Episode 39 – Part 2: Challenges and Drivers in Adopting New Building Materials with Vighnesh Daas from Sensicon Ventures

The following transcript is autogenerated so may contain errors.

Matt Nally: In part two of this week’s episode with Vighnesh, we are looking at the sort of challenges of adopting new materials. So what are the the drivers that are allowing new materials to be adopted, but also what are the barriers preventing it? So if you haven’t listened to the topic one, have a listen to that in terms of the type of materials that are coming to market.

But yeah, Vignesh, what do you think are the, what are the big drivers at the moment that are meaning new materials are being implemented? And I suppose later on, we can look at what’s. What’s the barrier?

Vighnesh Daas: Thanks, man. I don’t know about you guys, but I feel the world’s really changed since COVID.

The pandemic changed the world in numerous ways. We became more mindful of what we’re doing as a species. There’s a lot of many people looking into net zero. There’s a lot of many people. Looking into how do you build responsibly? And yeah, we just, I think, appreciate our planet a little bit more.

I feel like that’s the first driver. The second driver being government regulations the Paris agreement net zero regulations of the UK similar ones with governments across the world. I think it has become apparent that we do need to change the way we build. Um, and if we were to keep building the way we are, we will struggle with future generations and with future materials.

And I think those two are definitely the key drivers. The third one I would definitely say is Is financial returns. Previously, there was no significant financial returns from using innovative new materials or sustainable new materials because that was something that, companies wouldn’t look at if there was no business case towards it.

And right now, with banks and financial institutions being and pension funds being driven by sustainability credentials and responsibility to their shareholders, there is. Has allowed or has compelled almost contractors and specifiers and developers to go and hit those targets. If you want to borrow money off these financial institutions, you need to show your project sustainability credentials.

And when you’re a huge developer it does account to a lot more savings and profits. So yeah, I would, if I was to summarize it, I would say one is people’s change in mindset. Two is net zero regulations and three is financial and shareholder requirements from financial institutions and developers.

Matt Nally: Yeah, that’s really a good point about the COVID one. I think that did accelerate a lot of things because I think before there was a belief that, yeah. Changes would make, wouldn’t have a huge impact potentially, but that might be a wrong assessment, but certainly during COVID when everyone had to stop around the world, suddenly all of the yeah, the pollution maps and all that type of stuff just completely changed.

I think we then quickly realized how much we can have an impact quite quickly with different changes. So yeah, I can see how that would have driven Yeah, a change in mindset, how much as well along with yeah, changing financial returns where there’s more incentive, to be seen to be more green and so on.

How much is it also that the stage at which materials are is changed. Are you there? Is it that materials are further down their life cycle have been proven to Be effective and safe and so on. Cause we touched on risk, um, risk of adversity earlier on. Yeah, is that a driver too, but you happen to have more materials now that have moved into a later stage of success or proven ability.

Vighnesh Daas: Matt, that’s a bit of a chicken and egg situation really. Because if all these drivers didn’t come into play, I do not think that the industry and the people who are responsible for more specifications and incorporating these materials we’re interested in testing them as rapidly and trying them as rapidly as they are doing right now so these three drivers are certainly compelling a lot more companies and Industry members to look at these innovations a bit more seriously because they have to hit some of their targets Before that it was almost a phd project or a research project And CSR or whatever you want to call it.

Right now it’s a completely different mindset because if you don’t do it, you don’t win a project in a massive framework. And that impacts your business case and that impacts your underlying profits. So at the end of the day, It is highly profit driven. It is highly survival driven.

If you want to be in the construction industry, if you want to keep supplying products, if you want to keep designing buildings and infrastructure projects you’ve got to look at these aspects because business as usual is not going to get, let you hit those embodied carbon targets or operational carbon targets.

Something I’m hearing quite often is there’s a carbon budget. For every big project coming up. And that carbon budget is almost is from the asset owners themselves. So the asset owner would say to that framework, this is our carbon budget. You’ve got to go and find solutions within to stay within this budget or you’re financially liable towards not hitting those targets.

I think that compels a lot more of these new technologies to be tested. Where before the case was almost saying it’s your innovation, you’re a starter. You’ve got to go and prove it if you want us to use it now, there’s a bit more of a technology change where it’s come to that point where it’s your innovation.

Give us some numbers. And let’s go and do some tests together and see where we get to. We may or may not be able to use it, but we would like to trial and test your product. So that does make it a little bit easier for innovators and startups to go in and trial new building materials or new software or new, programming stuff.

That is a key change. Another bit is the venture capital model. The venture capital model has never been ready for hard tech. They’ve never been ready for building materials because like we have discussed earlier, it needs to go through design standards, security checks, safety checks has to fall within some Euro codes or British standards.

It’s a long slog. It’s not like building a software. You can build a software within a few months or a year or something like that, and you can test it on the market. You can do a, beta test or whatever you guys call it. And within two years, you’ve got a market share, you’ve got revenue, and it’s great for the VC model because they do have to show returns to their investors.

But with, building materials, it’s not that quick. It takes a few years if at the earliest to go from a university grant research project to being, a material that you can see outside. And that’s the key challenge for this industry, the adoption, how quickly can you scale the innovation and adopt it.

And now there are more and more VCs who understand this, there are certainly a few VCs who understand this and it depends on their investors, but their investors are usually, companies in this realm already who are looking to incorporate this as a new product in their supply chain, as a sustainable offering, as an alternate.

And that’s a great business case. And that’s what is so helping push the innovation to market. And that’s a huge change in the last five years that I’ve seen.

Matt Nally: Oh, yeah. I think we’ll cover more of that potentially in, yeah, the sort of final topic around the venture building bit, but I suppose the other sort of types of barriers and I’m thinking back to something we touched on in the first part around like rack concrete.

But. What are the challenges around, validating the lifetime of a material and, will it stand the test of time? Because I suppose that, is there a hesitancy as well around new materials because of yeah, materials of the past that have, potentially turned out to have big issues later on down the line?

Vighnesh Daas: Oh, absolutely. I think, it’s, where do you trial these new innovations? We keep talking about two things. One, the supply chain to the project management. All of this is almost fixed, right? If these are fixed, where do you find space? I think it’s up to asset owners and asset managers to find pockets of, innovation funds, small innovation funds small pilot trial funds on every framework.

If they can find that, then the. Contractors and their framework vendors are almost they’re almost reliant on those innovation funds to go and trial some of these new products that are coming to the market. So it’s finding a separate space, a safe space, if I say that to trial these things.

And also there is a massive role for universities to, to play in this. Conventionally universities have always been published research papers, go to conferences, And finish a PhD. I think that model has to change and is changing. Certain universities are changing it really well. But the targets need to be very different.

The target is how do you do accelerated, for example, corrosion testing or what we call as freeze thaw testing? How do you do that in an accelerated manner that you can say, if you add self healing concrete, you can do accelerated corrosion test and prove that. with, if you use self heating concrete, then it does reduce the rate of corrosion.

And if you can, then prove that data and send it to contractors and frameworks, then it comes from an independent potent body and senior researchers to say that, yeah, we’ve tested it. It does stand the test of time and there is technology, there’s environmental chambers, there’s accelerated all sorts of tests, there’s fire testing.

And that is a key way. And I think Innovate UK, for example, are doing a great work in this space. I know that they have working with them. We know that they do what they call as an advanced subscription with certain asset owners and asset managers where they do give funding to startups to go and find them these advanced subscribed users who will use these on their frameworks and then work with universities to prove these projects.

And I think that’s a great way it’s evolving. The space is evolving. So it’s really promising on that aspect. However, I think there’s a there’s also a major challenge. A major challenge being design standards don’t really change so quickly, and they shouldn’t. For the right reasons. However, if the data is there and the there’s sufficient data from numerous sources, I think it doesn’t really change.

It’s a business case for these design standards to be revised more frequently than they are currently and, or there’s an aspect where there’s public publicly accessible standards PS there’s numerous ones. And I think PS could be much more relied upon by designers and contractors to incorporate these new these new technologies.

So yeah, it’s a bit of a cross siloed thinking as some of my colleagues would like to say, You know involving universities startups and asset owners and that’s something that you know We have done really well for the last couple of years. Yeah, i’m singing my own praises, but it’s it’s been challenging But we do know that it is possible and if people want to do this I would definitely encourage them to go down that route

Matt Nally: That’s a good point around the one of the issues around to testing the longevity of products will be the financing aspects of doing the tests in the first place to prove that is another aspect a geographical issue.

And by that, perhaps you’ve got Someone who’s interested in using a particular material when they’ve got that, they have, they’ve got that signed off that there’s the willingness, but the new material, for example, whether, let’s say the electric arc furnace installation is in a completely different part of the world.

It’s not near them. Are they issues we’re seeing as well in terms of not having. Alignment of where the materials might be even where the people willing to do them use them are Was that less of an issue?

Vighnesh Daas: I think it’s a major issue. And you’re right but if we talk about the uk, we’re a small island.

We do import We’re a net importer of a lot of these building materials. We get stuff from Spain, Turkey, Portugal, China, India all over the world really. And yeah, it does possess key challenges, but there’s something coming called as CBAM. It’s like a carbon border mechanism.

It’s like a tax which will be applied on if you import products from outside the EU or the UK or something like that. And That’s something that is driving the industry here as to be less reliant on those sorts of products and find more innovative technologies here that can be augmented with the existing supply chain.

There’s only a certain number of steel plants, for example, if we were to take that example. So a company dependent on on utilizing waste from those steel plants will always be dependent on a certain radius from within that steel plant. If it’s the UK, sure we’re not that big.

We can probably, manage distances, but there’s a fine balance between. Embody carbon and operational carbon. This is something that, when we used to run a pre gas factory, we would think about it when people used to come to me and say, wait, we want this embodied carbon to be hit number to be hit.

And I would just simply say to them, guys, you would do that, but you would increase your cost about three times and your operation, our operational carbon would be a lot higher. So you would need. a lot of energy or heating in the winter to make this product work. Why are you not thinking about that? So it’s tricky. I think everybody is learning. Everybody’s learning really quickly because some agencies have net zero targets of 2030, the UK has a net zero target of 2050. So it’s finding where do you find these pockets of pockets of opportunities to to make sure that you can.

Use g. B. S. Where you can, which is these deals like use the electric car furnace like where you can use if you have a coal power station near you or a port near you, then how about looking at P. F. A. Based product, which is fly ash based product. So I think Yeah, it’s not, it’s a tricky one.

Someone was telling me a couple of days ago, one of my old colleagues, he was like, Oh yeah, a lot of these manufacturers are using what we would call a SEM 3A. SEM 3A is basically cement and GGBS put together in concrete and it is lower carbon, but yeah, it’s been around for, significant number of years.

So it’s not new, but you’re packaging it as something that is new while you’re deviating towards it you do realize that GGBS won’t be around for that longer, because steel plants are moving into electric arc furnace plants. So that product is not going to be available in the UK. So if you’re changing your Precast or other factories into that, you best be prepared that in, in two years or five years, you’re moving on to another product very rapidly.

So it’s staying in touch with the developments of the industry and I think geography is, it has to play a key role. You can use limestone as a, as an aggregate in, in, if you’re in the North of England or in Wales, you go down towards London or something like that you don’t have the peak district.

Also, we need to protect the Peak District. We can’t use all of the limestones from there. Yeah, this conversation is, yeah is another aspect was, can you use local concrete break products as breakwaters in Cornwall without dredging a lake in Norway? It would be really nice not to dredge that lake in Norway.

But then you’re saying, oh, rocks are more sustainable. Are they really? Because you’ve dredged a lake in Norway surely impacting the ecosystem in, in that lake and near that locality to say that the project in Cornwall is a lot more sustainable. Is it? Is apples and oranges. So I think could you use concrete with a little bit more embodied carbon in, in, in that area locally manufactured with local stones and saving a lake in Scandinavia?

I would prefer that, I think, but I’m not an expert on ecology and all that. So I think it needs and layered and collaborative approach to, to manage those kinds of projects.

Matt Nally: Definitely. I think I think it’s going to be an interesting space to watch over the next few years in terms of, yeah, one, the new material is coming through but two, what changes the acceleration of adoption and and so on.

So it’s a, yeah, one to watch. Perfect. I think yeah, we’ll move on to a topic three, where we look at sort of the venture building that’s going on around helping to support the decarbonization of the environment. So join us

for that.