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Business interview: Ovo Chief Stephen Fitzpatrick in pole position for the renewable power revolution

·6-min read

Stephen Fitzpatrick once made a good living as a City trader before founding energy supplier Ovo, and you can see why.

Sitting cross-legged on a sofa in his Notting Hill office, the 41-year-old Northern Irishman exudes focus.

He’s controlled to the point of being cagey, speaks in a measured, low voice.

If you walked past him in the street you’d barely give him a second look, still less think he was worth more than £600 million, unless maybe your eye fell on the £400 Zegna trainers.

But his firm is the UK’s seventh-biggest energy supplier, offering its 1.5 million customers electricity and gas from renewable sources.

And in a climate where politicians are setting targets for a zero-emissions world and Extinction Rebellion has brought London streets to a halt, the firm is also making a big bet on electric cars.

Its Kaluza division has the tech to link the batteries of vehicles and other devices to the power grid, telling them when to charge, and when to put power back in.

This investment, and an accelerated international expansion, have been driven by Japanese conglomerate Mitsubishi splashing out £200 million on a 20% stake in Ovo in February.

That turned the 10-year-old company into the UK’s latest unicorn; it also gave Fitzpatrick, who owns 65%, a vast paper fortune.

He’s gone from the upstart berating the service of Big Six rivals in front of MPs at the height of the furore over profiteering in 2013, into a target for others to shoot at.

He insists the DNA of Ovo is “completely different” to his larger rivals but admits “when you start out, you can get away with more”.

Fitzpatrick had his eye on the energy market for years.

After finishing university in 2000 he was just too late to the first boom, setting up an unsuccessful rentals website and learning valuable lessons in the process.

When it failed, he headed south to London “to get a proper job” and after a brief spell on the dole, landed one as a credit default swaps trader at Société Générale in 2003.

The plan was always to have another crack at starting his business but he wanted to “prove to myself I could stick at something for five years”.

Moving to JPMorgan he was bearish, partly because of his experience in a summer job selling books in the US, watching customers spread a $60 payment over three cards.

But the markets weren’t with him until a fateful day in 2007 when HSBC made its first ever profit warning, the Dow fell 500 points and “I’d made my budget for the year in one day.”

He quit to set up Ovo in 2008.

Bad customer experience and industry dynamics such as deregulation and the gradual emergence of renewables drew him towards energy.

“It was the realisation that there are 27 million consumers, every single person is a potential customer, an industry recently deregulated and seemingly inept, and companies who didn’t feel like they were keeping up with consumer expectations.”

That savvy has been rewarded as Ovo racked up £834 million in sales in 2017, a number that will only rise following its move for failed rivals like Spark and Economy Energy last year.

But Fitzpatrick is most animated when he discusses the Kaluza business. The genesis was the racing fanatic’s short-lived foray into Formula One, when he pumped a reported £30 million into rescuing the Marussia team in 2015.

He might still be involved but for a rain-soaked Brazilian Grand Prix in 2016, when one lost point pushed his renamed Manor team out of the cash in the Constructors’ Championship, costing it $50 million in prize money. The F1 dream died, but being around some of the biggest car companies he could sense the shift towards electric vehicles.

He argues Kaluza will be vital because of the sheer demand on the power grid of a boom in electric cars. “We live in a world where there are lots of devices that use electricity that have flexibility, for example your fridge. If you turn it off for six hours it will stay just as cold for six hours. Kaluza is a platform that enables the grid to securely connect to those devices and send them instructions on the best time to charge or discharge their battery.”

There are thousands of devices connected, “but it needs to be millions”. He rolls out the stats: if there are a million electric cars on the road in five years’ time, they’ll need 7GW of power, the “equivalent of 15 gas-fired power stations we don’t want to build”, and they can’t all charge at the same time. A smart grid becomes essential.

In Fitzpatrick’s street the number of electric cars quadrupled to 12 in the past year since charging points were installed by Kensington & Chelsea council.

He reckons if London’s politicians only had the gumption, petrol and diesel cars could be an endangered species on London’s streets in the next decade.

Mayor Sadiq Khan went part of the way this week with plans for 50,000 charging points by 2025. But Fitzpatrick says: “There are cities now talking about banning internal combustion engines not by 2040 but by 2030. We could definitely do that. In London for example, if we had the political will, we could definitely achieve that. We would need a huge investment in charging infrastructure. Why not? Over a decade we can do anything.”

That said, he thinks the demands of Extinction Rebellion, which has called for the UK to move to net zero carbon emissions in justsix years’ time, are just too hard to meet.

“I have had so many conversations with individual customers about the pain that rising energy prices causes them and when the bills go up they have to find the money somewhere else. To decarbonise our power sector will take time, and trying to rush it will certainly make the costs prohibitive to society.

“I just don’t see how we achieve those aims in the timescale provided without a massive drop in food production, in economic output. There is going to be real social and economic catastrophes which would come from that. We have to weigh up the urgency of the discussion with how is society going to pay for that?”

It’s a debate that Ovo and Fitzpatrick are likely to play a prominent part in for years to come.

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