In this week's SME Focus we hear from an entrepreneur who has built a profitable renewable energy business while battling challenges such as apparent inconsistencies in the local authority planning process.


Andrew Lyle.



What is your business called?

Locogen Ltd, I wanted a single word that was memorable and had all the web addresses available (.com, etc). It took a bottle of whisky and 36 hours straight to find the name.

Where is it based?

Leith, Edinburgh. I love Leith. It has a great atmosphere and there are a lot of small businesses in the area. Also I live in Leith and in my previous role I had over an hour commute so wanted to be closer to home.

What does it produce, what services does it offer?

Renewable energy project development for wind, solar, hydro, biomass and anaerobic digestion. We take projects from initial conception through to installation.

Whom does it sell to?

Locogen operates in the medium-scale commercial onshore renewable energy market. Medium scale projects are typically between £1 million and £10m in value and generate enough energy to power between 250 and 5,000 homes. We originally set up to own and operate projects and have a number of medium scale wind projects in operation and solar farms in the final stages of development.

However, developing and operating our own projects is a very expensive and risky business so we built a successful consultancy business to generate profits to invest in the development of our renewable projects.

In general we assist our consultancy clients in the development of renewable energy projects from initial conception through to operation.

Our main clients are landowners, public sector, private sector, financial sector and community organisations who are looking to reduce energy consumption, save on their energy bills and introduce a new source of income.

What is its turnover?

£2.65m in Locogen Ltd plus a further £1.4m from subsidiary companies.

How many employees?


When was it formed?

December 2009

Why did you take the plunge?

A new opportunity came up in the market so I decided to leave the company I was with and set up Locogen. The new opportunity was the announcement of the feed-in-tariff (FIT) scheme for medium-scale renewable energy projects up to 5Megawatts in capacity. The FIT scheme provides a guaranteed financial incentive for generating green electricity from renewable technologies by ensuring that owners of assets like wind turbines can sell their output to electricity suppliers at a set price. There had been little or no development in this area, other than community projects, as it was not commercially viable. The introduction of the FIT scheme improved the economics of the projects and significantly simplified the process of trading green electricity. I was in a consultancy company at the time and thought there was a huge opportunity to develop, own and operate small wind farms.

What were you doing before you took the plunge?

Renewable energy consultant - basically in the same space but as a consultant rather than a developer.

I originally went into the renewables sector by accident. In my last year at University in 2003 I got the opportunity to do my thesis with a start-up renewable energy company who were designing a new wind turbine. They were offering £100 per day for students to carry out research projects on their turbine. I was broke at the time and desperately needed the income so was delighted to accept. I spent one day per week with the company out at their office and got an introduction to the renewables sector and life working in a small start-up business. I loved the informal atmosphere, the feeling of being part of a growing business and the technological / commercial opportunities in the sector. By the end of the year I had agreed with the owners to join the company full time to set up a consultancy business that would raise funds for the development of their wind turbine.

My family were surprised (and a little disappointed) when I didn't join an oil and gas company after I left university. They thought there was no money in renewable energy. However the sector has gone from strength to strength over the last decade and is one of the most exciting sectors to be in.

How did you raise the start-up funding?

The business started with £1,500 personal investment and has been funded from the re-investment of profits since then.

What was your biggest break?

Securing the rights to build our first wind turbine project: A 74m tall 500 kilowatt wind turbine on the west coast of Scotland. This project is now constructed and operational on a 30 year lease brining in consistent income for the company for years to come.

What was your worst moment?

When our projects are rejected by the local planning authority. There is a general consensus by most people I know that are not in the industry that the government wants renewable energy, so projects will therefore be approved by the planning authority. Unfortunately this is not the case. For example approval rates for the scale of wind energy project that we develop are as low as 0 per cent in some local authorities. Overall the average approval rate across all developers is only 20 per cent. Whilst our approval track record is significantly higher than this average there are still good projects being rejected.

What do you most enjoy about running the business? Watching it grow. I am amazed at how quickly it has grown organically and am keen to see how it develops over the next three years.

What do you least enjoy?

Missing my weekend when things are busy.

What are your ambitions for the firm?

To set up a business with long-term value in a structure that will allow me to take a step back. I'm hoping to achieve this within three years.

What are your five priorities?

Building the right team; reputation; building the brand; building a portfolio of renewable assets; living life to the full.

What could the Westminster and/or Scottish governments do that would help?

Firstly address the uncertainty issues that face the renewables industry with regards to financial incentives. The Feed-In-Tariff (FIT) mechanism for smaller renewable projects is constantly changing and the Contracts for Difference (CfD) mechanism for larger projects is vague at best. As a result of the uncertainty it is difficult to attract investment into projects unless you can demonstrate you can construct and commission the project before further changes to the system.

Secondly there needs to be significant investment in the grid infrastructure across large areas of Scotland, and in the UK grid connection regulations. The grid infrastructure is old and was originally set up to accommodate a few large generators near areas of consumption, not to accommodate smaller generators in remote areas. So trying to connect wind or hydro projects in remote areas causes problems on the network. We are quickly heading towards a period where there is going to be very little capacity for any new renewable energy connections to the network and the whole industry is going to grind to a halt. There needs to be active network management and smart grids set up to allow more renewable capacity to be connected while we wait for the old grid infrastructure to be replaced.

What was the most valuable lesson that you learned?

Focus on building long-term value and assets.

How do you relax?

When I am either skiing or diving I am completely relaxed.