Wind blows in right direction for power group Good Energy
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IN 1994, Juliet Davenport was a young graduate, with an Oxford degree in atmospheric physics and a masters in economics. The combination had fired her up with an enduring interest in climate change and a determination to do something about it. Five years later, she set up Good Energy Group, which was designed to allow homes and businesses to be powered with locally produced renewable energy.
Today, Good Energy is listed on AIM and has 115,000 domestic gas and electricity customers and 4,000 business customers. These range from small, one-man firms to PwC, the largest professional services firm in the world, which uses Good Energy for all its UK offices.
In 2015, Davenport launched a plan to deliver a five-fold increase in customer sales by 2020. Progress has been good to date and the shares, now 239¾p, should rise as the company expands.
Renewable energy attracts strong opinions. Some people dismiss it as poppycock and think that wind turbines and fields full of solar panels are blots on the landscape. But a growing number of individuals and businesses are enthusiastic supporters.
Davenport herself combines idealism with pragmatism. A fervent believer in renewable energy, she nonetheless recognises that most people will not buy it unless Good Energy prices are competitive. The company’s energy is cheaper than most standard tariffs, but it also aims to deliver good customer service and has come first or second in the rankings at consumer group Which? for the past five years.
When Davenport first started, she went round the country looking for people who were quietly generating electricity in their own homes or farms, principally through solar panels or single wind turbines. Many of these individuals could not find buyers for their energy so Good Energy created a marketplace for them, buying their electricity and finding consumers who wanted it.
Since then, the company has built up its own wind and solar sites in places such as Delabole in Cornwall, Woolbridge in Dorset and Doncaster. Today the group generates about a quarter of its own power, but it still sources gas and electricity from more than 1,000 locations, ranging from single homes to companies such as Wessex Water, which operates a major project turning sewage into biofuel.
The group also provides advice for customers who want to generate their own electricity, which fosters a particularly loyal customer base, many of whom are also investors in the company.
Good Energy even launched an online energy platform this summer allowing consumers and generators to contact each other directly so they can choose who they buy from and sell to. Coined the eBay of energy, the scheme has been enthusiastically received and is likely to be rolled out more widely over time.
On September 13, Good Energy reported strong interim profits and Davenport expressed confidence in the future. Brokers expect 2016 profits to increase by 14 per cent to £2.5million, rising to £2.8million next year. The group also pays a dividend – pencilled in at 3.4p for this year and 3.8p next.
Midas verdict: Good Energy takes its role as a green business seriously, but it is also growing at a decent pace and is expected to continue in that vein. At 239¾p, the shares should deliver long-term rewards and salve the consciences of environmentally-minded investors.