Alistair Houghton meets RICK SMITH, chief executive of green technology firm VPhase
WHEN Rick Smith wants to give investors their very own lightbulb moment, he pulls out his box of tricks and watches VPhase work its magic.
Smith, chief executive of Cheshire company VPhase, says the company secured £2m in funding from London investors after wowing them with a portable demo box showcasing his company’s technology.
VPhase is a device designed to help householders save money by regulating the voltage of the electricity supply that goes into their homes.
And to demonstrate it when speaking to analysts and potential investors, Smith carries a metal box fitted with a VPhase unit, a line of lightbulbs and a meter.
He plugs in the box, lets the lights warm up, then switches on VPhase. The meter then shows that the lightbulbs keep shining even while the amount of electricity used to power them drops by more than 10%.
The enthusiastic Smith – an accountant by training but clearly a salesman by nature – says VPhase did not go hunting for funding, but attracted it anyway.
“I’ve carted this box round every institution,” said Smith, “and everyone reacts the same way – bloody hell, yes, I get it.
“We didn’t go asking for money. The institutions just offered it after seeing the product.”
Smith is originally from Warwickshire, but settled in the North West in the 1960s. He trained as an accountant in industry, starting his career at Robinson Healthcare in Chesterfield.
Next he moved to International Energy Systems, in Neston, where he met future Energetix founder Adrian Hutchings.
From 1997 to 2001, he was finance director at Norcros Adhesives, before he moved to Ultraframe, in Clitheroe, as finance director, becoming acting managing director in 2004.
But later that year he moved to Energetix, the technology development company founded by his old friend Adrian Hutchings, as finance director.
“Energetix is about finding solutions to known problems in energy markets,” said Smith.
“Adrian started that business from his kitchen table in 1997.
“I joined because I had the opportunity to lead a float – something I’d never done before.”
The Energetix group is marketing two other technologies. Its Genlec boilers generate electricity while they operate, while its Pnu Power technology uses compressed air turbines to protect electrical installations from power cuts.
VPhase was first developed in 2005, and the VPhase company was set up as an Energetix subsidiary. It was spun out in 2007 and listed on London’s Alternative Investment Market alongside Energetix.
VPhase secured seed funding to help it create a working prototype and secure patents before, in May, 2008, it raised £3.5m through a share placing to help it develop the products and get them ready to take to market.
In September, Smith succeeded Dr Lee Juby as chief executive of VPhase.
“I had been championing VPhase within Energetix,” he said.
Today VPhase, based in Capenhurst, near Chester, is listed on London’s Alternative Investment Market, which values it at £19m.
Energetix owns 43% of VPhase, with other major shareholders now including ORA Capital and legal & General. Vanda Murray – deputy chairman of the Northwest Development Agency and former chief executive of technology company Blick – joined as chairman in September.
The business employs 14 people, though Smith expects it will double in size in the next 12 months.
The voltage supply to UK houses varies between the statutory limits of 216 and 253 volts. But, says Smith, most appliances do not benefit from anything above 220 volts.
“The fridge is a great example,” he said. “The motor has to provide enough torque to compress the refrigerant to do the duty of cooling at 207 volts. If you supply more voltage to it, it doesn’t need it and wastes it in heat.
“That’s a double whammy because it heats up the refrigerant and it has to work twice as hard.
“On a fridge, VPhase delivers 17%-18% energy savings.”
Smith says the technology is already proven in industry, but says VPhase is the first product suited for domestic use.
“Tesco’s stores save £8.2m a year on their annual electricity bills because of voltage optimisation,” he said.
“But there’s always been a challenge with voltage optimisation for homes because of the technology – it needed big transformers, for example. The challenge for us was to develop a product that was low-cost and easy to fit.”
And, at that point in the presentation, he pulls out his metal box and demonstrates VPhase.
Smith says that, including installation costs, consumers will pay around £300 for a VPhase.
Tests in staff homes showed they saved an average 10%on their energy bills. With the average UK electricity bill being around £600, that means people could save £60 a year, paying back the cost of their unit in five years.
Smith says homes with higher energy costs – like his own – could recoup their investment even more quickly.
“If, like me, you’ve got three teenage daughters, your bill is substantially more,” he smiled, “because you’ve got things like driers, tongs and straighteners.”
The key to VPhase’s success, he believes, is that families don’t need to change their behaviour.
“With a smart meter, you have to change your lifestyle to use less electricity,” he said. “With this, you just fit it and carry on living your life while it cuts energy costs.
“Now we have to get that message out to consumers.”
VPhase is being promoted through a new website, television adverts, and even a YouTube video featuring green guru Dick Strawbridge. It has featured on TV show DIY SOS – resulting in a sixfold increase in inquiries – and in Easyjet’s in-flight magazine. The product is also being promoted to electrical contractors through trade magazines and trade shows, while VPhase is working with social housing companies and utilities companies.
Smith, who turned 50 last week, lives in Cheshire with his wife and three children. He has a passion for sailing, either in the Mediterranean on holiday or on his family’s boat in the Lake District, and one day wants to sail the Atlantic – but not before he has made VPhase a household name.
Smith says VPhase is most easily fitted when homes are being rewired.
He says 1m homes in the UK are rewired every year – and that if VPhase units could be installed during just some of those building works, then sales could soar.
The Government’s green agenda could also benefit VPhase. As householders are pushed to install smart meters and cut their energy use, they will be looking for options that help them save while not affecting their lifestyle.
“When you talk to the utilities companies, they’re looking for opportunities to upsell when they install smart meters,” said Smith. “VPhase fits that really neatly.”
As sales soar, VPhase will need to make more units. Capenhurst is the company’s HQ and research base, but the manufacturing will be done in Eastern Europe. Smith says the company is focusing on the UK market for now but will one day consider expanding overseas.
The company is still loss-making, but Smith believes that as new orders start coming in he will be able to take VPhase into the black.
“I’ve had some good success at changing the performance and sales in the business,” he said. “We have more than trebled our monthly sales rates, compared to where we were sitting in the first half of the year.
“There’s no such thing as a voltage optimisation market yet. We’re creating it.”
