How could skyrocketing prices drive a “green energy” retailer out of a market grappling with a mix of renewable energy sources?
- Byron Bay-based “green” energy retailer Anova was placed in voluntary administration yesterday
- Co-founder Alison Crook says market structure is “flawed” because “gentlers” benefit from volatility
- Climate change and energy minister Chris Bowen says ANOVA’s situation “disappointing”
After Australia’s first community-owned energy retailer was placed under voluntary administration, it’s a question some of Anova’s 13,000 customers will be asking.
The move was announced yesterday, less than two weeks after the company was named as the winner of the Finder AU Green Energy Retailer of the Year award for 2022.
The situation highlights an anomaly – even though small retailers do their best to buy energy from renewable sources, it all goes into the national grid.
Former president Alison Crook, who helped found the Byron Bay-based company in 2016, said retailers have to buy supplies from a “spot price” market every five minutes.
“Solar and wind [generators] Bidding is not allowed, they just say how much they can put in,” she said.
“But they are not allowed to bid because they are considered a volatile source, so they never get to set the price.
“As it happens, we have hit winter – demand is high, there has never been enough wind and solar to fill the grid.
“In fact, I think we are saying that fossil fuels are still meeting 70-80 percent of fuel needs in NSW.”
Ms Crook says “gentlers” can still benefit when they have to buy electricity at higher prices. (ABC News: Chris Gillette)
Ms Crook said the structure of the energy market allowed some companies to flourish when prices rose from $70-80 per megawatt to $300-400.
She said the system favors “gentlers” like AGL, Origin and EnergyAustralia.
“Gentellers are organizations that own both generation and retail … so that they benefit when there is market volatility,” Ms. Crook said.
“They benefit when they can get higher prices for wholesale.
“Even if a retailer is buying at a higher price in the market, they can make super profits at the end of the generation.
“They own both ends of the supply chain.
“So the point is, this is a flawed market structure – it should never be allowed to build up and it should be broken.
“If the government doesn’t take steps to protect small retailers, there will be no competition left.”
Federal Energy Minister Chris Bowen says ANOVA’s situation is “disappointing”. (ABC News: Ed Reading)
Federal Climate Change and Energy Minister Chris Bowen was asked about the situation at a media conference today.
“I know that Anova Energy has entered a very difficult phase in the last 24 hours, which is disappointing for them and all their customers,” he said.
“They are a good company, but we continue to monitor the situation very carefully and closely.
“Ultimately we need more transmission, more storage and more generation of electricity.
“I continue to be in very close contact with the regulator and the ACCC regarding market conditions.”
Space to play or pause, M to mute, LEFT and RIGHT ARROW to search, UP and DOWN ARROW for volume. View Duration: 7 min 54 sec 7m Is Australia’s electricity market in trouble? (Dan Conifer)
Enova customers will be automatically transferred to a new retailer but will have to pay any bills issued by Enova prior to the transfer.
The lenders’ meeting will be held on June 30.
With the liquidation of some assets, it is not known how much of the value will be returned to shareholders or whether the renewable retailer will find a buyer.
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