'We create innovation - and when it works big guys do the same'
3 August 2011, source Sustainable Business Magazine
'We create innovation - and when it works big guys do the same'
If the recession was supposed to have taken the wind out of the UK renewable energy sector's sales, nobody told the Good Energy Group. In its August interim report, the owner of Good Energy, the UK's only supplier of electricity solely from 100% renewable sources, reported revenue rises of 29% on the same period last year to £9.68M, with pre-tax profits up 13% to £273,175.
The company feeds green electricity into the grid on behalf of more than 25,000 customers, including sustainability stalwarts such as Innocent smoothies and Friends of the Earth, in a valiant attempt to bolster a total national output figure hovering pitifully around the 6% mark. While the Department of Energy and Climate Change's target of 15% electricity from renewable sources by 2020 seems illusory, Good Energy Group chief executive officer Juliet Davenport intends to do her damndest to move things forward.
Good Energy's philosophy is to offer a viable alternative to the 'big six' electricity cabal (EDF, EON, British Gas, npower, Scottish and Southern Energy, and Scottish Power), by bringing power to the people by helping people make power.
In addition to the wholly-owned Delabole wind farm in Cornwall (ten turbines, averaging 10,000MWh a year), the company pays almost 1,000 independent generators to produce energy through deals such as HomeGen (15p per unit of electricity, including those created for personal use), SmartGen (for small commercial and large domestic generators with significant export capacity), as well as a competitive commercial scheme for large-scale operations.
In 2008, Good Energy facilitated a conscionable energy mix comprising 79% wind (7% from Delabole windfarm), 15% hydro, 5.9% biomass and 0.1% solar; since 1999, the company claims to have reduced the UK's CO2 emissions by 296,000 tonnes - a figure it says is "equivalent to over 33,000 family-sized cars driving around the equator".
"I see Good Energy as a kind of disruptor company," Davenport explains.
"We create innovation and when it works, which hopefully it does most of the time, we see some of the big guys innovating in the same way."
A prime example of this came last year when, in response to customer demand for a duel-fuel package, Good Energy started supplying gas. This presented an ideological quandary, as the UK network is incompatible with renewable gas.
Noting that while half of the UK's CO2 emissions come from heating only 0.6% of the 'heat' demand stems from renewable resources, Good Energy transformed constraint into opportunity, plumping for regular gas but choosing to siphon subsequent revenues into what is the UK's first renewable heat incentive scheme. Rewarding microgenerators of heat from solar thermal panels, it pre-empts the Government's plans in this field by almost three years.
Last year also saw Good Energy launch an online educational-cum-retail hub that provides advice and sells energy-saving gizmos, from lightbulbs and measurement products to solar powered novelty items.
The urge to innovate is in Davenport's blood. As a child she would frequently accompany her rally driver journalist father to racetracks across the country, revelling in the competitive thrill of pushing technology to the limit. After studying atmospheric physics at Oxford, Davenport fuelled her burgeoning interest in climate change by completing a Masters degree in environmental economics at Birkbeck College, London.
Formative career developments followed at the European Commission and the European Parliament. "The good things were the incredibly bright people and the ideas, the problem was the pace of change just seemed to be so slow, and it also seemed so disconnected from individuals in their countries back home."
She returned to the UK in 1999 to work for German environmental consultancy ESD on a project to set up renewable energy company Unit-Energy. The following year there was a management buy out and Davenport, who was appointed company CEO, rebranded the operation into Good Energy.
It made its first share offering in 2002, generating enough capital to purchase the Delabole wind farm. Further share offers were made in 2004 when Good Energy joined the PLUS Market, a small and mid-cap stock exchange in London, and in 2007, raising £2M from customers and independent investors.
Today, the majority of Good Energy's shareholders are also its customers.
"In a sense what I've done at Good Energy was borne out of that frustration of politicians just being 'political', and not really being strategic or having a vision," Davenport explains.
"If we took the bull by the horns and put the right policies in place the [renewable energy] targets would be completely achievable, but if we shilly-shally around they won't be. And in my mind we've put some policies in place but we're still shilly-shallying around."
One of her bugbears is the how the Planning Bill's Infrastructure Planning Commission, which was established to speed up the execution of major infrastructure proposals, only deals with onshore wind developments above 50MW, and offshore above 100MW.
"It is just unacceptable really," she says.
"The planning system just doesn't work, not for the amount of renewable energy we need to implement in the UK."
Davenport doesn't heckle from the sidelines however, and has taken up positions on the Government's Renewables Avisory Board, the board of RegenSW, and Ofgem's Environment and Advisory and Microgeneration steering groups. Good Energy, meanwhile, is at the forefront of bringing clarity to the befuddling world of green electricity tariffs by helping Ofgem define how it will implement a long awaited accreditation scheme later this year.
Davenport says that this is a long overdue development in a market rife with dubious "counting" practices. Currently, electricity generators are awarded three certificates whenever renewable electricity is produced: a REGO (renewable energy guarantee of origin), a ROC (renewable obligation certificate) and an LEC (Levy Exemption Certificate).
This has resulted in countless instances of sophistic smoke and mirrorism, with megawatts sold to up to three buyers, with a different certificate tendered on each occasion.
In a market with such ambiguous parameters and ill-defined loopholes, even an ethical bastion like Good Energy has been subject to criticism, with close rival Ecotricity recently accusing it of exaggerating its ROC retirement policy. ROCs are tradeable instruments that help the Government meet its renewable energy generation targets.
They are issued to and sold by renewable generators, and are designed to bolster renewable energy's natural market price. All electricity suppliers must surrender ROCs at a rate equivalent to a certain percentage of the energy they supply or face financial penalties. Good Energy goes beyond its legal obligations and retires the "financial equivalent" of an additional 5% of ROCs to raise their price and make it more desirable for firms to invest in renewable generation. While Good Energy has this practice independently verified, the lack of any clear industry standards has created a culture of frustration and mistrust.
"There's been ongoing debate between Ecotricity and Good Energy and it ebbs and flows, this is just one of those times when they've got a bit bored and they thought they'd have a pop shot at us," Davenport sighs.
"Our retirement policy is something we try to be as transparent about as possible, but the way the green market works is quite complex.
"This is why we need a central accreditation system. So people can't go 'oh well you didn't explain that properly'. That's what's frustrating with Ecotricity having a go at us in way. There's so much wrong with the rest of the market, let's all focus on trying to get it right and get a system we all can agree on."
Run by the flamboyant Dale Vincent, Ecotricity arguably forms an alternative energy faction, or "big two", with Good Energy, though it takes an entirely different tack.
Around 54% of Ecotricity's supplies hail from "brown" sources (nuclear 16%, coal 19.1% and natural gas 17.1% etc), but it invests more than any other company in the UK in new build wind energy projects.
"I don't see there's any need for us to be aggressive, there is an open market place with plenty of space for both offerings," Davenport points out.
Indeed, with 40% of the UK's CO2 emissions coming from electricity generation, the playing field for making a difference is wide open. Buoyed by the Good Energy's financial performance and customer loyalty, Davenport is optimistic about the next few years.
One of the company's main missions will be to repower and double the output capacity of the Delabole windfarm, to supply over 7,500 homes and save 10,000 tonnes of CO2 a year.
The project, which received approval last December, will be managed by recent recruit Charles Rattan, a former project manager for E.ON where he guided 150-megawatts worth of windfarms through the planning process.
"There's a certain disappointment that we're not bigger than we are today," Davenport muses. "We'd like to be double our size, but I think the pure fact that we exist means there is innovation in the energy market that might not be there without us."
This story is tagged with:
biomass | CO2 | coal | gas | Microgeneration | nuclear | offshore | ofgem | recession | renewables | retail | solar | wind energy
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