SQUEAKY CLEAN ENERGY: THE P2P PLATFORM CUTTING UTILITIES OUT OF THE LOOP

02 MAY 2017

Michael Holder

Squeaky CEO Chris Bowden's P2P clean power purchasing platform is looking to disrupt the energy market by cutting out the middle man

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Google, Apple, IKEA, BT and even a number of airlines are part of the growing band of businesses who are now gung-ho on sourcing the majority of their power from renewables, either through investing directly in their own projects, or by inking long-term deals to purchase their power directly from generators.

Consequently, some of these conglomerates are starting to cut out the middle-man in the energy market, working closely with developers and limiting their reliance on the kind of business energy tariffs offered by traditional utilities.

But, on the whole, committing to 100 per cent renewable energy commitments and then working directly with wind farm developers or solar asset owners remains a luxury afforded to those multinationals with pockets deep enough to employ the lawyers and energy specialists required to manage such deal. So where does this leave the increasing number of smaller businesses who are still looking to make an affordable, low carbon transition, switch to renewables, and de-risk their business from climate threats?

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Chris Bowden, an energy sector veteran of 27 years, believes he has an answer. Having started out as a banker at Merrill Lynch in the early 1990s, Bowden took a particular interest in carbon markets, and went on to set up Utilyx in 2000 - the UK's largest buyer of electricity for large corporate and public sector organisations - which he later sold to MITIE for a reported £16.2m in 2012.

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He therefore knows a thing or two about corporate power purchase agreements - or PPAs - which have become increasingly prominent in recent years as more companies look to buy clean power directly from renewable energy generators at long-term, fixed prices. 

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In fact, Bowden claims he may have had a hand in inventing the PPA concept while working at Utilyx, having been approached by the head of procurement from a major supermarket that was looking to save money by purchasing its electricity wholesale, rather than retail.

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"And to him, I said: 'Well I accept the challenge - right now you can't do that, but I'll go away and figure it out'," Bowden tells BusinessGreen. "And I came up with the PPA. It might have been the first in the world."

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Yet brokering a PPA deal can still be incredibly complex and arduous, Bowden acknowledges, as the big energy suppliers still hold so much sway. Understandably, they usually aren't too keen on customers going directly to power generators for their energy, and generally only agree to help businesses broker PPAs if it is their biggest customers demanding them.

As such, Bowden's latest venture - Squeaky Clean Energy Ltd - marks his attempt to disrupt the energy market and offer a mechanism for unlocking that pent up demand for clean power. "If I can convince more and more corporate buyers to do what Apple and Google are doing, then great," he explains.

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He describes the venture as the "eBay for renewable electricity" - a peer-to-peer platform which officially launched in February and has so far enabled around 300 small and medium businesses to purchase 100 per cent renewable electricity directly from generators.

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The online marketplace allows companies to pick the UK renewable energy generators they want to buy from - right down to the individual wind farm, for example - at a much smaller scale than is usually offered to big corporations through PPAs, while cutting out the energy supplier middleman to avoid premium costs. It offers fixed energy prices for between five and 20 years, and will soon start offering businesses the ability to purchase as little as just 1MW of electricity, thereby opening up the platform and renewable power purchasing to even more small businesses.

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And, whereas other independent renewable energy suppliers can suffer from fluctuating prices in the energy market due to the costs of energy and balancing, Squeaky claims to have much lower supply risks, as it is backed by what Bowden claims is Europe's largest renewable power generator. The unnamed company is A-rated by S&P, which he claims is "a better credit rating then the likes of British Gas or nPower". Yet, unlike any of the Big Six, it isn't an electricity supplier, it is a generator.

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"This is a bold statement, but we don't think there is another peer-to-peer platform like us anywhere in the world - yet," Bowden says. "We don't think it will be like that for long, though, because the idea just makes sense. We are buying at wholesale, and selling at wholesale plus a small margin, so we're very competitive on pricing."

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The other advantage is that Squeaky offers greater transparency to buyers of electricity, with the wind, solar and hydro plants all listed on its website for users to see.

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"It's a direct line of sight to the assets," explains Bowden. "With renewable energy there are different shades of grey. Often when you buy a renewable electricity tariff from a supplier, for example, you might pay a 10 per cent premium for something that doesn't cost more and you don't even know what it is - it could be landfill gas, which is not particularly green at all."

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At the moment the only electricity sources available through Squeaky are wind, solar, hydro and sustainable biomass, but the company is also keeping a close eye on more nascent sectors such as tidal, geothermal, and battery storage to see whether it can also offer these energy options to customers in future.

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However, Squeaky Clean Energy's offering will not include nuclear, and Bowden is certainly not a fan of the government's decision to go ahead with Hinkley Point C, arguing that "we're five years away from being able to probably run a system largely on renewables and interconnection". In the meantime, he says, money is better spent generating power from gas power to guard against fuel poverty.

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"We're not far away now from subsidy-free renewable electricity," he argues. "We'd like to see if we can get some deals away on subsidy-free electricity. It would be nice to show people that renewables aren't a niche technologies anymore, they are the technology."

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But for now, with over 200MW of renewable power currently signed up to Squeaky for SMEs to buy direct from, Bowden is focusing on growing the number of business users of the P2P platform and launching a new version of the company's software to speed up the process for securing a quotation.

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And although Bowden has no desire at present to increase its offering to household energy customers, Squeaky's move to innovate the energy market could not have come at a better time, politically. With a snap General Election around the corner in June, energy is perhaps one of the few green-related topics likely to get a decent airing over the campaign period, especially now the Conservative Party is promising to place a cap on consumer bills if elected.

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The policy has drawn much criticism from across the energy sector, and Bowden, too, is adamant that clipping the wings of the Big Six energy companies in this manner is entirely the wrong approach, to put it lightly. Although speaking before the Tories' election pledge last month, Bowden is withering in his assessment, describing such a cap on energy bills as "insane". 

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"You certainly should not do a price cap," he says. "Anybody who talks about a price cap fundamentally doesn't understand what is going on in the market, because that is really bad."

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Placing an arbitrary maximum price limit on the highest energy bills suppliers can offer to their customers, he says, would "kill the start-ups, it would kill the suppliers, there would be no investment".

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Instead, Bowden favours an idea - recently touted by Conservative MP John Penrose - that would limit the difference between an energy firm's cheapest and most expensive deal to around six per cent. "That's quite a good idea - capping the difference," argues Bowden. "Because then you can still put the prices up and down. But a price cap? That's insane." 

Bowden himself doesn't see Squeaky Clean Energy going down the household energy route, though, describing the domestic market as "impossible to get in to". Still, his P2P platform certainly does have the potential to disrupt the business energy market.

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Indeed, with technological innovations and more companies looking to source renewables at lower and lower prices, the next five years could be transformational for the global energy markets. It is easy to see why the more astute of the Big Six are starting to look over their shoulders.