How can soaring prices drive a “green energy” retailer out of a market struggling with a mix of renewable energy sources?
Key points:
- Byron Bay-based ‘green’ energy retailer Enova was placed into voluntary administration yesterday
- Co-founder Alison Crook says market structure is ‘flawed’ because ‘gentailers’ take advantage of volatility
- Climate Change and Energy Minister Chris Bowen says Enova’s situation is ‘disappointing’
That’s a question some of Enova’s 13,000 customers might be asking after the establishment of Australia’s first community-owned energy retailer. placed in voluntary administration.
The move was announced yesterday, less than two weeks after the company was named the winner of the Finder AU Green Energy Retailer of the Year award for 2022.
The situation highlights an anomaly – even when small retailers do their best to buy energy from renewable sources, everything goes into the national grid.
Former chairman Alison Crook, who helped found the Byron Bay-based company in 2016, said retailers had to source from a market at “spot prices” every five minutes.
“Solar and wind [generators] are not allowed to bid, they just say how much they can put in,” she said.
“But they’re not allowed to bid because they’re considered unstable sources, so they can never fix the price.
“We happen to have reached winter – demand is higher, there has never been enough wind and solar power to fill the grid.
“Imperfect” structure?
Ms Crook said the structure of the energy market allowed some companies to thrive when prices fell from $70-80 per megawatt-hour to $300-400.
She said the system favored “gentailers” like AGL, Origin and EnergyAustralia.
“Gentailers are organizations that own both production and retail…so they take advantage of market volatility,” Ms. Crook said.
“They take advantage when they can get high wholesale prices.
“Even if a retailer buys from a market at a higher price, he can make super profits on the generation side.
“So the point is, this is a flawed market structure – it should never have been allowed to be created and it needs to be broken.
“If the government does not intervene to protect small retailers, there will be no more competition.”
“Hard time”
Federal Climate Change and Energy Minister Chris Bowen was asked about the situation at a press conference today.
“I know that Enova energy has entered a very difficult period over the past 24 hours, which is disappointing for them and all of their customers,” he said.
“It’s a good company, but we continue to monitor the situation very, very carefully and closely.
“At the end of the day, we need more transmission, more storage and more power generation.
Enova customers will be automatically transferred to a new retailer, but all invoices issued by Enova prior to the transfer will need to be paid.
A meeting of creditors will be held on June 30.
With few assets to liquidate, it’s unclear what value will be returned to shareholders or whether a buyer for the renewable energy retailer will be found.
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