Demolishing Dale's Disinformation
Ecotricity owner Dale Vince is disseminating disinformation to protect his own interests
Summary
Eco-entrepreneur Dale Vince who owns and runs Ecotricity, has recently given interviews and participated in a Talk TV debate where besides being rude and belligerent, he made some demonstrably false statements about renewable energy, especially how cheap it is. Time for a closer look at Dale and his companies to see how well his claims stand up to scrutiny. My main findings are:
Ecotricity and its sister companies have benefited from over £100m in direct and indirect subsidies since 2002.
Dale Vince treats the group like a massive ATM, withdrawing over £7m from his director’s loan account over many years after selling some of his shares back to the company.
Dale bought some shares in one of his subsidiary companies for £49 and sold them five years later to an unrelated company for more than £36m.
·He has since loaned £19.9m of his money back to his company to prop up its finances. This is quite a lot to lend from someone who claims to have only a few thousand in his current account and no other savings or investments.
It is difficult to avoid the conclusion that Dale is engaging in disinformation to protect and promote his own interests.
Dale Vince Claims
I looked at three recent media appearances by Dale Vince, two on Talk TV and an interview with the Guardian.
Piers Morgan Interview 7 June 2023
In his interview with Piers Morgan on 7th June 2023, Dale Vince made the following claims:
Onshore wind is the fastest, cheapest, cleanest form of energy.
[Onshore wind] requires no public money at all.
100% of clean electricity in 10 years with no public money at all.
It is “counter-factual” to believe that more drilling in the North Sea will being down energy bills.
Guardian Interview 7 June 2023
He has donated at least £1.5m to the Labour Party over the last 10 years to “influence policy” and has also donated hundreds of thousands of pounds to Just Stop Oil (JSO), including £170K just last month. By pure coincidence, in May 2023 the Labour Party announced plans to block all new North Sea oil and gas projects in line with JSO demands. JSO have gained notoriety by hampering people on their way to work, disrupting the World Snooker Championships and other sporting events. In short, they are trying to bully us into accepting their world view without having to bother with minor inconveniences like the ballot box.
Mr Vince also claimed to have “a few thousand pounds in the bank,” “one current account, no savings account, no pensions, no property and no investments.” Dale’s company Ecotricity also claims to be a “not for dividend” company where all of the money they have goes into their mission to green up Britain (see Figure 1).
Debate on Talk TV 20 June 2023
He made similar claims in a debate hosted by Ian Collins, again on Talk TV on 20th June 2023:
We can boost the economy, lower bills and make ourselves better off by pursuing Net Zero policies.
£10bn per year in tax breaks and subsidies for fossil fuels that need to be flipped to renewables, somewhat contrary to his claims to Piers Morgan.
We have enough renewable energy to power our country completely.
We can bring bills down to the lowest place they have ever been, eradicate fuel poverty, create “forever” jobs and incredible economic strengthening if we just make the switch from fossil fuels to renewable energy.
Net Zero will save us money and make us a stronger more resilient country.
We do not have to pay more to get to net zero. It is not going to cost to get to Net Zero.
13% of all of the electricity we need in this country can be made on our rooftops.
Rebuttal of Dale Vince’s Energy Policy Claims
There is so much in Dale Vince’s statements, it is difficult to know where to start with a rebuttal. I have broken the response down into a number of sections.
Renewables are Not Cheap
First, let us take on Dale’s claims that renewables are cheap and installing more of them will bring down bills to the “lowest place they have ever been.” I covered this in my first ever substack article. Before 2020, electricity costs rose steadily even though gas prices stayed stable. Coal was largely phased out and the penetration of renewables increased. They were more expensive than what they replaced, and what is more, the costs of renewables keep rising because Contracts for Difference (CfDs) and Renewable Obligation Certificates (ROCs) are index-linked, meaning they go up each year with inflation. There is also the hidden cost of grid balancing that has risen from ~£0.5bn in 2011 to over £4bn in year ended 31 March 2023. This is summarised in Figure 2 below. It is also obvious from Figure 2 that it is a tall order to expect intermittent renewables to completely fulfil our electricity demand, especially as electricity demand is expected to increase as we move to EVs and heat pumps. In short, renewables are entirely dependent upon the public paying over the odds on their energy bills. And far from energy bills being the cheapest they have ever been, renewables are the reason we have very expensive energy.
Ecotricity Renewables Are Expensive
If renewables are so cheap, we might expect Ecotricity to offer the cheapest energy to customers. They do after all offer “100% green electricity” and “carbon neutralised green gas.” They are even registered as a vegan energy supplier. I did a quick comparison of the tariff I am paying Octopus from 1 July 2023 (coincidentally another supplier that burnishes its green credentials) with the variable tariffs for July 2023 from Eon Next, British Gas and Ecotricity (see Figure 3).
Ecotricity has by far the most expensive unit rates for both electricity and gas, with both unit prices >17% more expensive than Octopus. If Dale Vince’s wind and solar power is so cheap, why is he charging his customers over the odds? Ecotricity gas might be more expensive because they are passing on the costs of carbon offsets. The latest accounts say that the emissions from their gas has been covered by United Nations Certified Emission Reduction Certificates. However, earlier this year, the Guardian revealed that 90% of the rainforest carbon offsets sold by the biggest certifier are worthless. Guardian writer Patrick Greenfield even described corporations using worthless carbon credits to claim they are climate neutral as “carbon pirates.” It has not been disclosed exactly where Ecotricity gets its carbon offsets from, but it would be surprising if the largest offset supplier were not involved somewhere.
Renewables Do Not Boost the Economy
Dale says we can “boost the economy” and create jobs by spending more on renewables. I covered that too when I showed that Net Zero policies are damaging growth. It is true that installing more renewables creates subsidised jobs, but the impact of that is that electricity generation becomes less productive. Since 1997 we have lost six times as many highly productive jobs in energy intensive industries than we have gained in electricity generation as shown in Figure 4.
Far from making us stronger and more resilient, Net Zero policies have hollowed out our productive industries.
Onshore Wind is Not Quick to Develop
As for his claim that onshore wind is “quick”, he appears to have been developing Heck Fen Wind Farm since 2013, spending £2.5m to date and it had not been completed it by 30 April 2022. This is hardly a rapid pace of development.
Net Zero is Not Cost Free
Obviously, his claim that we do not have to pay more to achieve Net Zero is completely specious. The Public Accounts Committee estimates 1-2% of GDP each year to 2050. UK GDP was £2,491bn in 2022, which means that the cost of Net Zero is estimated at £25-50bn annually.
Solar Power is Not Going to Deliver 13% of Our Electricity
His claim that rooftop solar could potentially produce 13% of our current electricity needs is also misleading. He claims that solar could have a peak capacity of 37.7GW and produce 34,845GWh each year. Even if his methodology is sound, he completely ignores the fact that most of this electricity will be produced in summer when demand is low and nothing at all on winter evenings when demand is highest. Indeed, at this time of year, demand is around 30GW in the middle of the day which is less than the peak solar supply under his plan. We would have excess electricity and prices would crash, destroying the economics of all generators, except those receiving guaranteed prices, and those paid not to produce like the wind farms Dale’s company Ecotricity operate. Of course, if we relied on solar in the winter, either the lights would go out, or we would have to invest in reliable backup supply.
Dale’s Dependence Upon Subsides
Why might Dale-boy be peddling dodgy energy policies from the boot of his £750K EV sports car down at Stroud market? Could it possibly be that he is dependent upon a never-ending stream of subsidies from hard-pressed bill payers to keep his empire running? Time for a closer look.
Independent researcher, Ben Pile calculated the subsidies Ecotricity has received from ROCs since 2002, see Figure 5. He came up with a figure of over £89m, with £53m of that since 2014-15.
This does not cover all of Ecotricity’s activities. I went through the accounts of the other subsidiaries of Ecotricity and found another £9m of subsidies since 2014/15, see Figure 6. Some of those companies were operating before 2014/15 but did not separate out the subsidy in their revenue before that year.
Ecotricity has also declared over £16m in “other operating income” for administering Feed in Tariff (FiT) schemes. FiT schemes are another form of subsidy for electricity production; therefore, the administration income derives solely from the subsidies.
That is a total of £78m directly or indirectly from subsidy schemes since 2014-15 and over £114m since 2002/3. The Ecotricity Group restructured in 2020 so now the ultimate holding company is Green Britain Group Limited. Analysis of the accounts since 2014-15 shows total profit before tax for the relevant ultimate holding company of £12.2m to 2021-22 (see Figure 7). Even that figure is flattered by the sale of The Electric Highway Company Ltd to Gridserve in 2021 for £74m (more on that below).
Dale Vince’s Green Dividend
While it is technically true that Dale Vince does not take dividends from his company, it is misleading to claim that all of his money goes towards his mission of greening up Britain. The highest paid director (presumably Mr Vince) takes a reasonable salary for the size of business. Incidentally, the highest paid and the other directors also receive pension payments as part of their remuneration, although we cannot be absolutely certain, it seems Mr Vince does have a pension.
But that pales into insignificance compared to his other financial rewards from the company. In the years up to 2012/13 his director’s loan (owed to the company by Dale Vince) increased to £2.6m. In the following year, it increased again to £3.2m. Then in 2014/15 the loan mysteriously switched the other way, so the company owed Dale £3.1m. This swing was due to the company buying back shares valued at £7m from Mr Vince (see Figure 8 and the 2014/15 accounts). This is a capital transaction which would have been taxed more favourably than if he had taken income as a dividend.
This balance was drawn down over a number of years until Dale owed the company over £2.1m in 2019/20. However, the balance was then cleared such that by FY2021/22 the Group (Green Great Britain by then) owed Dale £19.9m. It is interesting to see where this money came from and why it was necessary for Dale to loan his own company £19.9m. This is quite a lot of money for a man who claims to have only a few thousand in his bank account and no other savings or investments.
In 2021, the Group sold their subsidiary The Electric Highway Company to Gridserve for £74m, as recorded in Gridserve’s 2021 accounts. According to the Confirmation Statement for The Electric Highway Company for 2016, Dale Vince owned 49% of the company, so he probably received ~£36m for his share of the company. In 2016, Dale paid £49 to Ecotricity Group through his loan account for his shares in the Electric Highway company. £49 to £36m is quite a return on his investment and again probably treated as a tax efficient capital gain rather than income.
In total, Dale Vince has received over £43m (pre-tax) from the company in the form of share buybacks, loans and receipts from the sale of a subsidiary and even more in salary. So, even if all this money was not technically a dividend, it was certainly quite a windfall for Mr Vince. He has loaned back £19.9m of this to the Group. All this shows that not all of the money goes into the company’s mission as claimed – quite a lot of it goes into Dale’s back pocket.
So, why did Dale have to lend some of his returns back to his Group? This is due to the rather precarious financial position Green Great Britain found itself in at the end of FY2021/22.
Precarious Finances of Green Great Britain and Ecotricity
Despite all of the subsidies Dale’s companies have received and the high prices he charges his customers, the finances of his main holding company Green Britain Group are in a precarious state. Thanks to the sale of the Electric Highway company and the loans from Dale Vince, at the end of April 2022 the group had £70.8m in cash. However, £29m of this was restricted cash dictated by banking covenants. That leaves ~£42m of unrestricted cash.
Set against this, there was over £182m of debt due within one year (including £19.9m to Dale Vince) and over £51m due in more than one year (see Notes 16 and 17). Of this debt, £9.4m of a Coronavirus Large Business Loan is due to be repaid in 2023. There is also £44.2m of Eco Bonds outstanding, including £29.5m in Eco Bonds 3 & 4 which bear interest at a rate of 5.5 and 4.5% respectively. These can be redeemed by giving six months’ notice prior to their redemption anniversary of 16 December.
When these Eco Bonds were issued the interest rates were quite attractive. However, at the time of writing, the yield on a 2-year Government bond is 5.3% and low risk savings accounts are available paying over 5%. It could be more attractive for investors to put their money in savings accounts or Government bonds rather than accept the 4.5-5.5% offered by Ecotricity/Green Britain Group. The deadline for issuing a redemption request for this year will have been around 16 June 2023. Maybe this was why Dale was prominent in the media in early June – trying to burnish his green credentials to persuade investors to keep his bonds.
If Eco Bonds 3 & 4 were to be redeemed in addition to repaying the Covid loan, then that reduces the unrestricted cash to around £3m. If all of the Eco Bonds are redeemed, then the unrestricted cash goes negative which would be a big problem. If Dale had not lent the £19.9m, they might be in big trouble.
The company has been considering mitigating actions in response to stress tests. Redemption of the Eco Bonds is just one of the scenarios they have considered. The mitigating actions (see Figure 9) include raising prices even higher and further asset sales. Apparently, their green credentials mean they are not subject to the Government price cap. Yes, they are allowed to charge above the capped rate for supposedly “cheap” renewables. You could not make this up!
Conclusions
Dale Vince has been active in the renewable energy industry since at least 2002. He must know the industry inside out, including the generation costs and the prices he charges compared to the market. He must also be intimately aware of how much money he has personally taken out of the company.
This article has demonstrated his claims of “cheap” renewables are demonstrably false and claims that Net Zero will save money are in cloud cuckoo land. He has also received at least £43m over the years from his investments in Group companies in addition to his generous salary. So, his claims that all of his money goes on his mission are also demonstrably false. Time for Dale to stop the disinformation.
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