This bill costs industry millions and nobody checks it

Okay, yeah. perch.

Good, yeah. Deutsch, yep. Yeah, indeed.

Mick, good talking to you.

No, that's a good question. I could talk for a long while here. I'm a German now living in Canada after a long detour. in short, I spent 20 years in the energy industry. started off as a risk engineer, then moved into commercial roles, started off in in Europe, then worked in Far East Russia on the Sakulan 2 project, then finally Canada, LMG Canada. yeah, energy industry. And on my last job, I found an area that I thought was vastly under addressed by industry. and that was related to industrial power. found an opportunity there and found opportunity to found ardour. That's the very short story.

Sure. And again, my background, 20 years, oil and gas, energy side. Power is usually a it's a top five or even top three operating expense item. So it's very big and it's crucial for operations. But the challenge is it's usually just seen as something that you can't influence very much. So once it's originally set up from a commercial perspective, original contracts are in place. Then it's just treated almost like the weather. So the invoice comes, you match it, does it look roughly right? You pay it, and that's it. Otherwise, it's the engineering teams that take care of it, that keep optimizing it, make sure the power is always there. But commercially, remarkably little focus on it because industry doesn't see the agency. Yet there is quite a lot of agency. There are a lot of ways you can influence costs, as I found out. Now, how did I find out that it isn't properly addressed? I was part of the problem in a way. I was one of those people that left money on the table, and I found out I was rather the rule than the exception. So there is a big opportunity, and in particular here in deregulated markets like Western Canada, like here in Alberta, where I'm based.

And that's exactly the issue. So there are ways you can influence it, but it's almost never simple. So power is one of these things that is quite complex and often a bit counterintuitive, and it's easy to get bogged down in a lot of details. So I'll give you an idea. You can work on, we put it into three categories: contractual levers, operational levers, and investment-based levers. And within these, there are multiple areas. You can hedge your power costs, you can change your retailer, you can have contracts for difference, power purchase agreements, you can do what's called demand response, you can put solar or a gas fire generation behind the fence, you can install batteries, there's lots and lots of things. If you want to address all of this and assess this really, sometimes energy audits try to do that, and it gets really complex very quickly. It's often a great space for consultants because it can be so many billable hours on the consulting side. But the problem for a client is it is really frustrating. And I was on the other side. I looked at these big power bills, and that's where it often starts. Just try to understand an industrial power bill. If you're in a deregulated area like Alberta, these can be really complex to read. Your transmission charges, distribution charges, there are very complex elements. Then do you really want to hire a consultant to spend many hours? You don't even know which questions to ask. And when they come back after a lot of hours, they give you a detailed report and it becomes your problem again. So it's one of these areas where, and sometimes they might not even find anything to improve upon, whereas other times you can say five, 10%, 15%, which is very material given how big these numbers are. For an industrial player, they pay easily several million dollars every month just on power. But how do you find this out? How do you do it? It's complex. Usually it's not a big enough scope that it warrants keeping an expert in-house. So even your commercial expertise is expensive to retain, it's complex to retain. So oftentimes then it's just one of these elements that gets verified high level. And as a result, a lot of yeah, money is left on the table.

Very good question. And I'll I'll give you the the lawyer's answer. It depends. And what does it depend upon? Because that's really the approach we take. The there are so many levers and the answer you have really depends. we're working with a midstream company right now where something like hedging, classic hedging, is a very important lever. For an upstream company where we worked a few months ago, opportunities were more around. power factors, and some of the data verification parts. So it's very different. Now, the problem is there's two ways to do it. You can do it very bottom-up. That's what energy audits do. So people are sometimes familiar with things like ISO 5001, other audits. These ones are very technically focused, they go very broad, but also very bottom-up. They assess all these levers. And They can sometimes be very good for companies that have the stamina. one of our clients has done that very successfully, but they hired someone who do nothing to do nothing else. And they spend a few years now on it and they assess all of these systematically. Can work really well. For a lot of companies, that's overwhelming. It's so big. Our approach is top down, so we just scan broadly and then very quickly narrow it down more with a commercial DL lead mindset, which yeah, comes back to the background that my co founder and I have. In on the deal delivery side.

Good question. I'll give you an answer. So we have invested quite a lot into building up our own analytics. So one thing we have done is whenever we solve a problem for someone, we encode it so that next time we solve the same problem, we're more efficient at it. Coding, I'm a mediocre coder. we hired a recently a young engineer who's much better at than I am. But even there, using AI to enhance our coding, not asking AI to solve the problem for us, which so far we've Not found any really good way to be able to rely on it. But using AI as a productivity tool, hugely useful. For example, we've just deployed our own data platform that's already currently used for visualizing a lot of the market data that comes out. yeah, it's a more advanced visualizations, integrations with clients, private data so we can give them advanced features. A lot of that coding. two, three years ago, we would have had to hire several programmers. Now we have one to if you count me in with halftime, like one and a half people doing the coding, but we can do a lot more work and deploy a lot more code. We're still old school in the sense we want to understand what we actually have. So this is not vibe coding. This is not this is defining a scope, help the AI helping us to develop a code base. But then we still read and verify every single line so we understand what we have before we deploy it. So I would say our approach is more conservative there, but it a vast accelerator of productivity. And for me personally, as a non-native speaker, I love AI because when I have to send out especially formal proposals or so, even after more than 20 years abroad, I like AI just looking through if my sentence structures can be improved and and other things. So I I like it as a productivity tool. I cannot yet see we sometimes try it out what it could deliver as a straight up solution tool. I'm not convinced there yet.

Yeah, so if we look at the market, look at power perspective here, and again our home as Alberta home base, AI in the sense that it's the biggest load demand, load growth. So biggest source for load growth, AI data centers. We're here at the epicenter of the data center boom in Canada. If you look in the United States, it's data center alley in Virginia plus Texas with ERCOT Market. Canada is all about Alberta. So that's coming in, that's driving load growth. And of course, there is a big question mark from industry. So far, our power market is dominated by the by the demands from oil and gas industry here in particular and petrochemical. What does that do to power prices, to reliability? Same from the consumer perspective. So AI is a big topic from that demand angle. what is happening here? Same as most other markets, power. Demand starts to grow very disproportionately after decades of almost slumbering along with very slow growth. We really see this taking off. our system operator just last year assigned one point two gigawatts of firm grid capacity to two new data center projects. That's twelve percent of the total power market here, roughly speaking. So it's big. Right now is a discussion of giving another 1.6 gigawatts, so another 16% potentially as what they call bridging capacity. That is currently heavily debated. But there's a lot in flux. We also have the biggest regulatory restructuring in a quarter century here, since 2001, happening in Alberta, where we move from uniform prices to locational marginal price. So lots of different price points, hundreds of markets out there. We're moving towards a bigger price cap, lower price floor. So without going too deep down that rabbit hole, everything is really shifting in this market. And that is a threat to those companies that don't work in it. And it generates a lot of opportunity for those who are proactive. And that's where we're positioning, helping those who want to be proactive and turn this challenge into an opportunity and into economic resilience.

Yeah, good good good good question. And I'll just take back my my last role. I was in an E VP role here with with Petro China with one the larger companies in Canada, and leaving that for a startup. So going from an executive role in a major oil and gas company to being a startup founder, I will say was a rather big leap. Why do it? And and to be honest, I was thinking I heard many years ago the Jeff Basil's quote, the regret minimization theorem. As an like when you turn 80, what will you regret more? Having tried something and failed, or not having tried it in the first place? And I thought I was I'd always thought about founding a company and building something up, but I didn't have the right idea. And here was an opportunity that was almost knocking on the door. And I could see how, with my background and then my co-founder's background, had a similar vision as well. How we could bring something out there that wasn't addressed and we could build something bigger on it. That's where we started. In terms of pivot, lots of stories to tell there. Because in the beginning we wanted to go low risk as well and certainly did not want to dilute. So we we hit the ground running with something that we knew. Actually, I started off the first year with a lot of LNG-focused consulting. So gas market, liquefied natural gas. I had done those deals for years. I was known in that market there. And that was a great way to start bootstrapping the business and on the side starting to build power solutions. So that took a while. That then learned a lot of lessons along that way as well that helped ultimately. But the vision was always, okay, we want to build a bigger company, but we need a solid foundation. so we've pivoted more over the last year, it's been almost entirely all focused on the on the power side. And we have still not had to raise any capital behind it, with the ultimate goal, okay, let's really grow this as big as we can. where we are right now, as I mentioned, we brought in an additional young engineer who does a great job there on our analytics in particular. So it's it's three of us now. We have a strong foundation. the consulting business there works well. Next step is owners rep business. So representing the clients, taking over their work as their representatives. They don't have the core expertise, so we deliver for them. So it's end to end from problem identification, solution identification to delivery. And then the next step beyond that will correct, yeah.

And then the next step might be even deploying some of the assets behind it. That's further out in the future. But we're very solidly on that first path, really levering our analytics that we build out along the way, but with a growth mindset.

It it's it it's certainly a very humbling experience as well. And I will say my respect for entrepreneurs who do this successfully has just grown tremendously. So many of the th I I thought the main challenge would be delivering the actual work. But all the things around it, like you mentioned, like how do you set up a web presence? What do you do? How do you do your accounting? Like sales and marketing. I so underestimate how hard it is to do Really good sales and sales which are not pushy, but you really want to find out what the client needs. How do you do the interviews? The good thing is we came at least from the industry, so we know all the industry things, we know a lot of the problems, but still you need to invest so much time on the questioning side, not to come in with too many preconceived notions. I had completely underestimated in the beginning, just how complex that is and how much there had to learn. So a lot of learnings, also very ro I would say very rewarding and very humbling at the same time.

That's a very good question. I would say I spent most of my career initially with with Shell and then Shell's joint ventures globally. and then Petrochina at the end. There is a reason why both of these companies are so big and y you look at the lot their long history, how how something that explains their longevity, their strength. It's not all luck. They have very solid processes and they really manage risk well. Especially on the shell side, I started as a risk engineer. The risk management on the pure safety side, but also financial side, contractual side, is extremely good. So it's something where it might cost you some upsides at certain times, but it really ensures that you have a robust business. So one thing we took away is always make sure that you Say that that you have at least a solid process underneath, and that when you do things, you protect your you protect your downside, you protect your reputation. Huge focus on that reputational management as well. So that is important for us now. Now every big company comes with, I think it's unavoidable, best companies in the world, with with a lot of complexity and processes. So we also learned which things to to really minimize and avoid early on. We've seen Where startups like ours really have strength, the agility, the amount of time that in a big company unavoidably gets spent on internal processes and coordination and meetings. A friend of mine who started his own consulting business a few years ago, he said, Jan, when you start, the first amazing thing you'll notice is how long 40 hours a week is. Because you don't spend half of them in internal meetings and things like that. And it's very true. So a lot more things to do, but also you have you have that ownership, you have that flexibility. And yeah, anything which you think is a waste of time, you just stop doing it. It's just I found that so rewarding and that really the strength. But certainly from the big companies, a lot of good things to be learned as well.

Yeah. Good question. The the the highest level sense check you can do is whether you might have opportunities is to ask, have you look have you looked at your bill and do you have a do you have a power strategy? Have you thought through how to do it commercially? If the answer is no, then probably there's a very high chance you have an opportunity. The second one is the simple question, do you know what you pay for power right now and how that benchmarks? And you can do some very high-level benchmark tests. Certain costs are indeed things you can't influence, but other elements are. so do you actually know what you currently pay, how that compares, and what what you should pay? If the answer is well, like most companies that we've talked to virtually everyone, the bill comes through, people compare. Is it roughly in the ballpark I've budgeted for? They ask the site manager, have you consumed this much? They say, Yep, sounds about right. And then it goes through processing. And I will say the the utilities are of course heavily regulated as well, in many ways. So it's not like there is anything wrong going on. But that can lead into complacency that you don't proactively look for what you can do. So it's a highest level check. Do you have a strategy at all? And when was the last time you've really looked at what you're actually paying? And if the answer is well, not sure we have a strategy or we haven't overhauled it. And well, at least commercially we haven't looked at it in in detail lately. The nice thing is you can do a lot with screening. You don't have to straight jump into a detailed energy audit. oftentimes, as where we usually start as very basic scope, and within a few weeks, a couple of interviews, couple of weeks of reviewing clients' data, you can sc you can narrow it down to saying, Do we think there's an opportunity? Yes, no, and where to focus?

have a look, ardor.ca, you find our contacts on there. You will find me on LinkedIn as well. always happy to talk, even if you just want to have a brief chat and just say, Hey, I'm not quite sure what to do. Happy to have a quick chat. there are cases indeed where there's limited opportunity, and there are others where there's very big opportunity. So always have happy to have that chat, just exchange some thoughts and and really take it from there. Our team we're we're all very passionate about this, so always happy to talk and i it's a fascinating space.

Thanks, Mick. It was great talking to you. Appreciate it.