Natural Power has grown from a small Glasgow-based player to the UK’s biggest renewable energy consultancy. Director Jeremy Sainsbury tells us why wind farms can offer a cheap future energy solution and a safer haven for investment.
The rundown former mining towns of East Ayrshire may speak of Scotland’s past, but neighbouring Dumfries offers a glimpse of its future. That’s assuming you can find ‘The Green House’, pictured below, buried beneath its grass roof on the edge of a sporting estate in pretty much the middle of nowhere. This is the home of Natural Power – the UK’s largest renewable energy consultants with a turnover of £21m last year.
The reason it’s here is thanks to Jeremy Sainsbury, who joined Natural Power – then a tiny Glasgow-based consultancy – in 1999. Before then, he’d been rural estate manager on the estate belonging to the Norwegian shipping and energy tycoon Fred Olsen. When Olsen bought Natural Power in 2001 and made it part of Fred Olsen Ltd – the private, family-owned side of his empire – Sainsbury organised its relocation.
With energy companies encouraged to hit the target of having 30 per cent of Britain’s electricity generated by green energy by 2020, turbines have now mushroomed everywhere (not a bad result considering it all began with a lone wind farm in Cornwall in the late 1990s) and Natural Power has taken off. “We now manage a third of all the wind capacity in the UK, not that you would ever really see our brand, because we’re doing it on behalf of the wind farm owners,” says Sainsbury.
No relation to the supermarket chain, the 53-year-old is very much the public face of Natural Power. In fact, you could say he’s the public face for the entire sector in Scotland, having until recently been chairman of Scottish Renewables. The trade body enjoys a remarkably close relationship with the Scottish parliament, which Sainsbury credits with being the catalyst for the industry kicking off in Scotland once Westminster and the EU had set the targets.
Land-based wind farms, known as ‘onshore wind’, account for 60 per cent of Natural Power’s turnover. The company offers a ‘full life-cycle’ service, and that’s what makes it unique, claims Sainsbury. “Our role is to provide everything from finding a site to developing it, getting planning consent, constructing it and managing the site all the way through its 20- to 25-year life. We then either return it to its original state or re-power the site.” It is said that two-thirds of proposed wind farms fail at the planning stage, but Natural Power boasts a 95 per cent hit rate. “We’ve built up a good understanding of working with local communities and stakeholders to keep that consenting rate extremely high.”
Blowing up a storm
Wind farms certainly attract their share of criticism and not just for aesthetic reasons. Critics have accused the sector of being risky, unreliable and dependent on subsidies, though, of course, Sainsbury has heard the arguments many times before. “We talk of renewables as if they’re sponging off the consumer,” he says, “but if you didn’t subsidise any form of power, renewables would be competitive. The problem is everything’s subsidised through tax breaks, capital allowances and so on. I believe in the next eight to 10 years, wind will be the cheapest power you can buy.”
With Ukip hostile to onshore wind and rumours of a partial subsidy U-turn in the Tories’ next manifesto, possibly in response, the issues remain intensely political. “What always puzzles me is that whenever you do public opinion polls, wind gets ratings that politicians would die for,” says Sainsbury. “In surveys, wind comes at just below hydro and well above nuclear or fracking.”
Having designed and consented the first wind farm in Scottish waters, 30 per cent of Natural Power’s revenue now comes from offshore wind. The installation and maintenance costs may be three times higher due to all the ships and helicopters involved, but with bigger turbines and a more consistent breeze you can generate more megawatts at sea. The company has expanded into other renewables including wave and tidal, hydro, solar and bio-mass, and has also moved beyond the UK.
Wind across the water
“We’ve partnered and acquired a number of companies starting with France and Canada,” says Sainsbury. Natural Power has tended to focus on North America and Europe – most recently Ireland (“a big growth area”). Beyond that lie potentially huge markets like China, which is reportedly planning to increase its renewable output by 20 gigawatts (gw) a year for the next five years. To put that in perspective, the UK’s output is currently around 10gw.
“You’ve seen a lot of the best practices of Natural Power adopted by Europe and the US,” he continues. “I think the UK’s been very good from a consulting, engineering point of view, but not from manufacturing.” The prize for winning that race goes to the Danes, who now have around half of a global construction industry worth £20bn. Had things been different, the extra jobs would have strengthened the UK industry’s case and helped counter some of the media hostility that has grown in line with the number of turbines popping up.
Most of Natural Power’s 300 staff are split between Green House HQ and a new Central Belt office in Stirling, with the rest scattered between 13 small offices overseas. The company plans to create up to 50 new jobs this year. “Because we work across the full life cycle we need everyone from wind engineers and project managers to drillers and financial teams,” says Sainsbury. Since recruiting the necessary skills is becoming harder, the company has invested sturdily in on-the-job training and development.
Wind power’s certainly a growth industry north of the border. “You’ve got to remember,” says Sainsbury, “that last year over 40 per cent of Scotland’s electricity was generated by renewables. This year it’ll be over 50 per cent.” How the industry continues to expand depends on many factors, not least the national grid. “It’s all about how we manage the grid and storage,” he says. “And grid investment always lags behind investment by seven or eight years.”
Again, the politics are all-important: “The whole energy policy in the UK is lagging behind the required investment,” says Sainsbury. “The UK is not that attractive a place to invest in power stations right now, and we need them.” For renewables, outside investment is critical, and here, Dr Nigel Wilson of Legal & General isn’t helping the cause. The boss of Britain’s second-biggest insurance company has said he wouldn’t put a penny into wind power, which he sees as “inefficient and expensive.”
Sainsbury brushes such comments aside. “Over the last five years our biggest growth in clients has been pension funds who are actively investing in wind farms because they’re interested in long-term stability and revenue. If you look at all the growth curves, wind and other renewables are going to grow substantially over the next few years.” That said, the required stability is being threatened by mixed messages from Westminster, the uncertainty over whether we’ll stay in Europe – and a small matter over Scottish independence in September.
Over the years Sainsbury has got to know Scotland’s political scene from the inside. As chair of Scottish Renewables he represented all the technologies from solar power to hydro and offshore wind. “This was very helpful as it meant presenting a genuine industry framework and not just a set of individual interests,” he says. In return Scottish MSPs have offered pretty consistent cross-party support for the sector. While gaining access to the powerbrokers of Holyrood is a lot easier than Westminster with its labyrinthine departments, famed for their silo-like mentality. With the chance to break free from flip-flopping politicians down south, could Natural Power be a natural supporter of the ‘Yes’ campaign?
Sainsbury sidesteps the question as deftly as Jack Straw on the Today programme. With the independence vote fast approaching, he obviously has no interest in ruffling political feathers, even if he despairs of the way both sides engage. “It’s much more like a school playground fight, than a proper, educated debate.” When pressed on how it might impact the business, he says “it depends on the way in which people work with the result of the vote. With all the different scenarios there are good and bad signs. Uncertainty is bad and in the event of a ‘Yes’ vote there would be a large amount of uncertainty in the short term. [But] energy is taken very seriously by the Scottish parliament, who said they would back energy and renewables during times of uncertainty.”
Whatever the outcome, Natural Power appears to be a stable business under the benign interest of Fred Olsen, now in his eighties.
“Fred’s still very involved in the company and provides the security, so we’re able to invest in new technologies and new countries. His family house is on the estate, and he pops in to see us, and give us wise words of direction,” says Sainsbury. It’s clear the company is well set-up to progress, whichever way the wind blows.