Q&A with Ory Zik, CEO, Energy Points
From heating buildings to consuming water to keeping supply chains running, businesses are extremely resource intensive. But with so many different metrics to measure the various resources, making decisions to benefit both the environment and the bottom line ends up being well-intentioned guesswork. Physicist and entrepreneur Dr. Ory Zik wants to change all that with his latest venture, Energy Points. By analyzing big data and putting it through rigorous mathematical equations, he has developed a universal metric for sustainability that is able to translate every resource, such as water, gas and electricity, into something we can all understand: a gallon of gasoline. Founded in 2011, the Cambridge, Massachusetts-based company has grown globally, expanding into Europe, China and Australia. For Dr. Zik, empowering sustainable-minded decision-makers with simple, accurate and actionable data can go a long way towards reducing both environmental impact and capital expense. I talked to him about his innovative concept, the state of science in the United States, his advice for young entrepreneurs and one of his favorite television programs, Masterpiece's Downton Abbey.
You founded Greenpeace Israel in 1994. What first inspired you to become concerned about the environment?
I grew up by the Mediterranean. As a kid, it was full of fish and had some kind of purity to it. As I grew up, it became more brown and depleted of fish. And then I had an opportunity to start Greenpeace there as a clean seas campaign, while I was studying to get my doctorate in physics. It was something that I wanted to do emotionally.
What was your biggest lesson from that experience?
The reason I left Greenpeace was that as a physicist, I felt that while everyone may understand the problem, we need solutions that are quantifiable. So that's my biggest lesson.
Does that lesson connect to the inspiration behind Energy Points?
In 2009, when I was the CEO of HelioFocus, which I started to augment conventional power plants with solar energy, I became curious about my environmental footprint, since we were building the world's largest solar collector. When I started to calculate it, I found out that when you do a lifecycle analysis, you get numbers that no one really understands. So I decided to develop a system that allows people to understand their footprint in a way that is both accurate and simple. I spent a year as an MIT affiliate to develop the technology, and then in 2011, my partner and I launched Energy Points.
In a nutshell, what’s the goal of Energy Points?
Essentially, we provide decision-makers, notably CEOs, COOs, CFOs, with a way to analyze the environmental impact of their companies to make more informed decisions. Energy Points converts all the resources that a business uses into energy numbers that are simple, accurate and actionable.
Why is a conversion necessary?
Without a conversion, you can't compare kilowatt hours (kWh) versus gallons of water versus billions of BTUs versus tons of waste versus tons of CO2. You can't make a logical decision about your resources. The location in which resources are consumed also plays a role, but you don't have any way to incorporate this data. So what you have is a list of numbers that are not at all meaningful for making decisions. It's like running a business in five different currencies without a currency converter.
So Energy Points is a resource consumption converter?
It sounds easier that it is. You need to solve three fundamental problem. First, the units themselves are not intuitive. Second, water and electricity and fuel are considered to be in different silos. Third and most important is that things are not calculated accurately.
What do you mean by inaccuracy?
For example, when we think about how we use resources, we ignore location and time. Water in Albuquerque, New Mexico, and water in New York should be rated differently, due to the variances in availability. Also, the time you draw the water is important due to weather factors like drought. For electricity, time plays a factor in terms of peak and off-peak usage.
Doesn't the market value these resources properly?
It turns out that the market doesn't do a good job in pricing natural resources. If you would like to make environmental decisions based on pricing, you would expect water in Boston to be cheaper than water in Albuquerque because Albuquerque is in constant drought and Boston has six years worth of water in its reservoirs. But water in Albuquerque is five times cheaper.
What's the reason behind that?
Water prices in the United States are based on the amount of money invested in the infrastructure. So it's a paradox. If you have a new infrastructure, water is more expensive. But consuming it is less of a deal. Electricity is a similar example. Electricity from coal is cheaper than electricity from wind. So if you just want to save money, you would buy coal. But if you want to be better to the environment, you would rather choose wind. So the market doesn't work when it comes to natural resources.
Why did you make an Energy Point equivalent to a gallon of gasoline?
Because it is the most intuitive energy-related unit in the US. We wanted to build a system that is intuitive from the outset so that people can easily understand it. If I tell you that you consume a million Energy Points, you would know it's costing you somewhere in the range of $2-5 million. So it's familiar, intuitive and makes sense. It's also the right size—and people care about fuel. But in order to develop an accurate system, what we need to do is not define it by the energy embodied in a gallon of gasoline, but the amount of energy that is required to create a gallon of gasoline, namely primary energy.
Can you explain the reasoning behind that decision?
If you just count the end-use energy, you basically ignore all the losses in the system. And we want a system that takes losses of the entire system into account because we want to show people how heavily or how lightly they step on Earth's strained resources, the infrastructure and consumer resources and allow them to make decisions based on the financials that they're already familiar with. We count the amount of natural resources that are being used as energy, whether its fuel or water or waste. This way, you can understand your impact in way that is simple, accurate and actionable.
Can Energy Points determine the efficiency of all energy sources?
Behind every electrical plug, you can have an efficiency rating, just like every car has an MPG. If I want to reduce the number of gallons I consume, I either drive less or drive a more efficient car, or a combination of both. By the same logic, if I want to reduce the number of Energy Points I consume, I either have to use more efficient technology, like LED lighting or energy-efficient appliances, or have a more efficient energy generation, or a combination of both. So for example, we start with an Energy Point of coal or natural gas and we count the kWh we have at the end to arrive at the MPG of the plug: how many kilowatt hours I have per Energy Point. This way, we can compare the kWh of coal versus natural gas accurately.
What are the best and worst sources of electricity in terms of efficiency?
Typically, coal will be 8 kWh per Energy Point, which is the least efficient. Solar and wind are the most efficient at around 80 kWh per Energy Points, depending on location.
You mentioned that location and time are generally not considered. How do you incorporate these variables?
In terms of the "big data" aspect of what we do is we take all the power plants and all the electric grids in the US and convert that data into what we call efficiency maps, which are dynamic because you consume electricity differently at different times of day. If you're in Colorado, for example, most of your electricity comes from coal, so the efficiency rating is low, while in California, the number is high because most of their electricity comes from natural gas. So every CFO who also drives a car all of a sudden understands energy efficiency because it's just like the MPG of your car. You consume 50 kWh in Colorado, it's 5 points. In California, it's 2 points. So it's very simple but very accurate because it takes into account information down to the building level. For example, if you installed solar panels, your efficiency rating changes.
How do you handle carbon emissions?
The way we account for CO2 is by asking how much energy you need to invest in order to mitigate CO2 emissions, such as carbon capture or sequestration, so it's already included. Even if I ask experts to give me CO2 numbers, it's highly non-intuitive for them. But if you embed it into the energy efficiency, you take care of the CO2 problem without forcing people to learn it. In addition, our system allows people to report carbon emission.
So much of your business is based on big data. Are there some kinds of data that you're not able to get now that you wish you had?
First would be waste data. People tend not to document the kind of waste they create and dump. And also, organizations don't assign waste to where it's generated so it's very hard to improve. When companies send us waste data, in the best case, they just tell us how many tons of cardboard and steel waste, for example. But we want them to assign it to location so we can enable them to improve. Also, it's pretty hard to get electricity and water data per ZIP code and building. In general, it's possible, but we're investing a lot of effort to get this data, but in principle, it should be free to anyone. In general, the US is by far the best place in terms of data availability. Try to build these detailed maps in China and it's very difficult to get to the same level of accuracy.
Are you still involved in environmental activism?
I see my activism as doing the numbers right and allowing other people to make the right decisions. I teach Energy Points wherever I can and have time just because I want people who study sustainability to be able to discuss it in a quantifiable way. In order to reduce our impact to the minimum possible level, we need to have numbers we can trust and use.
If you could enact one law that all countries and all companies had to abide by, what would it be?
All organizations, whether governmental or commercial should accurately measure the consumption of all energy resources (electricity, fuel, water, material, etc). Accuracy means taking into account local resource scarcity, efficiency and emissions.
As a successful entrepreneur, what advice would you give to a young entrepreneur?
You need to have an idea that you're really passionate about. Without that, the chances of succeeding are pretty low.
The US has been lagging behind other nations in terms of math and science. One of President Obama's goals is to get more American students interested in these fields. As a scientist, what would recommend to achieve this goal?
I think that the educational style in the US is based too much on description and not enough on critical thinking. For example, my younger child is in elementary school. They studied optics and I went to see a show-and-tell of what they studied. And instead of arranging lenses to see how the beams move to inspire questions, they simply dissected fish eyes and sheep eyes and doing things that are purely descriptive. So I think that instead of describing problems, you need to really analyze problems. In a way, it's like you do physical training. You need to be trained in analyzing problems and solving them.
What’s the biggest challenge facing Energy Points?
No idea can be better than our ability to execute it. We focus on execution and are pretty good at it. The challenge in every startup—and we are not different—is to optimize the path between funding and traction to create maximum market share at minimum funding and time.
Beyond converting resources, Energy Points provides a complete energy ERP (enterprise resource planning) system, correct?
Yes. We call it "from the boardroom to the boiler room" because the board wants visibility on the organization, but some of the actions need to be taken on the boiler room level.
It's like Downton Abbey. The decisions of how to run the house are made upstairs, but the work to make it happen occurs downstairs.
Yes! My wife and I love that show.
Considering how mismanaged the estate is, they probably could use Energy Points to make their decisions.
Well, let’s say the butler Mr. Carson wanted to present the estate’s environmental impact to Lord Grantham. This would be very easy with Energy Points. They can see all resources—travel, electricity, waste, water, etc., translated into a gallon of gasoline. They can make more informed decisions that help keep their costs down and also are better for the environment. They can use the Energy Points portal to assign goals and formulate a plan that gets the most environmental bang for the buck.
About Ory Zik
Prior to founding Zik Energy Points Inc., Dr. Zik was the founding CEO of HelioFocus where he currently serves on the board of directors. The company develops solar thermal augmentation for conventional power plants and is now growing internationally. Prior to HelioFocus he was the founding CEO of QuantomiX Inc., a microscopy company based on his invention, which he led from inception in 2001 to commercialization. QuantomiX was the first to visualize cells and tissues in their native wet state with an electron microscope. In 1992, he spent a year as the curator of Israel’s National Museum of Science and in 1993, while a Ph.D. student, he founded Greenpeace Israel. Dr. Zik Holds B.Sc. in Physics and Mathematics from Tel Aviv University as well as M.Sc. and Ph.D. in Physics from the Weizmann Institute of Science, where he received the Feinberg physics award and the national Amos De Shalit physics prize. He holds worldwide patents and has extensive experience in founding startups based on university innovations (Weizmann Institute, Stanford, Harvard, Boston University, Purdue). Currently, Dr. Zik is an MIT research affiliate. He is also active in education, coaching first-time entrepreneurs, and environmental protection.
For more about Energy Points, visit: http://www.energypoints.com.