ASX-listed clean tech energy retailer GO Energy has announced plans to scale back its business – as well as its staff – after being squeezed between rapid growth and high wholesale electricity prices.
GO, which was last year acquired by ASX-listed solar wholesaler SOLCO in what amounted to a reverse takeover, has focused its business on reducing energy costs and grid reliance for corporates through solutions including solar, battery storage, efficiency and its Go Hub energy monitoring system.
Solar has been the real focus, with the company offering no-money-down solar design, supply and installation based on detailed audits and energy analysis.
The customer then signs a contract – a PPA – with GO Energy that locks in their electricity prices at a “competitive” rate for a set period. At the end of that period, the contract can be renewed, or there is an option for the business to buy the solar system outright.
GO said its retail electricity and gas businesses had undergone a period of sustained growth over recent months – 80 per cent between December and January – resulting in increasing demands on capital and operations.
But in an update to shareholders, after the stock was suspended from trade last week, it said it had been hit badly by soaring wholesale electricity prices in the market its operates in – NSW, Victoria and Queensland. In January, alone, it said, this had been $500,000 greater than forecast, the company said.
“The combination of seasonality and significant growth in the Group’s electricity volumes (from 15,865MWh in December to 28,522MWh in January)… plus high wholesale prices in January has resulted in significant additional prudential requirements by the Australian Energy Market Operator through February,” the document said.
“To moderate the ongoing cash demands and manage the business’s growth, the board has decided to re-focus customer growth on smaller scale business customers” – the result of which would be a number of redundancies amongst staff.
The company had also decided to postpone the proposed acquisition of a stake in Australian battery storage and energy management company Redback Technologies, until both companies had developed their core businesses further.
The changes, said GO, would ensure that after a period of consolidation, the business would be in a position to sustain and continue its growth.
To this end, the company says it has put in place a number of funding arrangements, including a $1.6 million short-term bridging loan, a $5 million converting loan and a $3.6 million invoice financing facility.
GO has also made changes at an executive level, with chief financial officer Warren Kember stepping in as CEO after the resignation of Adam Pearse, who had been on personal leave. The company said the board was also currently undertaking an evaluation which would include a “board and management renewal process” over the coming months.
RenewEconomy Free Daily Newsletter