Ethical Power
Vertically Integrated, Maximum Performance
“We deliver unrivalled build quality and asset performance,” is the promise of Ethical Power, and the ongoing delivery of this mantra is key in the strategy of CEO Tom Kneen who tells Energy Focus that the result is the consistent and sustainable growth of the business.
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Growing from a dream inside the head of CEO Tom Kneen, through small business to medium-sized entity, and onto large organisation with international presence, Ethical Power is achieving its mission of realising the global potential of clean energy and the vision of becoming an IPP (independent power producer).
Starting life as a rooftop solar PV installer, focused on the rural landscape of the UK’s southwest, Ethical Power took advantage of favourable conditions during a time when government feed-in tariffs (FIT) promoted the installation and use of renewable energies.
Kneen had a small team installing panels atop industrial buildings and schools. The market was saturated because of the generous government support for the industry and so the company had to differentiate itself from the competition. Ethical Power did this through an unwavering commitment to quality. Kneen was aggressive about every aspect of the business being the absolute best it could possibly be, and he built a reputation for excellence.
In a booming sector, Ethical Power gained lots of new business. Organising everything, selling the concept, managing subcontractors, handling finances – the early days from 2010 to the 2013 were challenging. After three years in business, Ethical Power had to grow, says Kneen.
“We decided that if we were going to scale, it had to be a business that would build utility-scale generation.”
In 2013, the company built its first ground mounted solar farm and aimed at a transition to an engineering, procurement and construction (EPC) contractor. “That was a way we could grow very quickly. We set out our stall to be the highest quality EPC contractor that we could be,” Kneen remembers.
Over the next five years, the construction arm of the business grew quickly and this allowed other divisions to expand. Partnership with SUNfarming allowed Ethical Power, through a JV – Sunetik, to build a significant volume of solar installations.
Kneen, endlessly focused on quality delivery, wanted to control as much as possible across the value chain, and began to vertically integrate the business.
“When we see something we are not comfortable with, we want to take control of it. We try to bring things in-house as we want things to be perfect. We want to do everything from cutting grass and panel cleaning to asset management and negotiating PPAs. That way, we are completely in control of our destiny, start to finish.”
Merger and acquisition and financing teams were also built to acquire, optimise, and sell assets, and this set up the next stage of growth.
In 2021, an international developer Hive Energy invested in the Ethical Power Group. Kneen says that effective partnerships have been the cornerstone of the Ethical Power story.
“We’ve built our business around partnerships. Working with Hive Energy helped us achieve a step change in our business and scale our operations.
“Lynher Energy, where we are in a $300 million JV with Napier Park Capital, is another great example. The JV allowed us to acquire multiple projects that we’re now constructing through our EPC arm.”
AMBITIOUS TARGETS
By 2020 and the onset of the Covid-19 pandemic, Ethical Power was well positioned, owning a strong place in the market with a lengthy pipeline. The business began to grow in other geographical markets to add new revenue to the Group. Kneen wanted to bring the Ethical Power offering to new markets with a positive outlook for renewables. So far, the company has managed to grow in Spain, Italy, Greece, Poland, and New Zealand.
“It’s going well,” he smiles. “Spain is very exciting. New Zealand continues to deliver, and we are very excited about what we can achieve there. In Italy we have an amazing new country manager who I think is going to be very successful. Our growth has been well aligned and supported by Hive Energy. Hive had development teams in all the territories we are now in. A year ago, we created our own development business within the Ethical Power Group. Complimenting that international expansion, that business is now developing in Poland, and is the driver behind our operations in New Zealand.”
He says that the growth in these new markets should, in theory, come quickly as Ethical Power now has more than a decade of experience of scaling operations in the UK and has fantastic local teams who understand how to do business in each of the new territories.
“It’s interesting moving into these new markets and each is subtly different. Our key values give us a huge competitive advantage especially in emerging markets. We’d like to build similar businesses to what we have here in the UK in each of the territories. We can apply our skills and experience abroad – Spain is a great example. We have the right people in place, we know the challenges, it is very exciting to see the international business grow, and we now know what we need to do to succeed. We have set some very ambitious targets, but I think we will exceed those quite significantly,” he says, detailing targets of 200 MW per annum of new build capacity in every territory, while growing the wider business around those construction contracts.
David Martinez leads the team in Spain, Matt Rowe is Country Manager in New Zealand, and Francesca Cavallini was recently appointed Country Manager in Italy.
“Every territory has its quirks,” says Kneen. “It is difficult, for sure. If it was easy, everybody would be doing it. You need patience and hard work to understand the markets and how they work. Ultimately, you have to have a good local team – we have achieved that.”
UNDER CONSTRUCTION
Big companies trust Ethical Power to deliver. The completed project portfolio the company boasts is impressive and includes more than just solar. Battery Energy Storage Systems (BESS) and even gas peaking plants are in the Ethical Power wheelhouse, and this comprehensive exposure to the wider energy industry makes for a growing business. “We are certainly BESS and solar now,” explains Kneen. “There are very few standalone solar projects that we are looking at. All will have some element of storage included.”
However, with clean energy transition underway, the key to further growth is being able to connect to the grid when projects are complete.
“One of our big focusses is growing our high voltage team as grid is a high risk in this industry. We have just acquired the remaining 50% of the Ethical Power Connections business so that we can gain more control of that element of the delivery. That gives us huge competitive advantage as, ultimately, our vertical integration has been driven by risk mitigation.”
He says that the company is regularly looking at connection dates in the 2030s when planning future connections, and that this is the norm for the industry. Grid congestion and grid access have been highlighted as long-term threats to the country’s Net Zero ambitions, but it is important to continue building renewable energy capacity and that is where Ethical Power is an industry leader.
“We are building the 45MW Larport Solar Farm for Conrad Energy in Herefordshire. Our Lynher Energy fund is constructing a portfolio of assets in Scotland which is nearly 100MW of solar and two 50MW batteries. Lynher Energy also purchased a project in Shropshire called Twitch Hill which is under construction by Ethical Power now,” says Kneen.
Earlier in the year, the company completed construction of a couple of brownfield project, sold two operational assets to Fuse Energy and announced a BESS partnership with Varco Energy to install the Native River project and the Sizing John project in the northwest.
“We have a number of other key relationships that we are busy building including long-term construction and development agreements,” adds Kneen. “We are also working on a swathe of projects for our high voltage business which is all battery focussed.”
While Ethical Power has come a long way from its early days as a solar rooftop installer, Kneen believes there is an opportunity in that space. The UK government hopes to deliver 70GW of solar by 2035, but even if this is achieved, there will still be considerable commercial and industrial roof space with room for generating equipment.
“We are aware of opportunities in behind-the-meter solar and that tends to come as a wider package with electric vehicle charging and storage. We are quite well placed for it, and it is a strategy discussion we are having. We will probably make an acquisition to get ourselves up the curve in that space. The commercial and industrial opportunity is huge and it’s a space where I think we could do well,” he says.
MAKING A STATEMENT
In the New Year, Ethical Power will launch its new brand, and the purpose of this modernisation is to display to the market and to clients that the business is now well-established and has moved beyond being just an installer of solar panels.
“We want to make a statement that we are not a small rooftop business from Cornwall anymore – we are now a global vertically integrated IPP. I’m excited as it’s a moment in time where the business identity changes, and we start to look and feel more corporate. Previously, the business was managed very differently. Now, we have our own identity and vision, we have more than 200 market-leading people, and we produce innovation that is remarkable,” Kneen smiles.
His team is excited, not just because it can look back on 13 years of success, but because it can look forward to major opportunities. Achieving Net Zero requires a significant amount of renewable energy to be designed, built, and connected in a relatively short period of time and this aligns perfectly with the Ethical Power offering.
“There is a huge appetite from financiers for renewables. I don’t lay awake worried about whether we will run out of pipeline,” says Kneen. “If every project that everyone ever thought of got built then yes, you’d saturate the market, but the reality is that you’d have to be building gigawatts of renewables and we don’t have enough people that know what they’re doing or the grid infrastructure for that to happen.”
He is optimistic because not only is there enthusiasm for renewable energy, but because there is now the added hunger for storage. “That wasn’t there in the past. As Ethical Power, we’re sitting in a very unique position with a huge competitive advantage. Still, it will take a long time to deliver the pipeline.
“The major risk is the same as it has always been, that a new technology comes and changes the world completely. It may be a technology that isn’t on the radar yet, and we are looking. We are considering a hydrogen strategy – we want to be at the front of the curve with whatever the next big thing is.”
Typically entrepreneurial, Kneen is not happy to stand still and is planning for rapid expansion as the brand continues to make waves.
“We are getting to the point where we can choose who we want to work with and that is exciting. It’s been an interesting journey and I think we’re only just starting. Next year we want to double our revenue and that is not something we’ve done before. It’s about having the best team and making as few mistakes as possible,” he says.
Ethical Power’s commitment to quality and its devotion to green power has been the driving force behind the significant growth achieved and this, concludes Kneen, will not change.
“Renewable energy is the key,” he says. “We created a company to generate and sell power. That was the mission of Ethical Power, and that hasn’t changed over the last 13 years.”
Tom Kneen, CEO