In this episode, we talk to Nick Piromsawat, a senior investment associate at ExpresSo, the venture capital and venture building team at PTT, the Thai national oil company.
Nick shares how ExpresSo is driving the transition from oil and gas to renewable energy and decarbonisation, by investing in and partnering with startups with innovative technologies and solutions for a greener future.
He also discusses the challenges and opportunities that PTT faces as a significant player in the energy sector, and how they are collaborating with other corporations and stakeholders to create new supply chains and business models that are sustainable and profitable.
Nick also reveals some of the most exciting areas that ExpresSo is looking into, such as sustainable aviation fuels, EV batteries, and second-life batteries.
If you are interested in learning more about how a large oil and gas conglomerate is tackling climate change and transforming the country's energy landscape, don't miss this episode!
If you're interested in learning more about climate tech, or if you're looking for inspiration to start your own climate tech venture, then be sure to listen to this episode.
And if you like what you hear, please subscribe to the podcast and share it with your friends.
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Tarmo Virki
Let's just welcome to the Naturebacked podcast where we are speaking with investors and entrepreneurs about the green economy. My name is Tarmo Virki. And today in Bangkok at the Harbour.Space University, my guest is Nick Piromsawat from PTT, where he runs a new solutions team. What do you do exactly with PTT? Nick?
Nick P.
Yeah, so the Express Solutions team. ExpresSo is the short form and what we go by we're essentially the venture capital and venture building team at PTT, the Thai national oil company. Some might wonder what an oil and gas company wants to do with climate change. I mean, well, since we are definitely one of the major culprits of accelerating climate change, we feel that we are somewhat obligated to really reverse the change. And, of course, oil and gas is a sunset industry. For business reasons, we need to find new avenues to do business as well. And of course, the most natural, the most natural choice is to go towards renewable energy and decarbonisation as a whole, because that's essentially what's going to replace the energy sector. So we're really bullish on trying to make your transition, go, Go fast. And that's one of the major roles of espresso, which is finding the right technologies and solutions to make those transitions with technologies into new businesses, including especially the ones that would lead us to a more decarbonized future. And my role here is Senior Investment associates where I work on the venture capital side, finding great investment opportunities into other funds, and also directly into startups that have the technology capability to create these new decarbonized supply chains based on their technologies and their business angles as well. And it's beyond just a financial investment into those startups. We look at it mainly through a strategy angle in the sense that, hey, after we invest in these startups, how can we perform? How can we form the right relationships, and the right commercial arrangements to work together and then create new businesses that would one - create represent a new revenue stream for PTT, but also decarbonize businesses in Thailand? Whether that's the energy sector, the construction, losses, logistics and whatnot,
Tarmo Virki
How big is the team? Or what's the scale of your operations?
Nick P.
Yeah, so our team is roughly 20 people, including both the investment and venture-building side.
Tarmo Virki
How many deals do you do, and how many companies do you invest in?
Nick P.
So we end up investing in about like three or four companies per year only. But the average investment size is usually somewhere between five and $10 million. We invest in series A plus startups for the most part, and from the venture building side, we've successfully spun off, incubated and spun off three different companies that tackle different sides of the decarbonized economy, then being one of them is renewable energy certificates, based on blockchain technologies to pretty much certify renewable energy production and another one is called swap and go, they're battery swapping tech solution for two-wheelers, more electric motorcycles, really. And the other one is to make EV where their digital solutions providers are targeted towards larger institutions, governmental institutions and especially players in the industrial sector to utilise digital solutions in modernising their business that's increases both efficiency in many senses and of course, helps them decarbonize with smarter solutions.
Tarmo Virki
What kind of businesses you're looking at? You know, linked, or how much are you looking for links to that potential kind of PTT operations? I assume you have also some kind of retail network in place, which means that electric charging would be probably something which would be very natural for you guys.
Nick P.
Right. So PTT has pretty much the whole integrated oil and gas value chain from exploration production through refining and gas, refreshen and distribution and through retail. So we intend to maximise the value of these assets in any way we can to pretty much be the starting point for new businesses that are there in the renewable supply chain rather than being based on the old oil and gas value chain. So we see our, through a certain lens, one can look at our legacy of a gas business as a liability in the sense that, hey, it's gonna go down one day. But in another sense, these are real operating assets with experienced people working on them. And with the right technologies with the right collaborations, it can transform, hopefully seamlessly into new renewable businesses. And of course, having these the oil and gas legacy business is a really important source of funds for us to deploy into investing in the future.
Tarmo Virki
Of course, this week we have seen around the globe again all the heat records. And yeah, and there's probably a lot of environmentalists also listening who think that it's all because of the bad oil companies. How do you work on the kind of trying to how do you work with us, basically?
Nick P.
I have had quite a few arguments with sceptics, trying to paint the picture that, hey, what we're doing is just trying to greenwash it all on the gas versus this, this ExpresSo, your unit or the otter businesses that are doing renewable stuff is just a tiny, tiny portion of the company, which in that sense, presently, it is true, like the amount of revenue we generate for these new businesses are is completely, still completely dwarfed by the oil and gas business. But on a strategic level, PTT has already, PTT group actually, like the whole group set a goal that 10% by 2030 10% of all our revenue would have to be based on new businesses, which include these renewable energies, which means that we need to invest much more than 10%. Today into these kinda new technologies, and to really transition into something new. Almost always, it requires cooperation in some way from the people who still maintain the current solution. So without us, this transition would be quite incomplete. So even though we face criticism and opposition, with very understandable reasons, we do believe that we come in here with the best intentions for not just the company but for the world. And we're doing what we can to push your transition further.
Tarmo Virki
Your focus is pretty much on Thailand, but at the same time, of course, the possible solutions coming out of those either spun-off companies or the companies invested. Potential having a much larger impact.
Nick P.
Exactly. Yeah, yeah. Okay. So I think that Thailand is in an actually very good position to become a technology exporter or solutions exporter of raw decarbonised solutions because for many reasons, economically Thailand is kind of entering this middle-income trap where we are pressured to be more services focused rather than being resources focused and being a technology importer is a really important part for the economy as well. So we believe that that the government's and pretty much federal national policies would support the creation of technologies for export. That's one. Secondly, Thailand has a precedent for being a regional leader in ASEAN, in adopting renewable solutions. This has been true for decades. And it's still true now. China has just been rated as the top adopter of renewables, and decarbonised solutions in the region and we intend to use this position of strength and double down on it and not just be the biggest adopter but be the exporter of technologies as well. And these things like I we believe at ExpresSo that the new renewable businesses is not just a business for Good is and it's going to be an immense business like the, the biggest business friend in the world, I would argue, in the next couple of decades will be decommissioned stations just because of the like mind-boggling scale of it. All businesses, essentially all businesses today have somewhat of a carbon footprint, more or less, and to be for the world to survive, that must be cut down drastically. And what would help that reduction is going to come from climate tech, it's going to not just from the technology developers themselves, but from the businesses that know how to leverage the technology in the right way and make the practical business fresh positions into decarbonizing them and beat by Thailand by being an early adopter and a big adopter. We can have the insights of how to actually deploy these solutions and these are the exact things that people who aren't familiar with this new business need. They don't just want the technologies to implement them. They want the whole roadmap, they want the whole game plan of how to deploy it. And as the first users, we can transform ourselves into the leaders of decarbonisation deployment.
Tarmo Virki
I would agree with you that climate tech is definitely part of the solution. The other part of the solution has to be kind of new energy sources, how in how is in the region? How are they doing? I mean, do you actually know that at least solar is something which has a strong potential here, right? I don't know about the wind. But how far is that? How big are they in that kind of total energy mix of their region or the country? Yeah.
Nick P.
So, I'll just focus on Thailand, for now, the renewable mix is still strongly below 50%. The mix is, of course, predominantly hydro and solar. But of course, hydro isn't really, you can't really force the scale-up of hydro, just because of the fiscal limitations and solar is a very, I would say, a very much still a growing industry. Influenced by the rapid decline of costs and the rise of China in providing really economic components for making this industry work. So lots of large solar projects are coming up, and the wind is limited, just because there are only a few locations where it would, there will be enough, actually, actual wind for it to be efficient enough. And for others, after renewable resources, biomass is something that I will say is kind of like the Holy Grail that people are trying to find because there's only biomass adoption in certain niche applications. But people haven't found a mass use case for it. And if we could find that that will be highly influential for countries like ours who are very agricultural base, and many other emerging economies are, has a big agricultural sector as well. So biomass definitely is one of the whole holy grail items that we are looking at. But we don't just want to focus on just trying to find the right energy sources to lead the transition. We, right now, a lot of our focus is on how to make things more efficient. And so just that we consume less energy. One of that is through implementing digital technologies, especially on the industrial side, to even just help them reduce energy consumption by just 5% which would drastically cut fossil fuels consumption. And In terms of the also usage of certain industrial practices, instead of just using natural gas as the heat source or the feedstock, there are alternative chemicals and alternative energy solutions, especially electricity and hydrogen that could power these power plants, because I'm talking about the industrial sector a lot because Thailand is quite an industrialised economy, and a huge chunk of our economy is based on the industrial sector. So I think, for Thailand, and presumably a lot of other emerging economies, decarbonizing the industrial sector is hugely, hugely impactful for the environment.
Tarmo Virki
When you're talking about biomass, one thing which comes to my mind is biofuels which are tightly linked to what PTT has been doing over the years, right? And with Nestes massive investment in Singapore to build the biofuel, diesel biofuel plant, I think. Which is also in the region. So I think that's the kind of connection I'm joined in my head. Are you guys in biofuels at PTT at all?
Nick P.
Biofuels are actually one of the reasons that Thailand has been really highly rated in terms of the adoption of renewables, because like if you just go out at every, virtually every gas station, they will have a blend of biofuels in that both diesel and benzene. And we are, though there hasn't been a significant change for a long time, we are pushing for like a lot higher than four for that, which is a work in progress for sure. But we ExpresSo are more looking at solutions that would essentially sidestep this continuous push in making the EV transition possible. That is true boats. One new business, that PTT has created that not from my team, but from a separate team, which is called a room plus, they are essentially PTTs EV flagship, and this is something that is very much linked to the national agenda as well, pretty much the government has assigned PTT as, Hey, you guys have to spearhead Thailand's EV transition, because this is going to be hugely influential for the environment and the economy. A big fear of the government is the loss of vehicle production in Thailand, like the automotive sector is huge in Thailand, representing a huge chunk of our GDP. And if one day that's wiped out, just because everybody is using EVs, instead, our country will be in a lot of trouble. So it's up to us to really make the right partnerships and write business decisions that would enable the production of electric vehicles in Thailand. And since we're already doing that, we decided why not just like do the whole integrated value chain in batteries production in software and consumer-facing solutions for people to adopt electric vehicles. And of course, charging infrastructure in many different forms, like one of the startups that ExpresSo indicated is swapping go for two batteries, solving for two-wheelers is a good example of how we're trying to accelerate the EV transition. And I think this is kind of a good example that proves that, hey, we're not just talking about going green, but actually making actually hiding the fact that we are still bullish on oil and gas, we are seriously trying to disrupt ourselves in transferring to the electric value chain. That means just destroying our own oil and gas demand. Well, we're fine with that. Because we know that hey, eventually it's gonna come. And it makes much more sense for us to just embrace it and lead it taking short-term cut in profits. That's fine.
Tarmo Virki
And it makes a lot of sense, because you know, being a first mover, or one is always the big thing in the business
Nick P.
world, right? And like combat coupled with the fact that we see that Thailand is well positioned to be the leader in Southeast Asia.
Tarmo Virki
What are the next big challenges for you and your team in the middle of 2023? The world has seen some kind of how would I say downturn. The investment markets have fallen off in the Western world? How is all of this impacting you guys?
Nick P.
Yeah. So the investments and investment impact of the Western world kind of coming down with that is certainly an obstacle for our investments to continue growing and generate business success, but it also means that we have the opportunity to invest more into assets that are right now, arguably very underpriced. So we are ramping up our venture capital operations and finding these REO value investments so that we could satisfy our financial mandate. Hey, just invest now where the market is cheap. And in the future, we still like to believe it will inevitably come up and the world can't afford the climate tech sector to go down like it's just not possible for the world. That's what I believe in. I'd hope and I hope most other people believe in that as well. And for that as for like the addressing the investment side and for the like the Western economy not performing too well. I think this is also kind of an opportunity for emerging players to show the world what they've got. And I think this is time for talent to really prove that we are serious about decarbonisation, we are serious about being the technology, adoption leaders in a forming what, what should I say forming like? Both the chips, Yeah, forming like an impetus for this? And it's Yeah, I think like partnerships is actually something that PTT, ExpresSo, at least, we have been struggling and we wish this was something that could have gone much smoother. Because another key component to make the decarbonisation transition successful apart from technology, we believe, is collaboration, because decarbonization is not just that people can create individual solutions that are better than the old solutions, we have to pretty much create entirely new supply chains that are practical for people to adopt, and also make the transition smooth enough. And even though PTT is a large company, like we're the biggest company in Thailand, and we have the whole integrated energy value chain, that alone isn't enough to create new recurrence, viruses and chains. We must work with other corporations that have those existing infrastructures, witters in construction or agriculture or industrials, we must be able to work with them closely to align our technology development. Strategy, technologically all directions align our investment timelines so that no one party has to be on the losing end financially. And when every party involved in every party involved is going in the same direction choosing the same technologies because some technologies just can't coexist. Instead of investing in all the technologies just choose one of them to deploy in with our limited capital. Well, choose the right technologies and go with the same strategies, pool funding, and aligned time timing, if we can do that, like if all if major enough major corporations can set aside our differences and set aside our own short-term obligations to all shareholders. I think this is something that really could accelerate Thailand's leadership position in creating different AI solutions. And this is actually something I fear, because if we are focused on having these squabbles, and this reluctance to be the first mover, reflux, and so like invest a lot because you fear that the other people in the same supply chain wouldn't share our enthusiasm that would just delay things. And once things are delayed to a certain point, maybe some other country, Vietnam, or Malaysia would just take our leadership position and Thailand would have us lose this really exciting leadership position right now. And yeah, that is definitely something I'm really struggling with. And I hope there will be really a change of when a change in the wind for collaboration really soon.
Tarmo Virki
I think it's clearly not only a challenge in Thailand, I think it's a challenge everywhere. And also, I think on a corporate level, it's sometimes much more difficult than on every call mental level, but also on a governmental level. The, you know, we have great declarations of fighting against climate change and a lot of signatures on different papers. Yes, but so little is done.
Nick P.
That's what so many MOU so many results to claim. Yeah, we are like ExpresSo part of our involvement with the climate tech industry is really one of the reason is to gain enough insight so we can give management solid inputs to what their sustainability roadmap should look like. How fast is it how risky is it? What technologies would enable it to become faster? Because right now, yeah, all the corporations have already said they're like 2050 2040, whatever it goes that they're going to be Climate Neutral net zero, but very few corporations have actually released like next year plans or even five-year plans, that is something that people are on the top are just really confused and, frankly, still a bit scared and sceptical about, they don't know, what they actually must do to decarbonize. They just know that they have to, they don't know how, and that's what we are actively trying to fix.
Tarmo Virki
Absolutely. That fix is desperately needed in many places.
Nick P.
Yes. Definitely not just a Thai issue.
Tarmo Virki
Exactly. The if a company working on, you know, changing the world and turning, turning the basically stopping their climate change and looking for investments. What kind of companies are interesting for you guys, any specific stage or sector in this field? Are
Nick P.
Something that we are looking at changes over time, but something we're looking into a lot right now is sustainable aviation fuels because this is something that could be a quick win per se because sustainable aviation fuels are one of the rare solutions that can be developed stand-alone and we just fit right into the old infrastructure. You don't have to change anything like the planes are still the same, like the transports transport and storage infrastructure is still the same, just that the liquid inside those inside that supply chain is changed from being on gas base into being made from sustainable materials. And it could also be, gradually rolled out starting with a blend of fields and transitioning into like 100% civil aviation fuel. So this is something that could garner momentum and bullishness in the climate industry. So we are looking at a couple of players in this space that we believe have robust technology platforms that could potentially become one of the winners in a sustainable aviation fuels industry. And another big one is in EV batteries and inland batteries as a whole for industrial, EVs and residential sectors as well, there is a lot like a staggering amount of innovation in this sector. Developed were like, huge teams of scientists are working on separate components of these batteries. And there are so many new tech upcoming technologies that claim they could be the winner. But of course, only a selected few of them would actually win. But when, when those players emerge, it would really, really create a, I would say, a breakthrough change in the adoption of electric solutions in, in both in all sectors. So like, technologies that are related to batteries is something we're really looking into. And not just the different chemicals or different production pathways is the different software and different ways of sourcing these materials as well. And of course, looking at Second Life batteries like because there's like the battery sector is really tied to like the mining sector. And it's well known that these materials that are quite rare, and are quite limited compared to the even present demand. It's so clear that the future demand is going to be tenfold of what we're using right now. And we're already running out of these things. So like Second Life batteries or recycling batteries has to be a big part of the supply chain, and it's something we're actively looking at. Good.
Tarmo Virki
We talked a little bit about what you guys are doing. We talked a little bit about the challenges. Looking ahead, we you know, what's your next big challenge?
Nick P.
Yeah, so our next big challenge, let's say in the three-year timeline, I would say is to scale what we're doing. This is I'm just talking about ExpresSo. So right now, our font and size are about 100 million US dollars. We see that hey, it's not gonna be enough just to drive the innovation for PTT like a giant company, the biggest company in Thailand like this is not enough just for us, but We are, we kind of have to be the bank on the fact that, hey, we are our strategy is to push talent as the technology regional technology leader, we can't just be $100 million front, we have to be bigger than that. And we are exploring not just getting funding from Bat, we are exploring getting funding from other corporations to have us act as the kind of knowledge leaders in decarbonisation because PTT ExpresSo is the VC with the most experience in this sector in Thailand, not just not because we were like the most visionary or something, it's just because we are the VC of the oil and gas industry, someone who's has been on the path of disruption for a while. So we had to be proactive, proactive before anybody, anybody else because the energy sector is the first to go. And that's why we have had most of this experience. And we believe that it makes more sense for other people to work with us, rather than having everybody every company set up their own climate investment team, that's just not very scalable, and will then make sense too, it makes more sense to have one large group of experts who have access to the best deals, access to the best knowledge and, and deploy that knowledge and those opportunities of collaboration with different players to many different corporations within the same umbrella. That on a structural kind of viewpoint makes more sense. And that structure alone would solve the problem. I said I'm currently struggling with the problem of collaboration. If different corporations are aligned. Financially, they wouldn't be, it'll become easier for them to be aligned strategically as well. So we're really looking to create another fun, like even bigger fun that would involve others, starting with Thai corporations as limited partners, and hopefully, we would be able to include regional corporations to make this movement with a shared vision with our share timeline with a shared technology selection. I believe that only with this, can we really accelerate the much-needed transformation for the region.
Tarmo Virki
Sounds like a great plan. Hope you can execute
Nick P.
it. Yeah, the plan is good. The execution is really tough.
Tarmo Virki
Thank you for joining us, Nick. Thanks for the chat.
Nick P.
It's my pleasure. On the back
Transcribed by https://otter.ai