Profile: Thrive Renewables
No-one likes paying over the odds for power prices. The UK needs to balance the interest of consumers – who want low-cost electricity and gas – with the drive to cut carbon emissions, which has tended to drive prices up. The policy uncertainties are getting in the way of power producers being able to plan for future growth, says Gary Mead
Last year the UK generated more electricity from wind than coal for the first time, on an annual basis – 11.5% compared to 9.2%. Today, the UK is the world’s sixth biggest wind-power producer.
This relative decline of coal-power, versus the onward march of wind-power, speaks about more than simply environmental issues; it is another way of understanding how the underlying nature of British society is changing; how one whole industry, coal, on which our Industrial Revolution was built, is transitioning to another, that of renewable energy. In the late 18th century, no-one could imagine the economic development, and vast social changes, that were about to be unleashed thanks to coal. Two centuries on, our imaginations are no less trammelled by the past; for all any of us know, we may be on the brink of a fresh economic revolution, thanks to renewable energy.
One of the wind-power producers contributing to this revolution is Thrive Renewables. Formerly managed by Triodos Bank, it separated itself a year ago and is now a fully independent, non-listed company. Thrive joined the Social Stock Exchange late in 2016 and its CEO is Matthew Clayton. I asked Clayton why Thrive had decided to join: “We have watched the progress of the Social Stock Exchange with great interest, and have been talking to them for a while. We have an aligned mission, not the least part of which is to allow individuals to have an accessible relationship with efforts towards greater sustainability – Thrive’s mission is to allow individuals to be part of the delivery of a more sustainable energy system. We also see the importance of a more diverse investor base. The Social Stock Exchange brings us closer to the City investment community. We currently have around 6,500 investors; the vast majority are retail investors plus half a dozen of those being institutional.”
Thrive Renewables has achieved annual growth of 20-30% in the past few years, according to Clayton; raising capital in a way which is accessible to a wide range of investors is not easy, but key to Thrive’s mission. It has now successfully issued bonds to fund growth and increase the investor base. Currently, trading shares in Thrive is via a monthly auction – a Matched Bargain Service offered by the company. Does Thrive have any ambition to list on a recognised exchange I wondered? There are pros and cons to such a route, according to Clayton. “The pro to a public float is that it would open the door to an even wider investor community. Against that, we have a very close relationship right now with our community of investors and that would inevitably change.”
Plus there is one big uncertainty overshadowing the whole renewable industry – what’s going to be the policy-making context for the future? If there’s one certainty about the UK’s energy market, it’s that it is in flux.
According to a new House of Lords report the “long-standing objectives of energy policy are to ensure a secure and affordable supply of power. A third objective – the decarbonisation of the power supply – was added in the 21st century as governments adopted long-term carbon emissions targets, culminating in the Climate Change Act 2008 which requires the UK to reduce 1990 levels of carbon emissions by 80% by 2050. These three objectives are not complementary at present.” Nick Butler, who advised the Lords committee responsible for this report, said: “security of supply has been made more vulnerable by the clumsy way renewables have been promoted. The lights are not likely to go off but consumers will find themselves paying through the nose to keep them on”, a view that has itself been challenged.
For Clayton, who is running a company that gained a stimulus from the Climate Change Act of 2008, the policy uncertainties that now abound are, to say the least, unhelpful. While the law is the law, the achievement of such carbon emission reductions could be found to have failed by the time we reach 2050; and who would be to blame, or placed in the dock for having broken that ‘law’? No-one.
Does Clayton have a suggestion as to how we might cut through this particular Gordian knot? “The government needs to be clear about its objectives. It needs to put a price on greenhouse gas emission reductions and let the market work it out from there. That’s the catalyst required – take the gloves off. Onshore wind is the least costly solution to our problems. There’s such a tangled web of benefits and supports within the entire energy system which results in the electricity price no longer representing a wholesale market. It makes it very difficult to make investments because the fundamentals are disguised within a complex legacy of policies and incentives. What we do know if that we need low cost, low emission generation, greater energy efficiency and a more dynamic relationship between demand and supply. This is where we are focusing our efforts. There needs to be a levelling of the playing field,” he says.
The Lords’ report concluded that there should be established an Energy Commission “to provide greater scrutiny of energy policy decisions. This would be an independent advisory body, reporting to the Secretary of State, tasked with advising on the best way for all the objectives of energy policy to be delivered.” That kind of Olympian overview of the energy market needs to be implemented – so that the interests of individual consumers, society and the environment can be reconciled and made to work together. If investment in renewables had been contingent on achieving the ‘right’ policy framework before anything was started, we would probably not have any renewable energy companies at all. As it is, it is testimony to the resilience of companies such as Thrive Renewables that we have got as far as we have.