Article by Kayla Ente, founder & CEO of BHESCo
From Rhode Island to Brighton Beach
My connection with nature has been deep for as long as I can remember. My earliest childhood memories are sitting under a tree reading in the garden, playing explorer in the woods, discovering the mysteries of the natural world.
My favourite lesson in school was biology and favourite TV show was ‘The Undersea World of Jacques Cousteau’, who first exposed me to coral bleaching, the colour and mystery of sea life.
Twelve years after graduating from business college in Rhode Island, USA, I was working for Greenpeace International in Amsterdam where it became clear to me that campaigning on its own won’t work. Being more solutions oriented, I concentrated on the energy industry as a key driver of global climate change that could be addressed at a more personal, local level. This was the beginning of a 20 year journey.
As luck would have it Ecofys, a Dutch consultancy who specialise in energy effciency and renewable energy needed a finance manager. While developing business models for future focused energy companies, I realised that ‘Energy’ was treated as a commodity when it really is a vital service. The inequity in access to energy was mirrored by the environmental damage energy suppliers were creating. The penny dropped in terms of the connection between social justice and environmental justice.
The widespread consumer detachment created by this commodity service approach was a gap in the marketplace for a new type of future focused energy services supplier.
In 1998, I won an award from my Dutch energy supplier employer, Nuon, for what would become BHESCo’s ‘Pay As you Save‘ financial model that encouraged investment in renewable energy by matching the environmental and financial benefit over the life of the generation assets.
I knew that by combining attractive financial returns with the ethical and moral imperative of taking action on climate change I could present a compelling offer for powering people’s lives in a sustainable and equitable way.
How BHESCo came to be
Moving to the UK in 2003 was fortuitous because its energy market is broken and has been for a long time. I saw that the Big Six energy suppliers were entirely motivated by profit and had little interest in providing a decent and equitable service to customers, nor in seeking to transition their business model away from fossil fuel based energy generation and towards low carbon alternatives.
The fact that the UK energy sector is not treating all customers fairly is evidenced by the 3 million people who are living in fuel poverty. To me, the knowledge that there are millions of people who suffer because they cannot afford to adequately heat their homes in the fifth richest nation on Earth is sickening.
It made simple economic sense, that if communities were able to generate their own energy from free sources, like sun, wind and water, then it could be made to enrich their lives instead of keeping them at a disadvantage, while also looking after our planet.
Complacency with existing convention is not my way so I began to develop a business model around the provision of clean energy to customers as a service, as opposed to a product, as a truly new and innovative idea, while improving the energy performance of our properties.
This type of investment creates value in every link of the chain, generating new trades and expertise, more jobs, affordable energy and infrastructural investment.
This is why BHESCo today is all about offering a holistic, caring, respectful and ongoing relationship with our customers, instead of simply completing a single standalone transaction and moving on.
Climate change is a huge and intimidating threat that makes people feel hopeless, powerless and isolated in their ability to change it. As many people concerned about climate change want to take action but feel overwhelmed about what to do, there was an opportunity to fill that gap.
My vision is to demonstrate that communities can attain their own energy independence, rooted in thermally efficient buildings where energy is supplied by locally owned clean energy generation centres. As the price of clean technologies decline, this is becoming all too evident – all that is missing is willpower, collaboration and a belief that an alternative to the exclusively profit maximising, fossil fuel driven business model is possible.
I believe with absolute conviction that a community ownership model is the solution to simultaneously alleviating the fuel poverty crisis (social justice) and the climate crisis (environmental justice). In 2012 I set out to prove that it could be done by moving to Brighton, a city widely acknowledged for its acceptance of new ideas and embrace of radical innovators.
Developing BHESCo's innovative business model
Once the business case was clear I walked away from a well paid consultancy business and set to work establishing Brighton and Hove Energy Services Co-operative (BHESCo). I moved to Brighton in 2012 to establish the business and that’s when things began to take shape.
BHESCo was established in 2013 as a social enterprise, because profit making wasn’t my priority, to overcome the two barriers to the uptake of renewable energy, finance and technical uncertainty.
During the first three years of business development I didn’t earn enough for a salary so lived on my savings. I spent countless hours developing business relationships, building community support, designing BHESCo’s first projects and refining the business model.
By 2015 everything was in place for BHESCo’s first community share offer. I had developed four clean energy projects requiring £250,000 to be raised through the issuance of community shares paying 5% interest. The 5% interest rate is significant as I had read Thomas Piketty’s Capital, where he makes the case that any interest rate (rent) greater than 5% creates social and environmental degradation.
Thankfully all the sacrifice and hard work paid of and enough money was raised to build all four community energy projects.
The primary driver behind BHESCo is to accelerate the transition from fossil fuels in our energy supply by removing all barriers that may otherwise prevent property owners from taking action to improve the energy performance and clean generation capacity of their buildings.
These barriers are typically an absence of technical knowledge about how to improve a property, followed by willingness to pay the upfront cost of installing the equipment.
The wealth of experience and technical expertise within BHESCo’s project management team enables us to identify the most cost-effective solution to suit the particular characteristics of the properties. Our ‘Pay As You Save‘ finance initiative removes the burden of whether the customer can afford the upfront installation costs.
BHESCo finances the upfront costs to install energy saving/ generating technologies. Repayments are made using a portion of the associated savings achieved from a reduction in our customers’ energy bills. Once the upfront cost has been repaid to BHESCo (in addition to the 3% interest payment that we pass on to our member shareholder investors, plus our project management fee) our customers become the owners of their energy assests and can enjoy the full financial benefit of their savings for the remaining operational lifetime of the equipment, in addition to the value we have added to the property itself.
Along with our innovative Pay As You Save financial model, BHESCo distinguishes itself by developing renewable heat projects and energy efficiency projects – both niche corners of the community energy sector which most community energy groups avoid due to the technical and financial complexity involved in delivering such projects.
It is our core belief that every property across the UK can be made to become more environmentally sustainable, and we will pursue any avenue that will achieve this goal, no matter the complexity of this challenge.
BHESCo's five year strategy and future business growth
In the five years since our first community share offer BHESCo has completed fifty six community energy projects, mostly financed using our Pay As You Save initiative.
We now employ 6 full-time members of staff, the majority of whom were initially volunteers who were able to progress to a paid role when cash flows allowed.
We have attracted 352 members who have collectively invested £1.2 million, and we have paid £72,974 in interest payments to our shareholders.
Added together, we estimate that our energy projects will reduce energy costs for our customers by £1.9 million, in addition to reducing carbon emissions by 7,339 tonnes over the operational lifetime of the equipment – which is the equivalent of 8,092 transatlantic flights.
In 2016 BHESCo launched our Energy Saving Service, with a remit to provide bespoke energy improvement surveys for homes and businesses in the South East. In the four years since the service was launched we have delivered over 700 energy surveys through a mixture of ‘Able To Pay’ surveys for homeowners and free surveys provided for those at risk of fuel
poverty with grant funding provided by sources from the Local Authority and the E.U. Regional Development Hub.
I have ambitions for BHESCo to become a £40 million social enterprise in the next three years, supported by a growth strategy focused on developing microgrids and heat networks throughout Sussex and Kent.
Our formative years have concentrated on developing individual projects for schools, offices, leisure centres, workshops, retail shops and homes in the Sussex area. Now that we have a proven record of exceptional project delivery and customer service, we are scaling up our business offering to include projects which provide renewable energy generation and energy
efficiency improvements to whole communities in a self sufficiency, microgrid model working with partners like the network operator and technology providers.
In recognition of our unique business model and great success in delivering clean energy projects throughout Sussex, BHESCo have received a number of prestigious awards, including Green Company of the Year at the Brighton & Hove Business Awards, Best Community Energy Project from ReGen, and the Carbon Saving Award from Community Energy England.
Furthermore, BHESCo’s have been identified by Ofgem, the energy regulator, as a ‘Local Energy Archetype’ in a report focused on ‘Local Energy in a Transforming Energy System’.