Here’s one for your daily dose of schadenfreude: a ‘renewables’ company set up by a lefty economist going tits up. Pass me my tiniest violin, Jenkins.
The loss-making renewable energy company developed by high-profile economist Ross Garnaut is precariously placed after its trading position was damaged by a wind drought.
Zen Energy’s position has been exposed by a bumpy transition to renewables, a wind drought and to some extent ideology, according to nine sources who are directly familiar with the details or have been briefed on the matter.
For those of you unfamiliar with him, Ross Garnaut has had his nose in the publicly funded trough for most of his life and influenced left-wing government policy from Bob Hawke to Kevin Rudd. His biggest and most damaging contribution was his Garnaut Climate Change Review, commissioned by Kevin Rudd. This was the dire landmark that set Australia spiralling into the abyss of ‘Net Zero’.
Few policy prescriptions have done more damage to Australia’s economy and, via the devastating impact on heavy industry, its defence. As architect of the Gillard government’s carbon tax, Garnaut’s ivory-tower activism led directly to an energy and environmental crisis in Tasmania in 2016. The Julia Gillard carbon tax enticed Tasmania’s hydro generators to sell energy to the Mainland. But in Tasmania, energy equals water in its dams: the rush to profiteer from the carbon tax dangerously drained the state’s lakes. When a drier than expected winter struck, our lakes were near empty and our electricity supplies on the verge of collapse.
So, you’ll excuse me if I don’t shed a tear if his ‘renewables’ company goes under.
Of course, we might damn Garnaut with faint praise by acknowledging that at least he was willing to put his money where his mouth was, for once. Except that it wasn’t all his money. In true ‘climate change’ fashion, Zen Energy has been quick to hold out its hand for taxpayer money, in the form of multiple government grants.
But, like Tim Flannery’s geothermal company, all that taxpayer money is getting thrown down a black hole.
The company is not alone in its predicament. The Australian understands Spanish global giant Iberdrola adopted a similar local strategy, but market sources insist Zen is significantly more exposed.
Both Zen and Iberdrola were last year relying heavily on wind generation to meet their retail exposures, and were forced to purchase capacity from the spot market at a time when prices exceeded $150/MWh.
“Both took an absolute bath as a result,” said a source.
And why were prices so high?
Hoist on their own petard is the saying that comes to mind. If only they weren’t hoisting the rest of us along with them.
Zen’s chief executive Anthony Garnaut, son of founder Professor Ross Garnaut, acknowledged the company has had to make changes.
“Zen has never shied away from the fact that the energy transition is hard,” he said. “We were, as other energy retailers both renewable and traditional were, underprepared for the extent of the wind, solar and water drought of May 2024.
Because absolutely no one, ever, pointed out that wind and solar are intermittent in the extreme and wind droughts are commonplace.
The performance of Zen and Iberdrola over recent years reflects Australia’s struggle to transition away from fossil fuels. Both companies moved aggressively into the Australian renewables market […]
Zen’s aggressive expansion was no surprise given public comments over the years from Professor Garnaut, who has pushed to fast-track the country’s move away from fossil fuels. He was also an architect of the Gillard government’s carbon pricing scheme.
“I have no doubt that intermittent renewables could meet 100 per cent of Australia’s electricity requirements by the 2030s, with high degrees of security and reliability, and at wholesale prices much lower than experienced in Australia over the past half dozen years,” he said in 2019.
Last year he and former ACCC chair Rod Sims urged Prime Minister Anthony Albanese and opposition leader Peter Dutton to impose a carbon tax on fossil fuels.
So excuse me if I feel a healthy dose of schadenfreude if his ‘renewable’ company goes the way of Solyndra, Geodynamics and the 750-odd solar companies who’ve gone bankrupt over the past decade.
