Bringing offshore in-house with Bailey Bradley (Managing Director @XceCo)

Just provides some scale here because that that's selling an offshore wind farm when at the time it's one of the largest in the world. There aren't that many buyers. It's not like selling a used car. And so, started the process of trying to put a bid together.

No, I've never put a bid together like this for myself. We have to think about share structures about what's gonna go where, about how we're gonna employ people, what we're gonna do, how feed in. How do you get the numbers? I'm a commercial guy, but but mine all of a sudden.

So, a bit more skin in the game. And there's there is option B, which is you do something different and you were figuring out how do we do something different? But really, the credits, the team thing, it was huge. The Like I said, we have the whole organization really put their shoulders to the wheel and get this over the line.

Hello everybody. Quentin here. This week, we've got a conversation with Bailey Bradley from Xzico. Bailey and I used to work together at Centrica in offshore wind, and what Xzico have done is highly entrepreneurial.

It's a small team that started a company to do asset management of some of the biggest offshore wind farms in the country. And what's really special about What they've done is it's it's a David and Goliath story. You know, they took on the big OEMs like Siemens, got the trust of some of the biggest investment banks in the world, to asset manage these complicated assets.

Now this conversation is structured in two ways. The first half is essentially the story of how they did that and some of the complications happening at the time with Centrica where we both worked. If you're looking for wind turbine stuff, The wind turbine only bit comes later, so zoom to the end. But I really hope you liked this conversation. It's a long one, but it's worth it. Let us know what you think in the comments. See you next week.

So Bailey, Exico or Mexico. How did he get to that name? Yeah. So that's interesting.

So, yeah, I should ask you who came up with your name, really, because it's always a an interest in a bit of a conversation, I should start by saying it was the least worst name on the table, and that's how we got there. There were a few other things banded around Nothing was particularly good. To be honest, we weren't all that fond of of XECO at the time, but time was pressing, and we needed to register a company at companies So XECO, it was. The Apocryphal tale is that it's x for x as in past, c e for Central Energy and c o for company, I'm not even sure if the last night where an ex said strategy can have a group of people, but that's the apocryphal story.

Not quite sure. It's quite like that, but to be fair, even in my memory now, it's it's in the midst of time.

It's hard. Right? You got, like, okay. I'm gonna start a company, and it's that weekend, and you gotta you gotta do it then.

And then you go you're trying to get some this really important thing that really match the company, you have to come up with out of nowhere. So for, I'm glad you asked about Moto because people don't really ask this question, and it's nice to do some talking. So don't know if you've ever come across Terry Pratchett's books, discworld novel. We're gonna get quite niche now.

But in Terry Pratchett's discworld series, There is there's a university for the wizards called the unseen university. And in that university, there's a there's a garden. And as a gardener, that is I think it's a little dwarf or, maybe it's a monkey, I can't remember. And the gardener is probably only says two things in the whole series, which is something about, I know, he really appreciates compost or something.

And he's called modo. And so that's where it came from. We're just trying to think of four letter words that we could get the the internet domain, and it's hard. And then you go on Coupley's house and someone's stolen it.

So that's how we came up with it, but we'll come up with a much more sensible reason one day. Okay. Should probably put a disclaimer on this, Bailey, that we've known each other for quite a long time, and we of course used to work together back in Grimsby when we were both wearing Centrica t shirts. When offshore wind was still very new.

And now a lot of water has gone under the bridge since then. So are you able to just give a quick overview of what you've been doing in wind for the last couple of decades, and then we're gonna talk about the company and what's so special about is very unique what your company is doing, and I wanna dig into to the trade offs and the cost and benefit of that. Yeah. Sure.

So a couple of decades. Is that what it is? Like, I guess I'm slightly shy of that answer. So I was around eccentrica from two thousand and one in one guys or another started my career in Bridge Gas moved on from there, told everyone I was gonna get a proper job by the time I was thirty and twenty nine, I squeaked into a proper job in Central storage.

So was over there working in dirty oil and gas storage mind you, but still not the kind of storage we think of storing gases now, proper hydrocarbons that were being pumped into their it's been recycled in the winter. Various guys isn't I won't go to the ins and outs, but I came over to the power industry working for the kind of central teams covering CC GTs, really. And then after hop skipping a jump through some support teams was around during the I can't claim construction here, but I was around during the construction phase for lid and for links. Centrica as around when we when we have Lydon links are sorry.

What's Lydon? Sorry. Lending and the dials in wind farms, which is one of the ones we one of those wind farms, what's after now, and links, well, there's loads of interesting stuff. Six of the turbines that were consented at lid part of Linx Wind Farm, and Linx Wind Farm sits just behind the linen and dowsing assets.

In the north sea. Yeah. On the east coast of the country. Right? It is on the east coast.

So just off the coast of Skegnes, the closest turbine on linen in Thousand is five kilometers. I'm sure. The furthest one, about nine kilometers. And, yeah, in two thousand eight, when this was commissioned, at a hundred and ninety four megawatts fifty four turbines was the biggest offshore wind farm in the world dwarf now by about ten turbines and some of the bigger wind farms, but it was a first To be honest, lid, is a history of firsts and we're a small part of that.

And then came to the fore within within renewables at a really interesting time. So we're going through a spate of there's a lot of commercial issues with the OEM. There's a lot of health and safety management issues with the OEM at the time, and Centriker had made the decision to in source, basically, to in house operations maintenance. The background is Centriker at the time had decided they wanted to build and own and operate massively ambitious offshore wind projects and had built some.

And then they were figuring out what they're gonna do long term about operating. That's right. So it it the model at the time was you would purchase the wind turbines from the original equipment manufacturer. They would then provide you with a pretty all encompassing warranty.

Now this was, a pretty good warranty, a pretty gold standard warranty. Five years that would run for And during that time, the turbines were operating while they were maintained to an extent operated by the OEM. And anytime anything went wrong, anytime anything wanted fixing any time anything wanted main component change out, the OEM would bring in the jack up, would sail on the vessels it provided and go out and fix the the turbines.

But there wasn't much of a market. You the market that was around at the time was was basically the OEM or nothing. No one's really doing much else in the offshore world. Now I'm sure he'd gone to a fragmented type of model, but in offshore, there there just wasn't the competition.

And so you imagine within Centrica sat there trying to do the make by strategy for O and M services, and where you got to a point of anything we wanted to make, we're gonna have to make a market for as well because we might want to make them, but we also need a fallback of a market. And in twenty fourteen, we undertook a a project. We put a program together called the Falcon program. I was the program manager for that program, and we embarked upon a a huge program change basically, building up the resources to perform all O and M services, a full engineering team, which you came and joined, quentin, we then looked at O and services.

We looked at wind turbine safety rules and bringing those in house, and then we looked at Scada and technical support services and troubleshooting And just to put some Wicolor around. This so this is just as to make sure we've got all the background. So it's at the time, Central owns these big assets that are brand new types of technology. And the it was Siemens at the time.

Right? So Siemens built these things, and we had a five year warranty. You get a longer warranty on a Kia car. Right?

You get five year warranty with Siemens for these offshore turbines. And as you approach the end of the five years, you have to think what on earth are you gonna do after the five years? And, of course, Siemens wanna sell you a longer service agreement and all that stuff. And there's there is option b, which is you do something different.

And you were figuring out how do we do something different? That's right. And I should give it a hat tip to the people that were really engaged in this kind of decision making process, really, because there were a whole group of people. So there was Tony Lion, who is my current business partner as well at Xseco.

And there's Mike Holmes who led the the commercial team and the procurement team were people in commercial with Accenture themselves, and, of course, they were supported by the senior leadership team within Centrica Central energy power. So this was the full strength of the power business, and that was considerable at the time. It really was a pretty hefty organization. Backed by Central Energy, which was just huge in terms of its his balance sheet and his P and L.

And they put their they they put their shoulders to the wheel and decided we were gonna do this. We were determined.

And, but we had to take we had to take a year's extension from Siemens, but that was part of the plan. We we take that year's extension. And by the time that came to the end, we'd be ready for taking over their services. And that's where we were on the twenty fourth of December on the year of taking over when we moved into the new service at the new operating paradigm.

Just to give because we a lot of our listeners are, you know, battery people or bankers or this is a huge operation of people. Right? This is a big significant office of probably a hundred ish people, something like that. But and then there's vessels and then there's out on the turbines all day, and there's a control room, and there's safety, everything.

This is not just like a few guys in an office. This is a serious operation. This is standing up a business and operations function, although there were some support functions, and there were some. We didn't have a fully fledged engineering community to to support that, we didn't have a full team of operations people.

We have the skeleton on which to graft everything but we had to work very hard to recruit to put policies, procedures in place, get the wind turbine safety rules, get everyone trained, And yet, come the time, we did a seamless switch over on a on effectively a holiday within the UK, being the Christmas Eve, and everything went without a hitch.

I think they say there's this seven piece thing isn't there about a planning preventing poor performance. And I missed a few peas out there in purpose, but really the credits are team thing. It was huge. I'm dare I also be a bit generous to Siemens wind power as they were then and seems to be somehow and say, Absolutely, they were a big part of us getting ourselves some success.

And there just wasn't a playbook for this back then. Right? So you have to to the wind turbines. You have to do schedule maintenance.

You have to get the right there's a whole supply chain to manage. You have to get parts in. You have to store them in a warehouse. You've got to put them on vessels.

The right people get do it optimally go and change bits out on on a turbine. And, of course, things go wrong, so you have to be ready for that as well. And you had to make it up from scratch pretty much because nobody had really done this before, apart from the OEM, apart from Siemens, and, generous as they probably work with how they did things, that it was a blank sheet of paper situation. It was.

We we'd been working in this situation for five years, and the story is a commercial one as old as time. Partners that really wanted to create a bit of commercial friction. So there was really competition, and there wasn't any competition. Trying to make sure we drove down a levelized cost of energy because that was a real big story at the time.

Wind power is expensive and we would continually wanted to drive down the costs because it wasn't just about these wind these wind farms. It's about the ones that we're going into kind of construction and the next ones that we put into commissioning constantly trying to drive down that levelized cost of energy. But yeah, so and if you imagine these are multi million pound contracts, that we are replacing. We are standing up dozens of people in very high impact roles.

And at every step of the way, there is the recognition that this is a high hazard industry where we're putting people working at height in an offshore environment and we're traveling to and from on a on a vessel I'm making sure all those things that were being managed continue to be managed effectively so that we don't have any because we found any increase in safety risk was intolerable to us. We wanted to get safety better. And we wouldn't accept it getting worse, and that was our priority out every step of the way.

So yeah, that's that's the the the journey we took. And all the time we were doing this, we're doing this for linen in a dowsing and its partners, so his owners, which was fifty percent centric of fifty percent EIG at the time, and we, at the same time, we have Senchka still operating links with Siemens Gamisa as the OEM, and so they were still in place. So there was There was a method to the madness of everyone working together. Just to make sure I've got that right. So Lynn Lynn Lynn and inner dowsing lid, which is how many turbines is lid?

Fifty four. Fifty four offshore turbines was blowing massive when it first got built, but of course it's small now underground scheme of things. Fifty four wind turbines to keep operational. And that was built first.

And then a few years later, the bigger links was built just next door to it. And what you guys were doing was managing the takeover of operations and management, the maintenance of Lynn, the small lid, the smaller one, whilst at the same time, the OEM was still providing services on a bigger one, all at the same office, which is commercially quite tricky to manage. Yeah. Add into this that at the same time, we decided we were gonna try and take on Siemens as an organization and and make it a bit more responsive we really felt that we needed to make Siemens part of the market solution.

We needed to move them along. We've always felt that the O and M, the OEM has a huge role to play with these wind turbines. They've got the most kind of oversight. They've got all these turbines under operation.

They still get all the data. They've got such a big role to play in such such a level of investment given it's their product. That we thought we could get them to be more involved, more engaged in a more cost effective and commercially effective way. But, yeah, at the same time, go through construction and Christian and then operations at links, I feel like I really must bring other people into this conversation because the people that we're running on that, we have Faith Richard doing some of the take over works.

We have Steve Danson and Mike Bean and his team is quite a small team that they had running things because when you've got the OEM, you really only have five or six of you looking after the entirety of the OEM, whereas what you really need is sixty people to run the facility. So So it was all testament to everyone pulling together. Maybe it's still waiting for you to name drop me in this. But I can wait.

I I can wait. So and then for our listeners who are some wind people, mostly battery people, of course, these are three point six megawatt turbines. These are big turbines. Well, small in the grand scheme of things now, but back then, trust me that when you look at one of these things and you're at the base of it, or you have to climb to the top of it, it's a long way.

And then hundred and twenty meters. Right? No. So they have got fifty two meter blades.

So that's the one zero seven diameter. Alright. Links behind it is one twenty diameter. Yeah.

Fifty two meter long glades, hub heights of, I think, eighty two meters. So when you're looking up, are you looking to the of a hundred meter race, which when you stood at the end of a hundred meter race, it looks a pretty lot far away to the end. That's what you're looking at up in the sky. That's terrible analogy that.

But there you go. The they're on a monopile foundation, so concrete monopile with the transmission piece on top, grounded connection. We could go on about all this. Of course, we Foundation corrosion in the early days, granted connection issues in the early days.

Everything that was gonna go wrong with putting a turbine in the sea We experienced. And these are non pile foundations. So it's one one pile that you put into the seabed. And, yeah, how deep is the water?

Good people are. I do. So I could betray my lack of knowledge here, but it's so shallow that the water in the Nazi is very shallow anyway across most of it. And ours varies from, I think it's about think about six meters up to about twelve, fourteen meters depending on the tide.

So, yeah, the very shallow water in the grand scheme of things, I don't think people expect the north sea to be that shallow, but that's how it is. And then it all sits on top of this one monopile, this big yellow thing, bit of concrete into the seabed. And then what's the design life of these wind turbines? We talked about five five year warranty from the OEM, but They've actually been built for a lot longer than that haven't they.

So what's the what's that design? Yeah. That's right. Without going into too much commercial detail, you buy your service and warranty program to go on the end, and it's like a bit of a buy it and forget type of thing.

Oh, you don't because you're looking at your option out afterwards. But that's what it is. It's supposed to be a wrap. We call it pretty much all encompassing.

The turbines themselves, they're bought under different regimes. You don't buy them to last five years. You buy them to last a certain amount of time, and you just mentioned Design Life. So when these turbines were put out, their design life was presumed to be twenty years.

So that's how long it expects those turbines last. Obviously, not every single part of it, but also a bit like wind year fifteen now. I think so, like, triggers up really. Wow.

Most of most of them being changed. We've had huge amounts of main components changed. So we've had large amounts of gearboxes changed. Currently going through changing quite a few generators.

It's quite a well known issue there with the fleet. They said that in ten to the last twenty years. However, in the sense of sustainability for one and also in just in good asset management. We are expecting these assets to last twenty five plus years.

That's where we're getting to. There's a whole interesting conversation about whether commercially that will be sustainable. And it would be a real shame if we're taking these turbines down before they need to come down because we can't get the level of power price needed to sustain operating and maintaining them. But that is a potential outcome at the moment.

That is a real scenario that is working through our minds, but one that we're looking to manage and mitigate through appropriate commercial measures. And so when does the subsidy run out? So the renewables obligation lasts twenty years from from the start of the arrow accreditation And in the case of linen in a dowsing, don't test me on which one's which, but it's March and then April, I think. So we got, and it's twenty twenty eight for each one.

But from twenty twenty seven, they go to a fixed price certificate, which is currently under consultation with the government. It would be such a great shame if these assets at the end of that certificate regime are not viable when all of that sunk cost and materials has gone into them. So, the turbines they're gonna last twenty twenty five years. Right?

But the foundations and the cables and the substation and all this other stuff will last much longer, won't it? What's your thinking around that? So, you know, that's all a wind farm, really, in its entirety. You've then got the support services at the back end as well because we're off the coast of Skagenesk, but we're based in Grimsby.

A ninety minute vessel trip away. But the foundations may well be the rate limiting step. So the foundations, but we think we can get them more comfortably to thirty years that's our current pitch for the life of the asset. We're thinking twenty five to thirty.

We're obviously gonna have to do something to to make sure that we understand the loads that have been put on those foundations, make sure they're safe. We won't allow safety to be compromised in assessing longevity of these assets that is always first and foremost. So you have the foundations. Now everything else should last a lot longer.

And I can't believe you're asking me to talk about major equipment at cables and saying it's gonna last a while, but but yeah, we We haven't suffered a failure to date on a cable and that we would like to continue in that situation.

I'm very aware that we've ended up jumping around here and we didn't what you guys do. So you tell you told us that Centrica back then were building massive offshore assets on balance sheet and they built these Two or technically three wind farms, but let's say two, lid and inner dowsing.

And Centroker had his five year agreement with Siemens, and you managed a team that took that operations and maintenance back in house. And so you did six years and bought it back in house. And then what happened? Because Centric has a very different business today, you know, a really asset heavy business when we were there.

And then they sold off pretty much for most of their assets, and they're now building up assets again. So it's all cyclical. But around the time when you started the company with Tony and the rest of the team, what was going on then and what was the vision for Xseco, which is what we're here to talk about. Yeah.

So, yeah, you're right. We we said great often we talked about the the asset but the yeah. The natural kind of continuation of the story is, Senchirk decided once it had made a bit of a market with linen and housing.

And once it had stabilized operations on links that these assets were gonna be put up for sale. We then went through a day a gathering process. We gathered all the information that we could. We've got kind of information about any failures we'd had.

We'd had a couple of interesting novel things going on, fistrict connections, and the GCR FCR stuff that we talked about, the greater connection and the foundation corrosion stuff that we talked about. And we set about in a marketing exercise and a project name as they all do to keep it all nice and secret. And that's tough to be executed out of the head office in Windsor. So people were insulated from it mostly.

And to I mean, can you just provide some scale here? Because that that's selling an offshore wind farm when at the time it's one of the largest in the world. There aren't that many and it's a lot of money, and maybe you could put some numbers around it. There aren't that many buyers.

It's not like selling a used car. And so you have to get all your dirty laundry out and say, these are all the things that right and wrong with this asset and who wants to buy it, but that's a very tricky thing to go about doing. Right? So what's the scale of this sale?

Whether it was was it public? How much it went for in the end? I don't know. Yeah.

I think it is. It was I mean, between four and five hundred million, I think, was the quoted number in the press. The the exercise that was undertaken, how'd you market such a thing? Well, there are bright and clever minds that I'm quite pleased I'm not in some ways because that that kind of M and A stuff is all feels very mercenary to me.

So every time I touch base in that kind of area, I felt like I was getting dirty. And we've done a little bit of that ourselves, and I really do feel like I'm getting dirty every time I do it. It's it's not great. But there's there's a team that put their hat on.

They get out there and they start shaking the the cam, and they draw up some interest. And Now when you're selling generating assets, generating stations, you need to sell to someone who understands power generation. That's what you that's your market. Some of them start power generation.

Or someone who will partner with someone who does understand power generation. And again, in in its series of firsts, it ended up with a, you know, two or three sets of serious bidders, and it was actually all financial institutions that were lining up to buy linen and dowsing. Now bear in mind, when this transaction took place and Green Investment Bank as it was then, BlackRock purchased Glid, which is the SPV, the company, the It was the first time that a financial institution or financial institutions had wholly owned an offshore wind farm. Now we've since had North oil and a couple of other things go through from this type of process.

But clearly in, there's no utility operating partner. So the investment firms, the investment funds that have gone down the street had felt that the way to manage that risk because it is a risk in financial terms, that's the management terms, is to bring in a partner who knows exactly what they're doing. And that's how Siemens Gamisa or Siemens wind powers over there, but seems gimisa now. Ended up back in linen in a thousand.

So they were straight in. They really they were hungry for this asset back, by the way. They wanted to it's a bit of prove it can't be done type of situation, which in them was a bit folly because as we know now, everything else is operating on that model. So In in simple in simpler terms, A bank ended up buying the wind farm from Centrica, but banks aren't very good at changing gearboxes at a hundred meters up in the air in the middle of the North Sea.

And so they needed somebody to come and do all that stuff and manage it, the operation to maintenance. And so -- Right. -- Siemens who sentrica had just pushed out a year or two before and you'd spent all the years working on how to reclaim repatriate that responsibility, came back in and took the contract again to manage this wind farm. Right?

Yeah. Awesome.

No. I didn't mean I didn't mean to rub it in. We were sore. We we were sore.

This is cathartic. I don't know. Yeah. We we we were sore about it. And, I think it's relatively common knowledge.

We actually put forward an alternative where you said Actually, there is something else that could be done here. And we spent a bit of time with some of the partners we already had, and we've put forward an alternative proposal. And I'm afraid that just didn't go anywhere. I think because the deal had probably already been done or at least in in the hole, but I don't think exercise was futile.

It was a very strange situation. We put together a a bid, and I'd cut myself out altogether. And the kind of one of the questions from the guys was, well, for new owners is, but why aren't you involved in this? Don't think I need to be.

I don't think you need my skills in that organization. I think it's covered. And this is a way to get more people kind of role. I'm Virgin, make myself sound like a saint.

It's not quite right. But I've gone through my own process where I decided to leave Sanchez. Can I say this? I don't know, because I had organized a situation with a redundancy was my exit.

So I was leaving central current redundancy on exactly the date that the sale completed, really, and the new operator took over. So yeah, so I I'm not gonna have to exit, but I was very keen that what we started to build that we tried to hold that model because I I believed in it. I believe we could actually make a greater offering and offer more value, actually. But anyway, it wasn't to be, and the guys moved forward.

And Tony and I, that the sale of being agreed paperwork all done, we're in a transition period where it's basically just get everything set up. We offered the new owners all of our help So we might have been slightly sore that they decided to go with a different option, but we still cared about the asset. And we knew that those people that we were working with, we're all gonna go somewhere. So Tony, I saw it.

Not just our duty, but as we had a real deep desire to want to make sure that this was done in the best way possible. So you were still wearing a centrica you're still wearing a centrica t shirt then. Yep. And so centrica had sold the asset to BlackRock or the group.

And but centrica was saying, okay, you can only ask it, but we'll still operate it for you. Here's here's you can pay us a fee and we'll keep on operating it because we're so good at operating things. And they said, no. We're gonna go back to Siemens.

And so -- So -- we had to no. You had to help hand the keys back over. You run the money there, q, except for one small thing. Wasn't putting forward a centrica position to carry on to operate because Centrica was centrica had made its decision to go.

We were putting together an external bid. So I was helping people get themselves into position and putting the right people talking to one another and helping them structure what it would need to be. I but I was still working at Central Accenture or exiting. And you imagine all this is a bit it also has a bit nefarious, but we were very honest about what we were doing with the senior management team.

We If we didn't have the support necessarily, I don't think it's because they didn't support what we're trying to do. I think they maybe did think what we're trying to do is futile, and they've made up the mind already. But they we got a bit of a fill your boots type situation and a an acceptance that we would as long as we don't, you know, the sale couldn't be derailed, it's all going on, as long as we don't ruffle too many feathers, we were good. So we still had the day job to do.

We then had the an hours leading commercial for the wind down at the time. We then had a new sale process come in. So we start to sell links and So bin Farm number two then came up for sale as well, and Centrigo was gonna sell that to another owner. That's right.

So you got you you got people trying to do a day job and very few people who aren't needed, like, ninety nine percent on the day job. So he got to a point where Tony and I divided the labor a little bit, and Tony went off to involve himself much more in the sale to to work on the management presentations, etcetera. And then lo and behold, it was some of the same people, by the way, which was interesting. They were involved.

That kinda left me looking after the O and M division and one looking after some of the back end stuff on the sale, but the stuff I could do from the base, the links, organizing that and getting the people organized. And this was the second one. So links was a much bigger project. The first one was a few hundred million links.

Links, I think the CapEx was over a billion pounds, wasn't it when they first built it? Something like that. It was. Yeah.

This is mega mega asset. Terrible. It it was. It's money. I never understand what a billion pounds is.

I just won't. It it's not a number I'm gonna get to, and it's not number I want to either. You ask me about billionaires when we my contrarian opinion at the end, but it wasn't although the assets are huge, the process was the same. So we'll go through the same process.

They'd already kicked the can and rattled it around at the same time as marketing lid. A bit like, well, would you be interested in getting another wind farm, by the way? Not quite a buy one, get one free situation, but by this one, there's another one in the mix, which honestly, I think it's how it works. It's all a bit Delboy to an extent.

So anyway, we've got the day to day managing this sale process. Tony's involved with lots of the the off-site stuff. I'm trying to with the team that we've got, trying to manage that kind of sale. And again, we've got shout out to Laura McGee who picked up quite a lot of the stuff around separation stuff afterwards.

We're also as a team trying to keep people together, myself, kind of Steve Danson, Robert Musgrove, Mike Bean, Simon Matson, who was an engineering manager as well. And we were we're trying to keep everything running safely. And there's no way to put safe at the beginning of that sentence, but if safety was our number one priority and People's heads are in a very funny space when you're going through this stuff. No matter how many times you tell them everything's gonna be okay.

They're worried about the one percent outcome. And I think that's natural, but it it was a real thing to manage. And then we've got and then we've got transition. We've got a new owner coming in who's basically taking over where negotiating contracts at the same time.

And bear in mind, we're going through the year here now, and we're maybe up to September, October, twenty sixteen. And we and we'd been very close to the new owners. We'd gone down to visit them. We told them exactly what's going on.

We put a project plan in place to make sure the transition was seamless. We did everything we could to make sure everyone got a seamless transition. Who was the new owners? Who bought the bigger wind farm links?

So links went to It went to Green Investment Bank and someone else, but I think Green Investment Bank ended up buying seventy five percent, I e, the whole of it in the end, but split between two funds. So it ended up going into one of the same funds and one of the different funds. And then, and, actually, since then, some of that sale has been sold. So Octopus have bought into links.

So you've seen that sale, and then there's also been some similar sales for similar shares of links. So there's two types of ones. The linen in a thousand is held in a buy and hold fund. So the strategy is to maximize the value of the asset within that fund.

Some of these other ones, when they use the balance sheet to to take control of these assets, then that's with the intention is to flip it at a later date where someone else has got a more rows of you with the DCF and it's worth more to them than it to the asset owner that opportunity. Somebody thinks they can rest manage the risk slightly differently. But, yeah, so that's happened. And then we're trying to make sure that everything's that we've got managed to take care of.

So we've got it into a two p process. That's a transfer of of people. So it's the there's these undertakings that go under to make sure that personal when they move from one organization to another and make sure their terms and conditions are protected. And we started that.

So that all went. And then so we have support from HR who were great doing that. Out of Windsor. They spent a lot of time with us, but then ultimately, we had to make sure that worked.

And then we got through all this. This jiggery pokeery to do because Siemens Gamisa, have never run a local control room, and part of their obligations was to have a local control room, and they didn't have a clue where to get staffed to do that. And we had some So we ended up doing some back to back deals and some jiggery pokery and transferring all of the people so they could do their both assets and Then there's a contract put in place to take services for a year to make sure that control room services provided the links. I mean, it was all very neat, but I tell you what, it was a it was a house of cards.

We were stacking things up that all had to get executed all at the same time. There's everything and there's there's a personnel aspect to it because you've got people with Centrica There's a thing about mugs I remember at the time where everyone was like, oh, what's gonna get with all the centrica mugs and get exactly the same mugs with a new logo on it. And there's a people who've got shares that are saving in Centrica PLC, and they've got company cars. I think I'm gonna keep my company car.

I'm like, this ought I'm not gonna get my my dental. All of this stuff, has been managed really carefully and compassionately on top of keeping the wind turbines running, generating the power, and doing right by the current owners and the new owners. I organizational, because of our words to say here, but very difficult to pull off. Anyway, so you managed it.

Yeah. I don't I would I think I'll take one small step back and say, I think we managed it well. Yeah. I think we did really well.

That they got it kinda brings us up to the point of creation of Mexico. So going down to visit the new owners, Tony Naya, the face of Centrica going down there, make sure they understand this all very much under control, make sure that everything's moving forward, make sure that they know that there's no kind of sales jiggery poke, because that's kinda stuff that upsets new buyers. Particularly isn't another sale process going on. You don't want anyone to think that you do any kind of bait and switch nonsense.

You've got a bigger prize all the time. So it was all about playing this with a straight bat and being as helpful as possible because that's what would be one best for Central Business, two best for the people in that business, and three just best all around. There was no way to to doubt that, I think. But then I think you'd have to ask the guys that were there at the time from the investment banks, but they they made a gentle approach to us, and it was a gentle approach it was a throwaway comment of well, if you thought about bidding for the asset management scope, and we thought it was a throwaway comment.

So Tony and I took the train back and we made one reference, I think, on the train back to the throwaway comment. What we thought was a throwaway comment. Obviously, we've got so much on. It's we won't get it anyway.

So what's the point in interrupting what we're doing now, we would rather finish this well and our futures, and we were sat there. So when our futures go on different Tony would have stayed. I think with Centrica and going to something else there, and I was on the exit path. I might have even seen being planned.

I was in there. I was out on the first of April twenty seventeen. That was my date, and I was gone. And then we had a few more conversations and then to short hand this a bit, on the third or fourth time, if someone gently saying, no, really, would you not consider putting in a bid?

We thought, well, hang on. This is probably serious, and they're not just being nice to us. Now bear in mind, I think Tony and I both quite humble people at hearts. I think we both tell you that we work hard and we try to do the very best we can.

And at times, I will tell you I'm brilliant. I'll pretend to be an accountant and all sorts. Right? But I don't really mean it.

It's like over egging of the imposter syndrome. I really don't mean it, but it's just that way of being a bit over the top. So but I've never been the one to say no to anything because although I might not believe in myself, I believe in the team, and I believe we could do anything. And when I talked to him about who we could put together and how we can do it, said, I think we can do this.

And so started the process of trying to put a bid together. Now I've never put a bid together like this for myself and whatever else. We have to think about share structures about what's gonna go where, about we're gonna employ people. What we're gonna do, how's that all feeding?

How do we get the numbers? I'm a commercial guy. I was leading commercial. So of course I can do this and put it together, but mine all of a sudden.

So a bit more skin in the game. Also, a brand new if a and I don't mean to listen to in a in actually a very positive way. A little brand new company that's only been going a few weeks. With guys in a team in the company that have got loads of experience, but the company itself, the limited company ex Eco was brand new.

The idea was brand new. There aren't many examples of this happening before. So for you guys to then put that bid together and win that bid, it was absolutely massive. It was the David and Goliath thing.

Right? And to win the support of the investment bank that took over and owned that asset. Must have really had a lot of trust and faith in you guys to go from zero to one like this. But I don't think it was an easy decision for them to make.

Investment banks, they don't like risk. Right? And it's easy to understand this that we've talked about the scale of the investment. We've talked about the size of money.

There is a sense of they would rather pay decently for an understood gold plated product that delivers exactly what they want, how they want, and they understand the price, and they can evaluate that. I'm not saying that because they're not rubes, they're commercially extremely astute, but they're also prepared to make these decisions on what I what they have to pay for something. And they were looking at experiencing people in the game and people with longevity and I'm looking at us. And if I was them and that was in the room, I guess they were thinking about experienced businesses, but not necessarily run offshore wind farms because not many other organizations have done that.

They're in the market. Are they looking at us who have run off showing fans, but never done it as ourselves. And I think in the end what might have won over that decision. And again, I'm not party to it, but if I was making that decision, I think the care that we're showing for the asset, the diligence we're showing for the people, and the way that we put everything together to move forward, and the way that we did all of that without the backing of the body corporate, because it we really were on our own at that point then.

All the help stop the other than the two piece stuff, which was taken care of by HR, it all started to melt away because that transaction had done. I think they probably weighed that up and thought, Okay. In balance, this is the least risk option. So I think it was a very calculated risk mitigation strategy they undertook, and I don't think it would have been easy.

Now looking back, completely different now because you guys have been operating this wind farm for, what, five, six years. Yep. And you know it at the back of your hand, I just wanna do let us talk about what XECO does then. You work for the asset owner, which is a bank or a trust or a fund or whatever.

And you look after the asset. That's actually mean. Yeah. So so Xseco has set up where an asset management, comprehensive asset manager.

So we were set up originally to take over the Linden and Dousing asset management.

And in the first couple of years, we had no focus on business development we wanted to prove ourselves and prove our mettle. So we we grabbed that opportunity and we did what we needed to do to make that work. But by comprehensive asset management, we look after Everything commercial. We look after all sale of power under PPAs, all sale of on transfer of rocks under PPAs and another agreement.

We look after the owner's bank accounts. We look after the shareholder payments. We look after any debt facility management, any bank relationship, any insurance relationships, And then we look after the main contractor, which is Siemens Gamisa, and they do they've got a big scope here. It's the entirety of the turbine and the balance of plan, which is was unique again.

So another first, they took on balance of plan. But what they took on was everything regular. So we then Balance of plan is other stuff that isn't wind wind turbine. Right?

It says it's capable of transformers. It's other things that you don't really think of when you think of a wind turbine that can be a real well, need to manage it. Put it up back. Yeah.

I mean, you talked about monopiles earlier. So the monopiles is a balance of plan, the foundations, all that kind of stuff. So anything that's not the white bit with the blades on it, anything that's built out with that really, there's a couple of exceptions, but that's the general rule. Anything below the ear from the other bit down, the t p down as transition piece.

Sorry. And Yeah. So the contract looks after that, but anything that's unusual, it seems like Lisa couldn't forecast how to do it. It's not their skill set to do it.

And so they pretty much opted not to do it. So for instance, we have to do an anode project to change out the anodes. Now this is all around foundation corrosion and making sure that the the turbines stay corrosion free have to replace those anode. So multimillion pound projects all run by XECO.

This is where you if you have big bits of metal in the sea, you do something called cathodic protection. So you get a cathode and anode essential, I shouldn't see. And because rust is about irons moving between those things, you put a you you you encourage the rust in one place. So the actual bit that you care about doesn't rust.

Which is really important in the sea because it's full of salt. So it sounds like a little thing to do, right? Solv rust on some foundations. But when you gotta do that on a hundred wind turbine, the middle of the North Sea.

It's actually multi million pound project. Which, by the way, that water shouldn't be there because they should have been watertight, but that's that's a story around foundation corrosion. So, yeah, and that's so it's a big project. But in some ways, I don't blame them not going into these things because they're on a tough time in the market.

They understand. I think taking on anything else is a big ask. So I understand it. But we also weren't set up to do that.

We weren't set up to do these big projects, but we are, like, currently, we're doing a we're replacing fifty four Davic cranes. So that's one on every turbine. We're currently putting a five g network out in the field. So a shout out to Ben George, actually, the catapult and all of that team.

Really gotta come from it with Microsoft, jet tech, and Filicom, and a number of others who I forget the names of and which is unfair on them, really, but a huge group putting out five g on the turbines.

And we're also doing some remediation within the foundations. We'll go down there to do, and we've got some blockages that need clearing and a bit of other stuff. So we've got divers going in the water. All complex work, notifiable to health and safety executive, and so we manage all that because there is no one else.

We're the backstop. Where the book stops with us and we sort it all out. And we're having a I say we're having a whale at the time. We've gone from we initially started, there was half a dozen of us maybe five There's now twelve of those sort of double in size.

Looking after lid has been a joy. It really has been a joy. Our clients are they're, again, they're no walkover, no pushover, but they are great organizations to be dealing with. They, they've got breadth of kind of experience and contacts and they're generous with their time and their efforts, but we also don't need lots of their time because we're we are pretty much hands on ourselves and so they can be hands off.

But, yeah, but we take care of we take care of everything. If there's something he's doing, we take care of it. And there a lot of people don't realize, but I didn't realize until I start working in offshore wind. That wind turbines are asynchronous.

So they have a they have an inverter just like a battery system's got an inverter. Wind turbines also have an inverter. Right. And so you're doing power conversion offshore and onshore, in some cases, but offshore, which is quite a complicated thing to do in the middle of the sea.

I just ask you about KPIs? So how is a business like XZECO measured? So it's at safety first. By measuring our safety performance.

Our safety performance, by the way, is not a positive gain either. So we can't gain anything from being for managing safely. We actually put revenue at risk for safety performance, which we believe is the right thing to do, and we have to think more businesses would do well for doing that as well. But we're also very clear and transparent about reporting.

Very direct about it. That's good. So you're measured on safety, but it used to be, like, the north star trick, if you like, was availability. Right?

You had to keep those things running. And so you're still measured in that way? We are. We've got a metric called yield based availability.

So for for anyone who for anyone who isn't a kind of a follower of wind specific stuff, it it's availability measure that kind of gives you benefits for being available when the wind blows. So Whereas time is a straight line industry, if you're off for a day, you've lost that amount of availability. On a production based measure, yield based measure, where you could actually be off on a summer's day. And as long as you're on a winter's day, it would be negligible beat off in the summer.

And, yeah, we're measured. We're targeted on yields. We're targeted on safety. We're targeted on and that leads us to us managing blame contractor and because they they're the people who we who are really responsible for maintaining their service.

We have to keep a close eye there. Were responsible for budgets. So they were managed on the, where we're targeting the business plan budget, and then we've got customer satisfaction, which is, well, it sounds off quite vague, but it's has to be quite over time we target it down now. So what matters to our clients, and we work with them to work out what matters?

And there's like ten or eleven kind of elements there. The ten or eleven's quite a lot to add to another three, but actually they are very clear. It's very easy to see whether we've hit them all we have. And it just gives us that view that insights into how we're doing for the customer.

You guys have got a very unique view on offshore wind because you've got the good and the bad of an asset that's been running for fifteen years or so. And there aren't that many that have been running that long. And, one of the things that strikes me about working off work offshore at a full stop is how much lifting operations there is. So everything seems to be about cranes.

It's about getting the right thing in the right place, whether it's a bit of oil or grease or washer or a whole gearbox. You have to organize that in the right boat at the right time and the right place, which is very complicated. And then you have to lift it with a series of cranes. If the cranes out of action, it's game over, but some things are so big that even you have to the cranes on the wind turbines, Well, aren't big enough.

So you have to bring in a a jack up vessel, and that's very complicated. So what kind of what are the big bits of work that's that are just massive operations? That would be interesting to our listeners. Yeah.

We've got ourselves into a bit of a situation on linear data. We don't change single main components anymore. If you imagine main components, you think about the hub, the blades, the miscell, the generator, the gearbox, so the transformer, those big parts.

And, yeah, if you want to change one of those, with the exception of the transformer, you'd probably need a jackup, and we seem to have a jackup two or three times a year now. It used to be a A jack up is for those who don't know, it's essentially a barge with four legs on it, and you put the legs into the water on the seabed, and then lift the whole barge out of the water, and then you've got a surface and a crane to do stuff with. Right? Yeah.

It's like a, you know, a high up on the road, but it's not the same, but it's a similar type of concept. You got stabilization legs. They go down. The ones we have just recently actually has got six legs cue.

So we've got the Oh, sorry. My bad. They're getting no. It's finally getting bigger and bigger.

This is we don't need six leg jackups coming in to be fair, but they're getting bigger and when you need a jackup, and that's the one that closest. That's the one you get. But, yeah, that that adds to the complication. But, yeah, so these big pieces of work and what you end up with is the jackup will come along.

We do an awful lot of pre work. The OEM is responsible for all this work as well, by the way, but we make sure that we they're exercising the right diligent making sure that they have gone through all the safety protocols, making sure that they've gone with the right checklist. And then we go for a go no go type decision on the work itself. And we do a jack up back in the field on Sunday.

It should have been back in two weeks ago, but it sailed away. It got a bit of an incident in the port, actually. So bit of a problem there. That meant it went somewhere else to do another bit of work, but we were generous with that.

We said, look, we're not it's not our jackup for a start. We're not making a comeback to us and wait for it to be repaired. Go and get those stop turbines back running. Hours isn't stops.

So go and get those one started. So I went and did a few generator exchange, I think, a gearbox. And then they'll come back to us. And we did that was the right thing to do.

So it wasn't over judged. The right thing to do. And in the end, the right thing to do was worked out well for us because In the meantime, we've got a gearbox inspected, and now we need a gearbox. And, again, with the might of the OEM behind you, they've managed to get a gearbox all the way down the landing time and all being well.

That'll be ready for being loaded onto the jackup tomorrow. I'm happy to gearbox on one of these things.

Yeah. Yeah. So I would embarrass myself telling you. So I think the generator is about about seven ton, I think, or something.

It might be forty ton. I'm gonna embarrass myself in rainy numbers. Right? I really am.

A lot of tons. It's like, what is a billion pounds? You don't know what forty tonnage or twenty tonnage It just knows it a lot of times. And if you and you need really good weather to lift it, and it's a long way up to lift it in the middle of the sea, Alright.

Betty, we've I absolutely love this conversation. It's been pretty niched because we've talked a lot about the story of bringing operations and maintenance from an equipment supplier in house and then outsourced and all the stuff with the sale, but it is quite a journey and quite a story. I wanna just touch on the last two questions, which we ask everybody. The first one is do you have anything to plug?

This is your sales opportunity. There's a big announcement about ExECO or something to do with what you're doing, now is your chance. So the only other essay for anyone is listing, XECO is now an employee owned business seventy five percent owned by its employees' interest. So if you join us, you'd be part of that journey and part of owning that business, and actually get in touch because whilst we're not specifically recruiting right now, we are in a growth path and we are interested in quite a lot of skills or interested in finance skills.

We're interested in data modeling. We're interested in engineering, electrical engineers queue. So if you go in spare anywhere, you've got some moonlighting of it, electrical engineers and and people that that kind of experience or people with slightly less experience, but he wants to come and be a part of something special that can grow and learn. We've got time and the space to do that as well.

So, yeah, that's my plug, and I don't know how many investment banks gonna be listening, but if you got any assets you want managing, we'll do that as well. Yeah. For sure. And I now my favorite question.

What's your contrarian view, Bailey? I've got so many of these. Let's go through all of them and then you cut them. I don't have.

I know.

Let's go with I leave it to him before. I I don't think billionaires should exist. Capitalism is a relatively efficient system up to a point, and it is relatively efficient at pulling people out of poverty, and the sense that sometimes you have a rising tide lifting all boats, capitalism can work. I don't think it's a unique monopolar solution to the economy, but it can work in lots of things.

I think If we put a cap on what people can have, I once you get to a billion, you stop. You've won at capitalism. That's it. You ding you get a gold medal.

People wouldn't be able to spend that amount anyway. It's just such an astronomically large amount of money that it's impossible to understand. But I also think it would have a very uniquely redistributive effect on incomes. And one of the things that that I'm quite passionate about is make sure that people are decently paid in people have good livings and have good roles and good jobs.

And no matter what the job is, I think people should earn enough to strive, not just survive. And I think if we cap people's kind of successes at a billion, I think they'll be alright, Jack. Thank you. They can even go up by inflation every year.

Probably like that. They really come. But I think they'll be alright, Jack. And I think it would work well for everyone else as well.

So I'm really interested in this. We my my pushback on that would be And I'm just arguing, I think, because I think I do agree with you. My pushback would be where would the money go? Like, if you cap it, what's the mechanism?

Because Also, I think governments are pretty bad allocators of capital. And so if you take all that money and give it back to governments, is that an efficient way to spread it around? I think I agree with you. I just wanna know how you spread it around.

Yeah. So so it's a lot. I think political leanings aside. Because I don't wanna get into politics, really.

This is really political. Any climate terms, governments are incredibly inefficient at the allocation of resources. Whether that be people or money and people or money are interchangeable in a sense, but whether it be people or money, governments can put the right people or the right money into the right place at the right time to the right job. It is always behind the curve.

It's always playing catch up, and then it over eggs. So it overshoots all the time, and you end up with this kind of seesaw in effect where people that are whether they're coming or going. I think the idea around people just kinda getting to a point is that companies can still have that kind of money. It's just where the shareholders, individuals can have any more money after that.

And it's about what you do with that. And for me, I do think there's a segway, and don't go wrong. This is not a fully formed view because you will have some shareholders who've got six pounds worth of shares. And then you'll have Jeff Bezos on fifty two billion.

And it's not fair to stop everyone taking share to take dividends just because Jeff's where he is. But I think once there's the billionaires get so much because they take quite small amounts from everyone. And if we stop all of those quite small amounts going from everyone, in fact, if you prevent and remove the stimulus to take those quite small amounts from everyone, You leave a bit more in everyone's pocket, and all of it is being taken anyway by people who are billionaires. It's post tax generally, because people spending their money post tax.

Actually, this is like a true hundred percent upside for everyone. And I think it would just remove that stimulus. So, yes, it would potentially have a slightly adverse effect if people aren't feeling incentivized, but I can't. You go from one billion and not knowing what to do and you probably buy a yacht and wonder what on earth to do with it.

To needing fifty two billion to put a space system into place. I think e even amongst billionaires, there's this kind of massive gap between them now, isn't there? And it's just huge. And I think if we think if there was a logical way to look at this, if there was a a way to put it in systemically, I think what it would do is push money back into people's pockets and make price is cheaper, I think.

Alright. Well, you heard it here first. That's the most. We could have done that to death at a pub, but maybe we will one day, but that is the most political economic answer, we've ever had to that question on the podcast.

They're very well done. Bailey, I want to say a massive thank you because it's all for hours. Thank you for taking the time out of your day to come and speak to us. If you listen to this episode and you stuck with us for the end, because it's quite a long one, and you liked it, then let us know.

And if you didn't, then tune in for the next one, and it'll probably be a bit different. Alright. Thanks guys, and see you next week. Nice to you.

Cheers.