Energy supplier Yuno started life in 2010 as “four middle-aged men above a second-hand bookshop in Blackrock”, Co Dublin. “We had an idea, an electricity licence and not much else,” recalls its chief executive and co-founder, Cathal Fay.
It was not the most auspicious year to start a business. An economic recession sparked by the collapse of the property market and the banks gripped the country. But the timing turned out to be good for Fay and his colleagues. Their idea was Prepay Power, pay as you go electricity, which allowed people to pay small amounts as they needed, instead of wrestling with big bills.
“Ireland was a different place then,” Fay observes. “People responded well to the offer. You pay in small amounts when it suits rather than pay a big bill, and at that stage a big bill every two months was a big ask for consumers. They liked the fact that they could break it down, typically €20, down the shop. We got a great reaction to that.”
Prepay went from zero to 2,000 customers by the end of 2011, then 12,000, then 20,000. Even when it ran out of cash to advertise, people kept coming. Its main constraint was getting finance to fund growth. Despite demonstrating that the idea worked, a year of dealing with advisors and meeting “various people around town” failed to get a result.
Fay got an introduction through family to Ulric Kenny, then best known as founder of Ion Equity, whom he approached for advice. Instead, Kenny joined as an investor bringing along colleague Andrew Collins. He is the biggest shareholder and company chairman today. “That was a bit of luck,” says Fay. “Not just his investment, but we also got his business insights. He’s been a great chairman of the company.”
Yuno is a different place these days. It has swapped the bookshop for an office in Sandyford on the capital’s southside. It has just bought Firmus Energy (Supply) Ltd in Northern Ireland, in a deal thought to be worth around €40 million. That brought in 113,000 homes and businesses, bringing its total customer numbers to more than 400,000.
It now employs 600 people, and revenues will soon reach €600 million. In 2023, Yuno’s sales were €373 million while operating profits were €4.3 million. It supplies electricity, gas and home heating oil to customers.
Along with Prepay, it has Yuno Energy, a bill-pay supplier. Prepay will continue as a mainstay of the business, but most future growth will come under the “Yuno banner”, Fay predicts. It plans to invest in the bill-pay operation and in recruiting commercial customers.
Firmus is already the North’s leading supplier to business and state bodies.
We ran out of meters when we were just about to grow. We survived without paying ourselves while we were waiting for investment
In the south, Yuno has hired Ian Mulcahy, a 20-year industry veteran, to head up the section offering electricity and gas to businesses. That has been so far so good, according to Fay. “We’re getting on well in terms of meeting our launch targets in commercial customers,” he says, without revealing the numbers.
“It’s an interesting contrast. One client brings a lot of gigawatt hours. They’re more dedicated customers, they can choose their own hedging strategies. We advise them and they decide whether they want to go to market or a fixed-rate for the year. So, we’re adjusting to bringing in the expertise, not just a head of department but also key account staff.”
Yuno’s business customers can take a pass-through rate, tied to wholesale electricity market prices, which change every half hour, a fixed price for the year, or “any number of products in between”.
The company has recruited some big customers, including well-known Irish retailer Smyth’s Toys.
On the domestic side, its bill-pay business in the Republic has recruited 35,000 customers since its launch in late 2023. The company maintains that those who buy both electricity and gas save around €900 a year, compared to rivals’ standard rates if they switch, while electricity only customers are €500 better off. Prepay clients pay rates comparable to the standards on offer elsewhere, but benefit from a better service, Fay says.
Yuno does not own power plants or gas reservoirs. Instead, it buys its energy on the open market, selling it on at a profit. But it does not buy at the wholesale price on offer at any given time: it agrees deals for electricity and gas months, or even a year or more, in advance of taking delivery, a process known as hedging. This is meant to cut out the risks of constant up and down movement in prices.
Fay cites what happened in August 2022 as a good example of how this works.
Electricity prices briefly rose to 10 times historic norms, as fear that there would not be enough gas to generate power gripped Europe. Anyone buying then would have had to pay the massively inflated price, but hedging agreements allowed suppliers such as Yuno to avoid this. It had bought a year earlier, when the electricity market was emerging from “the situation where energy prices had been low, so you could buy it at a low price for delivery in 12 months’ time”.
However, Fay concedes that those forward prices are tied to what happens at the wholesale level, so homes and businesses still face increases and decreases, but without the dramatic peaks and troughs seen on the wholesale market. “Absolutely, yeah. You can’t beat the market,” he says. “What you’re doing is trying to remove volatility.”
Essentially, success in the business hinges on getting the hedging strategy right. Yuno has 30 people working in its trading department, equating to 5 per cent of its employees. Its bill-pay business was launched as the pressure on prices eased in late 2023, allowing it to offer lower rates than rivals committed to hedging contracts struck at higher levels.
Electricity prices are tied to gas, as this is the fuel used to generate most of the power used in Europe. They have been falling, but now there is a risk that they will head in the other direction. Russia recently shut a pipeline through Ukraine that provided around 5 per cent of Europe’s natural gas needs. This was expected, but it came during a cold snap when demand was already high, so price has been moving up steadily.
We had an idea, an electricity licence and not much else
“Well, gas went up 25 per cent in December,” Fay says. “This winter has been colder and calmer than last winter, so that means more demand for gas for heating, and calmer means more demand for gas for power generation. The market has been tight and nervous, so prices have gone up – really driven by the fact that in the colder, calmer conditions, gas storage is 15 per cent less than this time last year and less than the five-year average.”
Europe competes with south-east Asia for gas supplies. In the medium term, volatility looks likely to continue, particularly as the continent will have to spend the summer replenishing its reduced gas stores, so pressure will remain on prices even as demand from homes and businesses subsides. While no one is likely to increase charges now, Fay maintains that all suppliers, his own company included, are watching this closely.
Fay’s background as a qualified engineer clearly helps him grasp the various moving parts of the business he runs. After getting his primary degree from University College Dublin, he did a Master’s in computer applications in Trinity, and then went to work with Telecom Eireann, now Eircom. He left in 2000, moving to a company that produced ebooks and productivity software for personal organisers.
“I found there that it was all about first-mover advantage, getting things to market quickly. We were first mover, but we found that there wasn’t a market,” he says. Then he worked with Red Circle, which developed ringtones and games for pre-smart phone mobiles. Strangely, this business was all about print advertising. “We’d take out a page in a magazine in the UK,” he says. “We’d know exactly how to optimise each centimetre of that space to maximise the number of ringtones that people bought. That gave us a significant advantage, so we grew big in the UK.”
Red Circle was then sold to Irish company Zamano. Fay remained on until 2010, at which point the iPhone had taken over, so ringtones and games were all app-based. Around that time, he ran into a former colleague who was involved in pre-paid energy, prompting him to realise it could work here. Shortly afterwards, he made the move to the second-hand bookshop.
Yuno is about to expand in yet another direction, district heating. This comes in two forms. One is a self-contained system where an apartment building is served by a single common boiler, which tenants draw on as needed, through heat exchangers in their homes. Yuno is already involved in such projects.
The other is known as “networked” district heating, which draws heat from a single source to a group of buildings in the one area. In the Irish case, this would be industries such as data centres and pharmaceutical manufacturers, which generate quantities of wasted heat. District heating is common in Nordic countries so the systems for tapping it are tried and tested.
Applying it here means that everybody wins, says Fay. It means a cheap source of heat for consumers, turning waste into revenue for the industries involved, which must pay for cooling, and cutting carbon emissions, as both the homes and the manufacturers are drawing on the same energy.
You can’t beat the market. What you’re doing is trying to remove volatility
The State’s climate action plan includes a commitment to this technology, but it needs infrastructure, ie, pipes connecting the data centres and pharma makers with apartment blocks and homes. Theoretically, that should not be difficult, as many of the industries are close enough to residential areas. An existing pilot scheme connects an Amazon facility with homes in Tallaght in west Dublin.
“We’ve looked at a number of case studies,” says Fay. “Even in my own local area in Dun Laoghaire, there is a pharmaceutical company that generates heat, and there are umpteen number of apartment buildings that will take it.”
The Government and the Sustainable Energy Authority of Ireland have identified suitable sites themselves.
Yuno has already hired someone with experience of this in Denmark to run this division. The next steps involve the Oireachtas passing laws enabling it, and for local councils to go from there and lay the pipes. Fay says there are indications that this is going to happen.
“It cries out to be done, because we have so many data centres around Dublin that being able to take the waste heat from them is a useful way of supporting them in meeting their own climate change mitigation goals. But you can see that it’s likely to be on a longer timeframe than what we’re used to,” he says.
The slower pace does not seem to bother Fay unduly. He’s had “plenty of scares” on the way to this point, he says. “We ran out of meters when we were just about to grow, while people were still calling us, despite us not advertising. We survived without paying ourselves while we were waiting for investment. So €600 million in revenues is not so bad from starting from zero.”
CV
Name: Cathal Fay
Post: Chief executive, Yuno Energy
Career: Began working life as an engineer with a master in computer applications, worked for Telecom Eireann – now Eircom – before moving to a firm that developed software for personal organisers and then to Red Circle, which provided ringtones and games for pre-smart mobile phones. He started Yuno with three others as Prepay Power in 2010.
Family: Married with two sons.
Hobbies: Cycling, playing tennis and travel.
Something you might expect: He is an engineer.
Something that might surprise: He has been to Indonesia, where he saw Komodo dragons (the heaviest lizards on the planet).
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