Lian Michelson, Investment Director, outlines why Vala’s Sustainable Growth EIS fund has invested in energy disruptor, Switchd, and why Vala is excited about the prospects.
The UK has been grappling with inflation since the Brexit referendum, which drove down the value of the pound and resulted in higher costs of imported goods and services. The ongoing war in Ukraine has exacerbated already high prices, particularly those related to energy, and has focussed peoples’ minds towards the transition towards low carbon energy sources like renewables.
MakeMyHouseGreen (the trading name of Switchd Ltd) is driving the decentralised green energy transition for UK homes. The automated platform utilises bespoke modelling and data to determine if green solutions, such as batteries and solar, are suitable for each home. The platform then connects customers to quality installers to ensure a smooth installation process.
Market Growth Drivers
Apart from rising energy prices, several trends are driving the growth of the residential solar market and the green transition in the UK:
- Climate change concerns: This leads many homeowners to seek ways to reduce their carbon footprint. Solar panels offer an attractive solution for homeowners as they provide a way to reduce their dependence on fossil fuels.
- Falling costs of solar: Solar is more accessible to homeowners, resulting in an increased upfront affordability of installation, while the long-term return on investment has become more attractive. Moreover, solar panels can provide energy independence for homeowners, as they can generate their own electricity and reduce their reliance on the grid. Particularly appealing for those who reside in remote areas or are concerned about power outages or energy security.
- Government incentives: The UK government has introduced incentives to encourage the adoption of renewable energy, most recently the Smart Export Guarantee that replaced Feed-in Tariffs. These financial incentives make it economically viable for homeowners to install solar panels, which has further boosted the growth of the market.
- Energy efficiency regulations: The UK has also introduced energy efficiency regulations such as the Minimum Energy Efficiency Standards (MEES), which require landlords to improve the energy efficiency of their properties. This can include installing solar panels, which has further contributed to the growth of the market.
Despite the continuing growth of the solar market, there is still huge potential for expansion, with an estimate of 9 million homes in the UK that are suitable for solar installation. According to the Solar Trade Association (STA), only 1 million homes in the UK had solar installed by 2021, representing less than 5% of UK homes. Significantly higher solar penetration in countries like the Netherlands (16%) and Italy (23%) reinforces the potential for growth.
Team, Tech and Traction
The team has already proven their operational expertise by building MakeMyHouseGreen into a scalable tech enabled platform. And it comes as no surprise, as co-founders Llewellyn Kinch (CEO) and Thomas Rogers (CTO) met while working as consultants at Newton Europe, a data-driven operational consultancy, where they honed their skills in optimising and automating operations.
MakeMyHouseGreen addresses three key problems facing homeowners when it comes to the adoption of renewable energy. Firstly, homeowners have difficulty accessing impartial and data-driven personalised advice on what green solutions are suitable for their homes. Secondly, the current installation market is fragmented and operationally challenging, making it difficult to deliver installations smoothly, at scale, and profitably. Lastly, individual homeowners find it challenging to extract post-installation grid-balancing benefits.
MakeMyHouseGreen’s platform solves these problems through proprietary data-driven modelling, an automated in-house platform, and a network of quality independent installers. The platform aggregates thousands of homes with the grid to maximise benefits and cost savings.
With rapid growth to over £6.5m in annual sales, a long waitlist of customers, and exciting partnerships with Nationwide Building Society, Santander, Wickes, and others, MakeMyHouseGreen is poised for success. The company has a clear growth path to over 1,000 monthly installs that will make many more UK households green.
Vala is very excited to support MakeMyHouseGreen on its journey to become the UK’s go-to green solutions platform.
Lian Michelson, Investment Director, Vala Capital