There’s something thrilling about stumbling across a company which does something so obvious, yet so brilliant, that makes you say, ‘why didn’t I think of that?’ The Social Stock Exchange member Point 4 – a private company – is a perfect example.
First let’s look at the facts underlying the raison d’etre of Point 4. They come under the category of ‘would you believe it?’
Somewhere between 12% and 30% of electricity faults in the UK are related to ‘vegetation interference’ – that’s trees growing too big or falling down to you and me. Ofgem, the UK government regulator for the electricity and gas markets, requires the power suppliers and distributors to survey each year more than 300,000 kilometres of power lines, to identify possible risk damage. This regular and continuous surveillance costs more than £100 million annually, according to the Energy Networks Association.
Probably most of us at some point in our lives have suffered a power cut after storm damage has brought a cable down. It’s personally inconvenient and annoying to us; it’s hugely expensive to the electricity suppliers; it’s a drain on the overall economy and our public infrastructure.
Dig a little deeper below its techie USP – a combination of surveying lasers (LiDAR), satellite information gathering, and data storage and crunching to control vegetation growth (as well as accurately project future growth and thus anticipate problems) around electricity transmission lines – and you discover a socially vital, cost-cutting service that’s admirably suited to the impact investing ethos of the Social Stock Exchange. We spoke to Martin Stanley, the founder and managing director of Point 4, to find out a little more about the company.
Stanley’s background is in vegetation management for the power companies. He knows from more than 20 years’ experience what he’s talking about. He’s spotted a problem – and has designed a better solution. “Coming from the industry I’d known about this problem for years, day in, day out, saying ‘why are we doing this? This doesn’t work’,” says Stanley.
He explains the catalyst for the development of Point 4. “The utility companies change a lot of wooden electricity poles each year, ones that are rotting at ground level while the rest of the pole is fine. I designed and patented a simple system of a metal splint that drives into the ground, bolts to the pole and extends its life. I sold that system to Babcock International. That gave me to confidence to say, why don’t we do the same in tackling the problems that I knew we were having with vegetation? It started from there.”
It’s the responsibility of individual power distributors to make sure that trees and other vegetation don’t interfere with power lines, and it’s a costly business for them. For the current regulatory period of 2015-2023 Ofgem reckons that vegetation management costs will be almost £1 billion – a vast sum that the electricity companies will have to find. On a Europe-wide basis the total costs from vegetation interference are a staggering €36 billion a year.
“When the power goes off,” explains Stanley, “it creates a CML – a customer minute lost. Ofgem gives the power companies a certain amount of CMLs that they are allowed to use to maintain their network each year. If they go over that pre-agreed limit, they get fined. One of the electric companies came to us and said they had 25,000 kilometres of network, and that they paid around £25 million in CML fines last year. Our system can completely eliminate that cost. But if we said that to them they’d never believe us! So we told them that we could cut that cost in half.”
This is a brand new service to the electricity industry but, as with anything new, there is reluctance to be the first to dip the toes in the water. Yet Point 4 has spent the past three years building its research and developing its technology to the point where it is now poised to come to market. Says Stanley: “Two power companies in the UK have requested trials for the first quarter of 2017, and we are in discussion with utility companies in the US. Inmarsat is on board so we have access to their satellite constellation. But we are pre-revenue. We have gone to investor meetings and the first question is – ‘what’s your turnover?’ We’ve got a list of people that’s as long as your arm who are interested in investing – when there’s a revenue. It’s a bit of a Catch 22 situation.” Point 4 has nevertheless secured investment for the next stage of its growth. Its strong and highly experienced Board, experienced management, plus a convincing technological platform, is now starting to bring impact investors in.
There are too many social benefits arising from Point 4’s innovative scheme to be listed in this brief space, not least enabling power companies to control the cost of electricity to customers. Point 4’s clever technology means that CO2-emitting aerial survey flights can be cut by 75%. And it’s a company that has global possibilities, and can extend its technology across other infrastructure areas such as telecoms, rail and highways. There are others operating in this field – but none of them offers a fully integrated survey, management audit system that can fully replace the existing laborious and often inaccurate schemes currently used by the power companies. It’s a convincing company with strong long-term prospects – one that sees the wood among the trees.
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