Press Can A UK Startup Persuade SMEs To Buy Green Power? 9th July
Chris Bowden says SMEs will buy green energy if the price is right.
June 8 was something of a landmark day for the UK renewable energy industry, as weather conditions boosted production of both solar and wind-generated power. At around lunchtime, renewable sources – which also included hydro and the burning of wood pellets – accounted for 50.7% of Great Britain's power production. With nuclear added, that figure rose to more than 70%.
In a small way , the upsurge in renewable power generation provided a counterbalance to general gloom surrounding President Trump's decision to pull the US out of the Paris climate accord. After all, here was evidence that 'no' and 'low' carbon energy no longer sits on the fringes of the power generation market. When the sun shines and the wind blows it can make a significant contribution.
Equally though, the spike in renewable energy production reinforced a view that the front line in the battle against climate change is no longer solely populated by national governments making grand multi-lateral plans. At national level clean power generation is on the rise. Customers are also playing a role. For instance, Google has pledged to switch entirely to renewable energy across its offices and data centers from next year.
And according to Chris Bowden, founder of UK clean energy supply platform, Squeaky the green policies of tech giants are inspiring other businesses. “Brands like Google are driving demand,” he says. “Businesses want to buy their power like Google does.”
That demand extends to SMEs. A survey published by Haven Power found that 71% of small and medium sized companies wanted to see a greater focus on green power on the part of major suppliers. Arguably that demand is not driven entirely by an altruistic desire to do right by the planet. Increasingly, sustainability policies are seen by businesses as appealing to customers while also helping to attract talented employees.
On that assumption, businesses should be queuing up to buy clean electricity and if they are not purchasing from the big supply companies they should be knocking on the door of specialist suppliers. But the reality is very different. “In Britain, the big six (energy suppliers) still control 85% of the market,” says Bowden. “And most of the electricity they generate is from Fossil fuel.”
The Cost Factor
“The key factor is cost,” says Bowden. “Green power tends to be more expensive. If the cost of clean power was the same as that generated by fossil fuel, I would be very surprised if SMEs didn't buy it.”
That's the logic behind Squeaky. Having worked in investment banking when the UK's power market was being deregulated, Bowden was later CEO of Utilyx, where he set up Direct Power Purchase Agreements between generators and energy customers. The economics of those particular supply contracts meant they were available only to large companies, but with Squeaky, Bowden has applied that purchase agreement principle to a platform that connects clean power generators – solar and wind – directly with customers. By cutting out the middle men, in the shape of supply companies, Bowden says Squeaky can offer 100% clean power, without the customer having to pay a premium.
A Competitive Market
This is a competitive market, where suppliers such Good Energy and Ecotricity are also chasing the small business market. Equally, there are also consultancies who advise SMEs on sourcing energy.
However, Bowden says Squeaky is gaining traction in the marketplace. “We have only been in the market since January and our numbers are constrained my market entry rules,” he says. Nevertheless, we have customers in the high hundreds."
Looking forward, Bowden sees a growth opportunity. “If we can get people to know about us, I don't think it's unrealistic to get around 20% of the micro-business sector,” he says.
When faced with the half dozen behemoths who dominate UK energy supply, smaller. entrepreneurial utilities companies face the challenge of being seen and heard by their target customers. The big six dominate the market and complex tariff structures for both consumers and small businesses have made it difficult for customers to make informed choices. Nevertheless, Bowden says Squeaky has a compelling price proposition.
And the energy market is changing. Electricity is a fairly unexciting - if essential - commodity product, a fact that makes it hard for suppliers to differentiate themselves. Companies that can offer green energy at competitive prices clearly do have an opportunity to differentiate themselves and gain market share, if they can also deliver competitive pricing.
It's a market ripe for entrepreneurial disruption.