29th July 2018
Read the original article in City A.M.
"That was the worst choice of name ever", admits serial energy entrepreneur Chris Bowden, as I add an extra syllable to “Utilyx”, his first company, which he sold to Mitie in 2012 for £16.2m.
Founded in 2000, it became the largest energy broker for commercial and industrial consumers and independent power producers.
“When we started, things were insane. In 1999, everyone had a business plan. You went to events and people would be brimming with ideas, and they were getting hundreds of thousands by presenting a couple of slides. Someone told me that it was one in 1,000 businesses that survived that period.” Bowden was raising money in March 2001. “If I’d done it a month later, the business would’ve collapsed – just like the stock market.”
A decade and a half later, and the ex-Merrill Lynch banker is starting something new: Squeaky Clean Energy. He’s building a P2P energy company, which launched last month, connecting commercial customers to generators of renewable energy via a platform.
Business can choose their energy source based on technology used (wind, solar) and the location it comes from. All the energy is clean (“which is what most people want anyway, but they aren’t given the power to choose”) and customers are paying the wholesale market price.
“We don’t need to charge more. Margins are pretty high in this industry and we don’t need to take anything out of the market. The generator gets more and the consumer pays less.”
Bowden also guarantees supply, having struck a deal with Europe’s largest renewable generator. “That makes us more reliable than the Dirty Half-Dozen. We’re targeting growing businesses. You read a lot about the profits made from the domestic market – they actually make twice as much margin out of growing businesses. For us, it’s at once about where the business opportunity is, and being able to offer a differentiated product in that market. No-one’s done clean energy at a low price before, and at scale.”
I ask Bowden why this is. “It’s because it’s complex. I’ve spoken to a lot of VCs – not investors, just acquaintances – and I think it’s because very few have the knowledge or insight to get to grips with this sector, so they don’t put up the money, and startups aren’t attracted. It’s also taken us a while to figure out how to do what we do – the technology, the contracts you need behind it.”
Bowden has spent time learning from the P2P finance market, too, describing his own firm as doing the same (creating a two-sided marketplace), but simply with a different asset (energy, not money). “People across industries are quick to say ‘P2P can’t work for us’…. historically in energy, the government owned generation, so it couldn’t make sense. Now it doesn’t, so you’ve got the makings of a marketplace.”
Breaking new ground
And there are exciting ways this can go: imagine if consumers could buy energy from local businesses, for example. Bowden points out that a lot of electricity is lost through the network. “We need more locally-sourced electricity and community power. That looks, on the face of it, more uneconomical at a small scale, but if you don’t have to ship it round the UK, it’s far better. If you’ve got localised generation, and then storage, you could actually go off-grid. After all, it was creating and enhancing local communities that interested Thomas Edison so much.”
And storage innovation could lead to partnerships for Squeaky, with other firms building – and buying – batteries. “I don’t believe in investing in what I’d describe as gizmos, because someone’s always going to build a better mousetrap. There was a lot of money going in in the 90s to what was then named cleantech, and you just had VCs ploughing money into loads of gizmos, most of which never made any money.”
This said, Bowden is positive that there will be people inventing things that will be enormously successful. “Our plan is to wait, then offer those products to our consumers. It makes complete sense for them to have a battery in their building. When energy is cheap, they can load it up. When it’s expensive, they’ll have a store they can draw down.”
Bowden says Squeaky won’t buy the batteries itself – rather, customers will lease them. “Leasing batteries will be a great, economical business model that’s coming. People will make a lot of money doing that.”
But the focus for him remains “gaining a big market share. We can’t do any of this if we haven’t got the consumers.” If you’re building a two-sided marketplace, says Bowden, “you have to think very carefully about which side is most important to get right first.”
The first thing he did was to secure “a lot of generation on long-term contracts,” selling excess into the spot market. “It’s imperative that we satisfy a base load. Electricity is the most important thing a business has – without it you have no light, no phones, no computers. So they have to know they’ve got a secure supply.”
Of course, Squeaky isn’t a supplier itself – it’s a marketplace. “It’s taken a little while to communicate that. We do some services – bill you, collect your money – but the ‘P2P’ means re-intermediation.” He’s keen, he adds, for people to start using re-intermediation – “it’s not complete disintermediation, but it is something new.”
Somehow we end up talking about blockchain (who doesn’t these days?). “We are actually looking at blockchain as a way of stamping origin. You could also consider it when it comes to the re-selling notion: if you want to make an additional transaction – windfarm sells to me, the business, I store it in a battery then sell what I don’t need to someone else. You don’t need blockchain for basic transactions, but it’d be helpful for that.”
As well as building Squeaky, Bowden is also a trustee for Start Up Kitchen, and a student in executive education. “You know, I was thinking the other day, my dad was self-employed and I’m an entrepreneur. He’d have cringed at the idea of being called an entrepreneur!” One of Bowden’s lessons for success is putting your money where your mouth is.
He says finding investors – which he’s always managed to do – is in the main down to “investing as much as I can into my own businesses to show I believe in them – and that’s usually my house. Obviously not everyone can do that, but you really need to show you’ve done as much as you can. Elon Musk came out of Paypal and invested everything he had into his business. It’s always going to be easier to get others to back you if you’re backing yourself.”