Business Profile: Dropped out, tuned in and still switched on
August 11, 2007
Dale Vince, founder of energy provider Ecotricity, is no ordinary businessman. In fact, he is a professional hippy of the kind the establishment used to deride.
He dropped out of grammar school aged 15 ("the happiest day of my life") and after a brief attempt at computing, hit the road. For ten years, he drifted around music festivals, protesting against cruise missiles and simply surviving.
He finally came to rest on a hill near Gloucester. There he lived in a truck until one day in 1991 when he "dropped in" and decided to change his life. Inspired by the first wind farm in Cornwall, he and his neighbour "a crazy guy (in a good way) who lived in a caravan" built a wind mast.
It took five years to get off the ground. In those days energy supply was a monopoly business and it was hard to get a fair price. When Vince tried to sell his new-fangled "green" energy to the London Electricity Board, they laughed.
So in 1995 he applied for a licence from Ofgem "on the back of a fag packet" and created the world's first green electricity company.
At first, he sold to businesses but three years ago expanded to homes. Users of the M4 will be familiar with the giant monopod turbine that scales the horizon at Reading. That is Ecotricity's own - an advertisement more than a generator - but the company has built others for the likes of Sainsbury and is on the cusp of a deal to erect five more for another large supermarket.
Ecotricity now employs 100 people and, Vince says, will turn over £30m in 2007/2008 - a big ask, given that 2005/2006 turnover was just shy of £14m. It has 30,000 domestic and 1,000 business customers, a figure Vince plans to grow to 1m in the next decade, starting by doubling his power capacity to 60egawatts this year.
So far, his only backer has been clean energy bank Triodos. But he recently borrowed £34m from German bank NordLB to fund growth.
Vince is the sole shareholder. A year ago, he says, investment banks encouraged him to float the company. But he spurned them: "A lot of these City people are revolting to me in that they pursue money as an end. The last thing I would want is to answer to people like that. What we value is our independence."
Money may not be Vince's driving force but if his business continues to grow at its current pace, he should make a lot of it - especially as energy prices continue to rise. No more trucks for him. He now lives in the north wing of a converted Victorian mansion with his wife Kate, whom he met through work, and two children.
Dressed in an open-necked shirt and jeans with a black leather necklace and amulet, he looks the archetypal flower child. It's an image that plays well to an establishment anxious for heroes to counter climate-change fears.
The Prince of Wales has described the 45-year-old as a "good chap", Al Gore presented him with an award for greenness, the Queen handed him an OBE for services to the environment and the WI clasped him to its collective bosom.
Richard Branson called for a chat after Vince took out a full-page ad in a national newspaper demanding reassurance from Branson that his pledge to plough profits into biofuels wasn't a gimmick. He later beat Branson in a New Statesman poll to find the nation's most inspiring business leader.
Clearly, Mr Ecotricity is not short on chutzpah. But his easygoing charm hasn't convinced everyone. Among Vince's small but growing number of critics are some you might expect - locals who have fought his wind farms through the planning process and lost - and others you might not.
In February 2006, the Advertising Standards Agency ruled that Ecotricity had misled consumers about the amount of power generated by its wind turbines that straddle the A47 near Swaffham in Norfolk. The company had published a leaflet saying its turbines would produce enough electricity to power 3,000 homes. In fact, they produced this much only over a ten-year period.1
Last December, the National Consumer Council also queried Ecotricity tariffs. Its report warned consumers that, despite appearances to the contrary, Ecotricity was not providing them with 100pc renewable energy.2
In fact, only 25pc of Ecotricity electricity comes from renewable sources,3 mostly from its own wind turbines. The rest is "brown" energy bought in from other suppliers.
At the time, Ecotricity slammed the report as "riddled with errors". But when I ask Vince if Ecotricity customers get 100pc of their energy from green sources, he is quick to say no. But, he points out, for every £1 spent on electricity, Ecotricity spends £1 on building green energy resources. He argues the amount an individual spends on green energy is unimportant. What's important is how much we spend collectively. Meanwhile, Ecotricity faces competition from the majors, whom Vince accuses of over-hyping their green credentials. In the past ten days, International Power has bought wind farms in Italy and Germany and Centrica has taken a 50pc stake in an onshore Scottish wind farm. The industry has obligations to produce 15pc of UK power through renewables by 2015.
"Wind energy is the UK equivalent of oil. It's safe, reliable, mass-produced and economic. You can't say that about any other technology," says Vince. Nonetheless, battery storage is still prohibitively expensive and lasts hours rather than days, while even on-site wind generation is subject to heavy fluctuations. When there is no wind, there is no energy.
As a result, big companies and government back nuclear power to solve the energy crisis. Vince, as you can imagine, is vehemently opposed. He says: "If everyone spent £10,000 on reducing bills by 50pc across our 24m homes, we could save 15pc of our electricity - equivalent to what the nuclear industry produces today - and protect ourselves from other problems like being exposed to the Russian gas market."
It's a bold claim. But then Vince is full of them. He's promising an electric car that "will smash the stereotype of the 30mph Noddy car" and a mini-turbine for cities called an Urbine for launch next year.
It will be made in the UK or "Green Britain" as Vince calls it. When turning, the Urbine could produce 25pc of the average house's electricity. "We may even take over the factory Dyson abandoned when it moved to the Far East," he adds cheekily before heading back to Gloucester for some five-a-side football with his employees, still recovering from the floods.
Vince's methods may be unorthodox, but there's no doubt that he's making waves.
A few notes from us (Ecotricity)...
1. "The company had published a leaflet saying its turbines would produce enough electricity to power 3,000 homes. In fact, they produced this much only over a ten-year period."
The Telegraph got this confused. The ASA complaint was that we were using forecast data rather than Actual data when talking about the output of our Ecotech turbine - and we had not made that clear. We did not claim that it would power 3,000 homes per year when it should have been 3,000 over per ten years - that is completely wrong. We said - before we built it, our Ecotech turbine would produce enough power for 3,000 homes per year, on average, each year for ten years. Our mistake was to not be clear that this number was a forecast as opposed to the actual output and we should have updated the figure based on experience. Actual output was nearer 2,400 homes in the year - not 3000 homes over ten years.
2. "Last December, the National Consumer Council also queried Ecotricity tariffs. Its report warned consumers that, despite appearances to the contrary, Ecotricity was not providing them with 100pc renewable energy."
Again a bit confused. This refers to the NCC report 'Reality of Rhetoric' released in December last year, this report did not focus on the percentage of green energy we provide in our tariffs. The report itself was a highly flawed piece of work, promptly withdrawn for investigation into its many inaccuracies only to then be reposted (buried) on the NCC website a number of months later. The NCC simply didn't understand how the electricity market works they accused us of 'treble selling' our greeness, and then failed to apply the same flawed logic to all other suppliers. They have since come to see us to gain a better understanding and their recommendations are about to be 'dumped' by OFGEM through it's new guidelines - which will finally discredit NCC's stance on green tariffs once and for all.
3. "In fact, only 25pc of Ecotricity electricity comes from renewable sources"
Not true. LAST year our fuel mix was 25% renewables (that we built ourselves). This year it is about 35%. Next year it will be over 40%. That's year on year growth of renewables against a backdrop of customer numbers doubling each year - all testament to the effectiveness of our investment in new build - £1 on new build or every £1 our customers spend with us on their electricity bills - and ten times more per customer than all the other electricity suppliers in the UK put together.
Having 100% green is not the big issue, there's only a limited amount of green energy out there and bundling it into 100% tariffs for the few, although they promise carbon reductions, only actually serve to redistribute existing energy - typically there's no net reduction in emissions or increase in renewables. We cannot all switch to 100% green overnight, it has to be built. Honest tariffs, in our opinion, acknowledge this and are dedicated to new build, not old redistribution.The real test is not 'what you have' it's 'what you're building', and the measure of that is simply what you spend. Not glossy TV ads and fine words - but actual spend on actual projects.