Dale Vince: Tilting at windmills: how to turn the UK green

The Business Interview: From hippy dropout to electricity boss without batting an eye. The founder of Ecotricity talks to Sarah Arnott

Dale Vince spent 10 years living in a trailer on a hill outside Stroud. Now he runs an energy company worth an estimated £100m and bats away takeover offers at an average rate of one a month.

It is not as much of a leap as it might appear. Mr Vince's "crazy plan" might be to become the seventh utility – an upstart rival to the so-called Big Six such as EDF and E.ON. But he remains a highly unusual energy boss by any measure. At a superficial level, he is the only one with long hair and jewellery, who dresses in torn jeans and a leather jacket. His views on the UK energy market are equally unorthodox.

"I was a hippy dropout, but I had an epiphany when I saw my first windfarm in 1991," Mr Vince says. "I thought, either I can carry on by myself with the windmill on my van, or I can get into the big stuff."

He chose the big stuff and set up Ecotricity, an electricity company which ploughs its profits into building green infrastructure – 54 wind turbines so far – steadily driving up the proportion of green energy in its fuel mix. "We turn brown to green," Mr Vince explains. "We don't mind harnessing conventional energy sources, so long as we are using the revenues to build an alternative."

The approach is working. Sixteen years after the company started, it has 46,000 customers and is adding around 1,500 each month. The electricity started out 10 per cent green, this year it will hit 55 per cent. And the charges are comparable with the Big Six's standard tariffs.

Now Ecotricity is moving into gas. It already has 8,000 customers on its green gas tariff, and the income is building Britain's first anaerobic digestion plant turning food waste into gas for heating and cooking – a scheme that will be up and running in 12 months. "In our first year, green gas from a sugar beet factory in Holland was 1.4 per cent of our supply," Mr Vince says. "It might not be much but it's still the greenest gas supply in Britain, and next year we expect to double it."

Mr Vince has serious ambitions. "The crazy plan to become the Big Seventh is not just a crazy plan – we're really doing it," he says. "Ten years from now I'd like to see one million customers."

Last October, Ecotricity launched Britain's first "ecobond", marketed directly to its customers, to help fund the expansion. It was an "awesome success" with enough offers to raise nearly double the £10m Mr Vince was looking for and an average investment of £5,500 (although one customer – by far the biggest single investor – put up £500,000).

Part of the philosophy behind the bond was a protest at the big banks "ripping people off" by paying 2 per cent to savers but lending to companies at 6 or 7 per cent. "We wanted to cut out the middle man," Mr Vince says. "When we started, we wanted to cut out the middle man who wouldn't give us a good price for our electricity, and now we're doing the same with the financial sector."

The bond will run for a minimum of four years – with a biannual interest payment of 7.5 per cent – and act as a financial turbo-thruster for Ecotricity's plans. By providing the deposit for the company's wind farm schemes, the bond will cut its reliance on expensive mezzanine debt. And because the money can be leveraged, the original £10m will fund £40m-worth of investments. "It gives us the chance to increase the rate we build," Mr Vince says. "The first ecobond probably puts us five years ahead of where we would be."

That's just the beginning. After such a success, the company is now working on a second, larger ecobond, which it hopes to launch by the end of the summer. "The next one will be huge and I wouldn't be surprised if in years to come we are raising £50m or £100m at a time, once we establish a track record," Mr Vince says.

Britain's green energy market is making slower progress. Ecotricity's bond is helping to fund a 1 megawatt (MW) solar panel facility alongside an existing windfarm in Lincolnshire, creating one of the first hybrid parks in the world. But there is a big, black Government-shaped cloud hanging over the scheme, catapulting the softly spoken Mr Vince to the forefront of the ructions convulsing Britain's fledgling solar power industry.

The initial findings of a shock review of the feed-in tariff scheme for solar power was announced earlier this month, slashing the subsidies paid to schemes of 50 kilowatts and above and, according to Mr Vince, instantly "killing off" any commercial appetite to invest in big solar by slashing revenues by 75 per cent.

The changes certainly "shred" Ecotricity's plans. They also ensure that the British solar power – currently at 100MW compared with Germany's 17,000MW – remains a niche, non-commercial market. "We were going to build lots of big solar parks and that goes out of the window now," Mr Vince says. "While the carbon price floor pumps billions into nuclear and clean coal, solar will remain a side show with just a token subsidy for individual households."

Even the Lincolnshire scheme now faces a tricky future as delays securing a grid connection threaten to push it over the 1 August deadline. "I don't really want to think about what will happen then," acknowledges Mr Vince, who has pumped £2.5m into the scheme and will be lobbying the Government hard that it should be subject to the existing tariffs.

Along with a large swath of the solar industry, Mr Vince takes issue with the Government's reasons for the changes, including both the assumption that large projects are squeezing out domestic plans and the claim that the changes reflect a drop in the price of solar panels.

He also lambasts the Government's "dishonesty" in putting forward arguments with such clear holes in them. "They should just come out and say that they are worried about food supplies or the use of land or whatever it is, but they shouldn't say that big solar kills small, because that's just dishonest."

Even the public cuts agenda argues the other way. "Big solar is 50 per cent cheaper than small," Mr Vince says. "The Government says value for money is important, but when it comes to renewable energy they are opting for something that costs half as much again."

There is some sadness, but little rancour, in his tone. "This is what happens in Britain," he says with a shrug. "Ultimately we don't really care what the Government does, we just get on and do the job."

In doing its job, Ecotricity is attracting increasing attention from potential buyers. And despite making clear that he has no desire to sell, Mr Vince is still continually fending off approaches from buyers, these days mostly from City financiers. But he is uncompromisingly "not interested", whatever the price. "If I had £100m, I'd only go out and start a green electricity company so what would be the point?"

Dale Vince: Power broker

* Dale Vince dropped out of school at 15 and became a traveller.

* He set up Ecotricity in 1997 after an "epiphany" that his single windmill had huge potential.

* Mr Vince is a green petrolhead, launching the Nemesis – an electric Lotus that goes from 0 to 60 mph in four seconds – last year.

* He is putting a wind-powered bike into this year's TT race and also plans a wind-powered supercar to challenge the world land speed record.

* He is a major shareholder of Forest Green Rovers and is learning ballet to improve his own playing skills.

* He lives – in a house – outside Stroud with his wife and children.