Long in solar, short on storage: Zen Energy faces liquidation as administrators blame high risk strategy

Renewable energy retailer Zen Energy faces liquidation at a creditors’ meeting this week after the voluntary administrators found no viable alternative, and pointed to the reasons why the venture ultimately failed.

It pointed to a high risk trading strategy – long on solar and ultimately short on battery storage – and suggests that secured creditors will get a maximum 10c in the dollar in the case of liquidation, and possibly nothing at all, and unsecured creditors will likely get nil.

McGrathNicol were appointed voluntary administrators in early July, despite the sale of its infrastructure business and despite having won regulatory approvals for a potential sale of its retail business to Swiss-based commodities trader Gunvor.

But the retailer’s issues had been piling up, with network company SA Power Networks seeking a wind up order in the federal court over missed payments

Zen was established in South Australia in 2024, and was led at times by Ross Garnaut and then his son Anthony, and had carved a significant niche in the renewable retailing business, with major contracts with the state government and other entities.

But McGrathNicol said the business model was undermined by from mid-2025 by the significant fall in Large-scale Generation Certificate (LGC) prices, increasing derivative liabilities and the reliance on additional noteholder funding as it pursued various restructuring, sale and recapitalisation options.

It said the ultimate failure of the sale and recapitalisation process, with the breakdown in the transaction for the remaining retail business, after the infrastructure assets business was divested on 24 June 2026 was the final straw.

“A revised proposal for the remaining business did not provide Directors with sufficient value, certainty or time to continue the sale process, necessitating the Directors to appoint voluntary administrators on July 3.”

A report to creditors said the Zen directors blamed the fact that the business model exposed it to significant market risk through long-term and substantial positions in the energy market, with market conditions moving against these positions over the last two financial years.

They also pointed to long and unhedged LGC positions, and the fact that Zen paid more than the prevailing market rate to secure the energy products and contracts it needed to operate. These products and contracts included PPAs, battery tolling rights and wholesale contracts.

The administrators also blamed its long solar generation position, that meant Zen was selling electricity at a loss, delays to storage assets coming online that could have protected short positions in the evening peaks, and “potential failings in good corporate governance and risk management practices.”

It said this meant that the business did not sufficiently manage downside risk in establishing the long term business model.

The creditor’s report notes that the infrastructure business – Zen Futures – was sold to note holders on June 24 for $45 million, after several previous offers were withdrawn.

Gunvor made its first non-binding offer in the retail business in February, and then adjusted the offer on several occasions before making a significant revised offer on July 2, which was rejected by the company. It went into administration the following day.

Directors were concerned about the trading position for some time. They hired KordaMentha as “safe harbour advisors” last year, and Rennie Advisory to help on sale options. EY issued an unqualified audit opinion on Zen’s FY25 financial statements, including a Material Uncertainty Related to Going Concern.

The report says that in 2025/26, Zen Energy had a loss of $322 million before tax, and had lost money in each of the last three financial years. It had a trading loss of $70 million, which deepened due to financing costs and unrealised financial losses.

Based on investigations to date, the Administrators said senior noteholders’ claims are approximately $177.8 million, with a further $15 million from super senior noteholders. Trade debtors are put at $27 million, $8 million is owing to staff and up to $347 million in unsecured creditors.

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