Energy retailer Discover Energy is dumping its licence to retail gas as it completes a pivot to solar and battery-backed electrification that started with the fossil fuel price shocks following Russia’s invasion of Ukraine.
Last week – as a new war sparked a new global oil price shock – the energy regulator gave the small electricity retailer the green light to drop its licence to sell gas, with remaining gas customers moving to CovaU officially from September 4.
The company says it’s quitting gas because compliance costs are too high for a small retailer, and because it has heeded the lessons of four years ago.
“Since the 2022 wholesale market volatility, Discover Energy has pivoted its business model to focus exclusively on Virtual Power Plant (VPP) technology and renewable energy solutions,” a company spokesperson said told Renew Economy.
“Gas services no longer align with our long-term vision.”
In 2022, Discover Energy was among a number of small retailers which had to tell customers they needed to hike rates to stay in business, after the Ukraine war sent coal and gas prices rocketing.
“The Australian National Electricity Market and Domestic Gas Markets in 2022 are witnessing extreme and consistent high prices that have not been experienced for more than a decade,” Discover’s co-CEOs Anson Zhang and Jeff Yu wrote at the time.
“This is being driven by black coal, hydro and gas generators who are bidding electricity prices higher in response to internationally increased prices for coal and gas, which in turn are driven by the unprecedented events in Europe and the knock-on effects of COVID-19.
“This impacts the entire industry and has meant that many small energy retailers, including ours, have been left with no choice but to increase household energy consumption rates accordingly.”
Discover Energy’s move to cancel its gas licence in 2026 comes as a new foreign war is sending oil prices surging.
The US attack on Iran in late February, and the ensuing spread of fighting throughout the Middle East, sent oil prices surge up past $US116 ($A166) a barrel – nearing the peaks seen in March and May 2022, according to data on OilPrice.
There are concerns of a repeat of the 40 per cent spike in households’ energy prices, forcing governments to spend billions on energy subsidies, given Australia’s domestic gas prices are tied to international rates.
Globally, gas prices are rising alongside oil prices out of fear of a lengthy war in Iran and the wider Middle East, according to data site Trading Economics.
Ironically, Discover Energy entered the retail market to stay competitive by selling electricity-gas package deals and then use that as a channel to upsell solar and storage products.
It received a licence to sell gas to consumers in 2019.
“In order to remain competitive in the industry, Discover Energy will take an integrated and coordinated approach to incorporate solar and storage into its energy retail activities, and will leverage its long-term partnerships with solar and storage system providers and installers for channel access to introduce Discover Energy’s energy offers including electricity (and gas) retail plans across Australia,” the company said in its gas licence application.
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