The London-based Verdabelo is one of those companies that should be better known. Indeed, if it can crack the mysteries of Internet marketing, it should have astonishing potential. It wants to talk to you about your boiler. That’s not an easy conversation, however: the household boiler is rather like our heart – it just sits there, quietly doing its job, and we just take it for granted.
Until it stops working.
Just as we need to nurture our heart, so too we should pay attention to our boiler, the heart of our home. Yet boilers are inherently dull. As Csaba de Csiky, Chairman and CEO of Verdabelo, says: “No one wakes up in the morning and says ‘sweetheart – gee whiz! – we are going to go and get ourselves a new boiler!’” Even if the old boiler is on its last legs, there are enormous disincentives to getting a replacement, not least the cost, the disruption, and the uncertainties surrounding the professionalism of the installer.
To continue the metaphor: about nine million homes in Britain are in need of serious cardiac attention. In December 2016 Stewart Clements, Director of the Heating and Hotwater Industry Council (HHIC), the trade association, said (in the context of the EU lifting its energy efficiency target from 27% to 30%), that “in the UK modernisation means replacing the nine million inefficient boilers currently operating in UK homes, with more modern condensing ones that use less energy, thus reducing household energy bills and greenhouse gas emissions.”
Nine million ‘zombie’ boilers – that’s what the HHIC calls them, because “they don’t die, they just keep chugging away”. That’s a lot of money wasted by householders, burning energy without getting what heat and hot water they should. Those nine million creaking and wheezing boilers are the targets of Verdabelo, one of the newer members of the Social Stock Exchange.
It seems to me that Government policy regarding energy is a bit of a mess, and chops and changes far too frequently, which leaves the private sector – the people and businesses actually doing its best to follow and implement policies – confused and wondering where to put investment. When 40% of global energy consumption is accounted for by the building sector for heating ,cooling and lighting, and up to 70% of the energy actually gets wasted, one can see that energy saving is the low hanging fruit on the way to sustainability, as in effect it pays for itself.
A case in point is the Government’s Energy Company Obligation (ECO), which has shifted its focus away from replacing old and inefficient boilers towards insulation; it has placed a cap on the number of boilers fitted under ECO at 25,000 over 18 months, a significant decrease from the previous yearly figure of 130,000. The Energy and Utilities Alliance, another trade association, says that “there has been a dramatic decline in the number of new boilers being fitted under the ECO scheme. In March this year, 7,037 new boilers were fitted, whereas by April only 1,211 were – a monthly decrease of 83%.” The ECO scheme is in any case due to come to an end in September 2018.
As so often the case these days, where the State retreats, the private sector steps forward. Verdabelo – which is Esperanto for ‘being green’ – has spotted an opportunity. I spoke to Csaba de Csiky, Chairman and CEO of the company, to find out more. Verdabelo originally started out by looking at improving the housing stock in central European countries, certainly some of the most inefficient in Europe. But this proved a step too far for investors and “over Christmas 2013 we made a decision to go into the UK,” says de Csiky. After some fund-raising and organisation, the business was launched last year. “After some very successful boiler installations we realised that we potentially had a very good business.”
What Verdabelo’s business is really all about is taking the pains and headaches out of finding and installing a new boiler. It’s a very simple process.
A typical boiler installation, including the latest peripherals costs between £3,000 and £5,000 – that’s a big chunk of upfront cash for a household, and unreliable installers may not provide the best product. Verdabelo uses reliable installers to put in a super-efficient Worcester-Bosch boiler, at a cost of £39 a month over seven years at no interest and a one-off £99 payment, with a 10 year warranty. It claims that, depending on the type of property, its customers will save up to £625 on their gas bills going forward. And for those who are interested in saving the planet as much as saving money, it claims that every new replacement boiler will, through greater efficiency, reduce CO2 emissions by 1.32-2.5 tonnes a year. The old boilers that are removed are taken to Maidstone Prison in the south of England, where inmates earn money from disassembling them for recycling purposes – and can stand the chance of future employment on release, so long as the company succeeds in its growth plans.
Technically, as Verdabelo is regarded as a consumer finance provider it has had to become authorised by the Financial Conduct Authority – an additional bit of security for customers – and so an affordability test needs to be applied, making its current target market those owner-occupiers in an income bracket of £40-£60,000/year. But in due course it will make inroads into the rental sector, and broaden out from its current drive in the south-east of England, to embrace the whole of the UK and then into continental Europe.
Currently it has a handful of clients, and aims to fully roll out in the autumn of 2017/8 with a target of 5000 boiler exchanges, and almost double that in 2019. As we come to the end of the interview, Csaba de Csiky says: “We joined the Social Stock Exchange partly because we think it might lead to the possibility of joint ventures, and because we hope to meet investors who may see us as an interesting company for the future. The thing is we don’t need £500 million – we need £500,000 to a million, get our marketing well established. As soon as we have a little bit of visibility it’s going to be a very quick take-off. We are running a very tight ship. The problem is that for these little niches, nobody is out there. Investors are stuck in the institutional logic they have created.”
For me, not only is Verdabelo’s proposition a no-brainer for improving the UK’s domestic heating and energy supply: if it succeeds in scaling-up, achieving 50 or 60 thousand replacement boilers a year, it’s also going to make a dramatic contribution to cutting CO2 emissions – which makes the company an all-round exemplar of a Social Stock Exchange member.
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