suggests — arguing the climate challenge of upgrading existing buildings is a problem startups are going to have to fix.
“Most of the housing companies invest less than 0.1% in R&D, and also construction companies invest only 1% in R&D. So the sector itself — the renovation sector — will not come up with solutions to to retrofit all these buildings,” contends CEO and co-founder Emanuel Heisenberg, who prior to setting up in the smart renovations business was consulting for the German government on how to decarbonize the country’s housing stock.
“In Europe, we have to invest €6 trillion until 2030 for renovation but the sector itself [won’t do it]. We have a negative productivity. Everything is done by labor on site — like 90% is assembled on site. So we have to do two things: We have to automate and bring all the work we can into factories where robots can do the work to bring down costs to create affordable housing from renovation. And that’s the huge challenge — and it’s absurd, actually, that such a small company as ecoworks is actually the innovation driver in this huge sector. But it’s the case.”
“It’s a matter of culture,” he adds, likening the failure of the construction sector to modernize and transform its methods to the frozen sclerosis of wealth-rich oil companies failing to sink the necessary investment into developing renewables to transform their own dirty, retrograde businesses. “They will never figure out to do this organically from their own innovation departments. They have to do it on un-organically by acquisition — or they leave it aside entirely. So this will be the same in the housing and construction industry. It will come from some technology companies and startups and not from the industry itself.”
Cold and drafty homes that are expensive to heat obviously aren’t good news for building residents either. And while Germany historically relied upon cheap imports of Russian gas for heating, that tap got turned off in the wake of Russia’s invasion of Ukraine last year — which swung the domestic political spotlight onto the inflating costs (and risks) of relying on fossil fuels. So geopolitics is also driving demand to overhaul domestic housing stock.
What’s the solution to all these problems? ecoworks’ answer is smart retrofitting, starting with residential apartment blocks in its home market. But it tells TechCrunch it intends to license its software and methods to scale the impact outside Germany’s borders in the future.
The startup, which was founded back in 2018, is using high tech tools and automated manufacturing to shrink the costs of retrofitting apartment blocks by installing prefabricated insulation panels on the outsides of existing buildings to limit heat loss while, simultaneously, bundling renewable energy generation installation into the same project. So it’s delivering both a reduction in energy loss and decarbonized heating systems in a single construction project.
Its approach involves fitting an insulated facade to the outside of the building. The pre-fabricated cladding slots together in large panels that come complete with integrated windows and can incorporate other external features like balconies.
A prefabricated ecoworks facade is hoisted into place by a crane. Image Credits: ecoworks
The facade, or “building skin” as the startup also calls it, reduces heat loss while incorporating the necessary pipework and cables to deliver new heating services powered by clean energy.
The installation of the external facades — which are made of “bio-based materials”, such as reclaimed wood and wooden cellulose — can also mean residents benefit from larger windows and new balconies, depending on the final design. Although it does, necessarily, mean slightly deeper windowsills given the added thickness, so there may be a marginal reduction in natural light filtering into some rooms in some cases (at least where windows aren’t also enlarged).
Its method allows for existing indoor radiators to be used, rather than having to rip them out — but with the heating source switched from dirty fossil fuels to clean renewables. Green energy is ensured via solar PV cells installed on the roof that power heat pumps fitted in the building’s basement to deliver clean heating and hot water for the apartments.
eocworks’ system is able to reduce “primary energy demand”, or consumption, by 85% to 90%, according to Heisenberg.
“A minimum [amount of energy] is needed to heat these houses and bring hot water and electricity to these houses. Everything is produced on the roof of the house by photovoltaic,” he tells TechCrunch. “Heat is produced by heat pumps in the basement. And we have a system that we bring the heat through the facade into the apartments. So it’s a patented way to actually integrate the piping and the electrical lines in the facade in order to make it easier to bring these new installations into the apartment.”
“At the end these buildings produce, with the photovoltaic installation on the roof, more energy than the tenants use for warm water, heating and electricity,” he adds.
While new builds can be designed from scratch with energy efficiency and clean energy generation in mind, our urban environments are packed with poorly insulated constructions that are literally standing in the way of achieving net zero. Most of these buildings are also still being heated by burning fossil fuels. But knocking them down to put up highly energy efficient alternatives in their place would be hugely expensive and disruptive, and totally new constructions could generate carbon emissions. ecoworks is shooting for the compromise route of smart retrofitting.
The manufacturing of the pre-fabricated buildings skins is done by partners off site, in factories using industrial robots, to drive down costs through economies of scale while also ensuring high quality and less construction disruption for residents, per Heisenberg. But the startup’s own team handles the on site construction. So it’s certainly getting its hands dirty too.
An production facility where ecowork’s prefabricated cladding is manufactured. Image Credits: ecoworks
Once a site is prepped, which includes having cranes in place to do the necessary hoisting of facades, PV components etc, the actual slotting together and fixing of the panels and the installing and connecting of new services is quick — four to six weeks, according to Heisenberg. Although the full construction project process takes longer (15 weeks) owing to the need to prep the site.
Residents of the buildings don’t need to move out during the refit — with just a couple of days’ access needed inside each apartment to cut out the old windows and switch the plumbing to the new heat source. So the process looks a lot less disruptive and time-consuming than traditional linear construction methods — which typically require different materials, craftspeople, trades and laborers to be on site at different points in the build, with risks of frustrating delays if components in the chain fail to turn up on time.
ecoworks launched back in 2019 with its first projects starting that summer. So far it’s completed four projects — totalling around 20 or 25 apartments, according to Heisenberg. But it’s stepping up its work rate and is currently working on the planning and installation for 850 apartments which it hopes to complete next year. (He estimates that accounts for around 40% of the total number of apartments in serial renovation in the country — which gives a flavor of how underserved domestic demand for green retrofits is likely to be; and how much growth potential there could be if ecoworks can scale its operations and proposition to unlock more demand for greening existing housing stock.)
Aside from the existential imperative to decarbonize our societies to prevent catastrophic climate change, and other clear benefits of switching away from dirty fossil fuels and their unpredictable supply-chain issues and costs, ecoworks also points to the risk of old, heat-leaky and carbon emitting buildings becoming “stranded assets” as another motivating factor driving customer acquisition.
“Energy efficiency is not just a nice gimmick — but it’s really becoming crucial for the business case,” Heisenberg argues.
ecoworks is applying a blend of AI, 3D scanning and digital design, combined with robotic manufacturing of the pre-fabricated external facades, to create economies of scale and make its green retrofits scalable. This includes using AI to cherry-pick the most suitable buildings to undergo transformation. “We automate planning — we apply software for the entire process to bring down the time from contract to commissioning by digitising and automating every step,” he explains.
“The first application [for AI] is to find a suitable project. So we get, for example, addresses of all the portfolio — our customers have sometimes a couple of thousand buildings — and then we select by AI the most suitable projects, in terms of are they easy to access; do they have simple typologies; do they have the right roof situation? So these are super complex optimization schemes, and we use picture recognition and database system machine learning systems to get to the most suitable projects.
“But we also use AI for scripted planning optimization. So you have a planning program and you will first scan the building and then of course you don’t want to do a new detailed planning every time you start again and a new energy and emission concept. So you use already existing planning details and just adapt these to the existing building size and building type. And for that you have to automate a lot of steps in between, so that you don’t have to apply, like, hundreds of architects and planners, but you can just click many steps automatically.”
“We have probably one of the most developed systems in the world. But there’s not so much about us but more on the state of automation in the [renovation and construction] industry,” Heisenberg adds. “We really have to invest much more in the built environment and automate these processes to get to net zero in the building sector. It’s really absurd that we are the front runners on that field.”
He confirms that the costs involved in the retrofits aren’t economical for single (detached) homes. Hence, for now, it’s focused on retrofitting residential apartment buildings — targeting its services at housing associations and companies which own thousands (or even hundreds of thousands) of residential units.
While the average “ticket size” for its projects is €4.5 million, according to Heisenberg, it has a project it will start to install in January with a price-tag of €40 million — and he says larger projects are attractive to help extract further economies of scale.
ecoworks clearly doesn’t have a demand problem, with an order book of around €100 million lined up for next year alone, just on domestic residential refits. It’s also looking at government buildings, per Heisenberg, and considers other public buildings, like schools and hospitals, as well as offices, viable future targets for its retrofit approach. “The goal is to scale to 10,000 units and by 2027 — so this would be €1BN in revenue,” he tells TechCrunch, noting the figure would represent less than 1% of the German renovation market. “The renovation market at the moment is at €150 billion, so we could easily scale to an IPO in Germany, just for residential in Germany alone. But of course, at a certain point, we will also licence out our software and hardware development,” he adds.
ecoworks is announcing close of a €40 million Series A round today. The round was led by the eco focused World Fund, with participation from purpose-driven German investor Haniel, early-stage focused Kompas VC and French fund ISAI.
Commenting in a statement, Philipp Göhre, growth partner at Haniel, said: “As a pioneer and market leader in the field of climate-friendly serial renovation, ecoworks fits perfectly into Haniel’s mission statement ‘enkelfähig‘, under which we build sustainable and successful business models. We are delighted to be part of ecoworks‘ journey and to support Emanuel Heisenberg’s team in their goal to reduce greenhouse gas emissions by a total of more than 1 gigaton of CO₂ by 2045.”
The Series A funding will be ploughed into updating ecowork’s software platform, including launching a new customer interface which will let its clients see each step of the planning and installation process. It also wants to further develop a cost prediction tool it already offers that’s based on building location. Plus it says it will be working to squeeze even more into the prefabricated facades to further reduce on-site installations — so hardware design will be another focus. (Per Heisenberg, between 50% and 80% of necessary components are installed in the facades currently; it wants to get that to 90%.)
Headcount expansion is on the cards too, as it looks to step up its work-rate with the goal of hitting €1 billion in revenue in around three years’ time. That will require having enough staff so it can work on “many, many” projects all over Germany. “We want to reach between €80 million to €100 million in billings over the next 12 months,” he adds.
One more note: While adding a wooden facade to buildings might be perceived as a fire risk, ecoworks emphasizes that fire protection is something it’s keenly focused on. And Heisenberg claims fire protection is actually improved after the retrofits.
“We have large hardware development teams who think day and night about static — [about] the fixing of these elements and fire protection issues,” he says. “For example, now we start to instal a five storey social housing project in Berlin, in a rundown situation. And, of course, you want to avoid a Grenfell Tower [a reference to a devastating fire in a high rise apartment block in London in 2017, where cladding made of aluminium-polyethylene and foam insulation was blamed for the rapid spread of the blaze].
“Our elements, if they’re exposed to direct fire they would not catch fire for 30 minutes. And the fire would also not jump from one storey to the next because they have mineral layers to protect the wood from bringing the fire from one storey to the next. So there are a lot of design issues to break down any fire protection risks. So the fire protection is much higher after we’ve done our installation than before.”