Valor Capital Group-backed, Brazilian Nextron launches a marketplace for renewable energy credits
Roberto Hashioka and Ivo Pitanguy, Nextron's co-founders. Photo: Courtesy

Valor Capital Group-backed, Brazilian Nextron launches a marketplace for renewable energy credits

The startup has built a solution to trade renewable energy credits from power generators and reduce the cost of electricity bills for end consumers; it secured a $2.2 million Seed to boost its marketplace

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With the proposal to connect renewable energy generators to final consumers through a marketplace and subscription plans, the Brazilian startup Nextron Energia has just officially debuted on the market, driven by a $ 2.2 million Seed round led by Valor Capital Group and followed by VC fund Barn Investimentos.

Founded only six months ago by Ivo O. Pitanguy and Roberto G. Hashioka, Nextron takes advantage of Brazilian Federal Law 14.300, passed in January this year, which established the Electric Energy Compensation System (SCEE in the Portuguese acronym), in addition to the country’s Legal Framework of Distributed Microgeneration and Minigeneration and the Social Renewable Energy Program. In a nutshell, the law improves the rules for distributed generation and expands access for participants in the generation and consumption of renewable energy.

The SCEE is a system in which the energy produced by a consumer unit (natural person or legal entity) is granted, in the form of a loan, to the local distributor and subsequently compensated with the electricity consumption of this same unit. In other words, electricity consumers install a generator in their homes or businesses — such as solar panels for solar power generation, for example — and the energy generated in this process is used to offset the unit’s own electricity consumption. Solar energy generates “renewable energy credits,” which in turn lead to savings on the electricity bill at the end of the month.

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Pitanguy explains that around 70% of the energy consumption market in Brazil is served by the so-called “captive market,” i.e. by distributors that hold the service concession in a given region; and 30% is assisted by the so-called “free energy market,” accessible to large energy consumers, such as factories and shopping malls, which buy energy directly from generators. Nextron wants to bridge the gap between the final consumer and renewable energy generators, facilitating access to the compensation system.

Pitanguy and Hashioka’s solution was to develop a marketplace and an interface to connect final consumers (homes or commercial places) that cannot afford to install their own solar panels with renewable energy plants. Nextron does not sell energy, but rather energy credits. How it works: the production of the renewable energy plants is converted into credits by the distributors; these credits are made available by the plants on Nextron’s marketplace, which sells them and informs the distributor that the credits are being used by certain consumer units to reduce the value of the electric bill.

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To make this process feasible, Nextron chose to work with a subscription model, in which the price is calculated according to the volume of energy consumed. The platform becomes responsible for paying the energy bill with the distributor, while the consumer pays only Nextron’s subscription. According to the startup, a subscription can reduce the electricity bill by up to 20%.

“Nextron simplifies access to renewable energy while providing the interface with the distributor for the consumer to get a discount on the bill at the end of the month. For generators, we provide the possibility to monetize the plant, as well as reduce operational risk because they don’t need to worry about selling this energy; with the allocation of credits to customers — they plug into our platform, and we are the facilitator of the distribution of energy credits,” explained Pitanguy.

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According to the founders, the background for the creation of Nextron is the urgency to review Brazil’s energy matrix, which is 70% reliant on hydroelectric plants. “When there is no rain, the country resorts to thermoelectric plants, which are highly polluting, and the cost of energy rises; that is, we are polluting and paying a high price,” said Pitanguy. “The prospect is that the market share of distributed solar generation in Brazil will go from 5% to 30% in the next ten years,” added Hashioka.

Currently, the startup counts on the supply of two photovoltaic plants, one in Mato Grosso do Sul and another in Rio de Janeiro, in the Midwest and Southeast regions of the country, respectively. The expectation is that, by the end of the year, the company can offer around 200 megawatts, enough to supply about 36,000 customers (considering customers who have an average monthly electricity consumption of around $200, or BRL 1,000). The Seed contribution will be invested in the team’s expansion, particularly in technology and new business areas, in addition to product development, marketing, and commercial, to leverage customer acquisition.

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A direct result of the founders’ past experiences — Pitanguy worked for 15 years in the renewable energy market in the United States, Europe and Brazil, while Hashioka made a career in Silicon Valley and Europe — Nextron caught the attention of Valor Capital Group for its B2B2C proposal focused on renewable energy. “Distributed generation (DG) is not new in Brazil, but the market should face a new level of growth leveraged by the Law 14,300 and the growing demand for renewable energy sources,” said Beatriz Madeira, senior associate at Valor Capital Group.

“We saw a great opportunity to be a software layer on top of the distributors, to be a kind of virtual distributor in the country for renewable energy through a marketplace leveraged by machine learning and artificial intelligence models, enabling a personalized service in a simple, safe, and scalable way,” concluded Hashioka.