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Doug Stewart: How I generated profits from green energy

Former car salesman Doug Stewart set up Green Energy UK to cash in on the boom in environmentally-friendly power. With a turnover of £7m, it's a business that's generating a healthy return.

Former car salesman Doug Stewart, now 55, got his inspiration for Green Energy UK from a chance conversation with another parent at a children's birthday party. The year was 2000 and "this guy started talking about how solar panels would change the UK's energy scene. I didn't believe him, but it awakened my interest." Stewart began to research renewable energy and realised that the power-generation sector was about to undergo a "massive change". But finding a business opportunity wasn't easy.

"I looked into everything, from becoming a generator to being a roofer and installing solar panels." Unable to find an opportunity in one particular energy source, he decided that the best option would be to market green energy in general and try to benefit from all of the different technologies. His plan was to buy the rights to "clean" energy and then sell it on to environmentally conscious customers.

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With just £200,000 to invest from his former car business, Stewart realised that Green Energy UK would be too small to go it alone. "I entered into an agreement with a larger firm so I could piggyback' off their licence." He also saved on staff costs by using a serviced office and renting part of a call centre. The partnership also allowed him to buy electricity from the wholesale market. He decided he would offer a relatively expensive but wholly renewables-based tariff alongside a cheaper pale-green tariff' based on supplying electricity produced from a mix of more efficient generators. His first such source was a tomato grower who used vegetable waste to power a generator, who sold him any excess electricity.

By summer 2001 everything was ready so Stewart who had "always been a big networker" began "contacting everyone I knew". By keeping margins low he was able to match comparable energy tariffs from larger suppliers. He also offered customers shares in the company to drum up more business. Stewart decided not to spend on marketing and reinvested the growing profits back into the business. As it grew, he created his own call centre, "so that we could offer better customer service". He was convinced that, in the long run, pledges such as the guarantee to answer a phone with a human voice within 20 seconds would win customers from his larger, more bureaucratic, rivals. Another boost came from the rising prominence of green energy. "When I started, not many people thought about green energy. Now it is mainstream." Meanwhile, new legislation encouraged more small producers to generate renewable energy.

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In 2005 it nearly all went wrong when a large corporate customer offered to sign an immediate agreement but wouldn't "give me time to secure the energy on the wholesale market". Stewart decided to pay spot prices until he could find a producer. But this backfired. Soon after he signed, a dispute between Russia and the Ukraine sent gas prices soaring along with the spot price of electricity. Servicing his new customer cost more than £500,000 and "nearly broke the business".

Yet Green Energy UK survived. With just under 20,000 customers, it now generates an annual turnover of £7m. Stewart is optimistic green energy is "set to grow".

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