Solar focused retailer Urth Energy goes into administration

Upstart Australian power retailer Urth Energy has become the second energy market newcomer to fail within 12 months – more than likely another victim of soaring wholesale electricity prices – after administrators were called in this week, rendering it ineligible to trade on the NEM.

In an announcement on Wednesday evening, the Australian Energy Market Operator said advised that Urth was being suspended from all trading in the National Electricity Market “until such time as AEMO notifies Urth and all other Registered Participants that the suspension has been lifted.”

rooftop solar

The company set itself up as an alternative to the major retailers, offering electricity from renewable resources and allowing solar customers to sell their excess power back to the grid at wholesale rates rather than fixed rates.

As we reported on One Step Off The Grid in October last year, the latter initiative, a spot market-based FiT package called Urth Trader, was said, at the time, to be the first of its kind – although some software companies like Reposit offer a trading platform that allow solar households to take advantage of peak prices.

Urth Trader, however, was notable because it did not allow the household to opt in or out of the wholesale price, but to receive the wholesale price for all their exports. And Urth had conceded it could yield volatile returns and be suitable only to those who have an understanding of wholesale prices and how the markets work.

“Urth Trader is a great option for an engaged grid-connected solar system owner who wants to take on this risk themselves and be an active player in the energy market,” the company’s director Richard Hermens told One Step.

“The principle behind (it) – that ordinary consumers can also be energy producers – also opens up a whole world of possibilities related to Australia’s burgeoning battery storage market.

“There will be months where a customer is behind and other months where they will end up in front, some time significantly.”

But the combination of high, volatile wholesale electricity prices, most notably in Queensland over the 2016-17 summer, and a small customer base – around 800 – seems to have brought the company undone.

The Australian Energy Regulator said in a statement that affected customers had been transferred to ensure their electricity supply continued without interruption.

“Approximately 800 electricity customers in South Australia, Queensland and NSW are affected … The power supply to these customers will not be interrupted,” AER acting chairman Cristina Cifuentes said.

“Depending on where the customers are located they were transferred to either AGL, Origin Energy, or EnergyAustralia.”

It is a disappointing outcome, not just for the company’s 30-odd staff but for retail market diversity, particularly as Urth had sought to turn the idea of a FiT on its head. A standard 6c/kWh solar feed-in tariff is essentially a forward hedge in anticipation of future wholesale prices. By charging a 15 per cent admin fee on feed-in revenues, Urth removed the hedging and basically offered pass-through instead. If the customer benefited from high spot prices with their exported solar, so did Urth.

Urth’s demise comes around 10 months after that of fellow junior retailer, GO Energy, which went into voluntary administration last April, leaving rival businesses to try and pick up some of its contracts.

The company, which was acquired in 2015 by ASX-listed solar wholesaler SOLCO in a reverse takeover, had focused on reducing energy costs and grid reliance for commercial customers using mostly solar PV solutions, as well as battery storage, efficiency and its Go Hub energy monitoring system.

Businesses were offered no-money-down solar design, supply and installation based on detailed audits and energy analysis. They would then sign a contract – a PPA – with GO Energy, locking in their electricity prices at a “competitive” rate for a set period. At the end of the PPA period, the contract could be renewed, or the customer had the option to buy the solar system outright.

Hints of trouble, however, were confirmed in late February 2016 in an update to shareholders that said the company had been hit badly by soaring wholesale electricity prices in its various markets – NSW, Victoria and Queensland. In January, alone, it said, this had been $500,000 greater than forecast.

Comments

8 responses to “Solar focused retailer Urth Energy goes into administration”

  1. MaxG Avatar
    MaxG

    Sad story… we went with them, and it looks we are back with Origin… ( Looking for another retailer other than the big ones.

    1. wholisticguy Avatar
      wholisticguy

      Check out Enova Energy if you are in Essential Energy’s distribution area. Origins tariffs with a 12c kWh feed in tariff.

      1. Jonathan Prendergast Avatar
        Jonathan Prendergast

        Agree. Enova. (Declaration, I am a shareholder)

      2. MaxG Avatar
        MaxG

        Got an e-mail from them: they may be in Qld by the end of 2017… 🙂
        What I figured they are better then Origin…

    2. David Pethick Avatar
      David Pethick

      Enova Energy or Mojo Power (for large households) worth a look @disqus_vtJDfIRxDY:disqus.

      Cheers.

      Dave P.

      1. MaxG Avatar
        MaxG

        Ended up signing with EnergyLocals; nice bunch of people, collaborative, friendly… and in my particular circumstances (high export) the best deal I could get, after comparing 12 retailers. https://energylocals.com.au/prices/

        1. David Pethick Avatar
          David Pethick

          Great call Max – sorry, completely forgot about EnergyLocals. They have a very innovative business model and a founder who know’s what he’s doing.

  2. Ren Stimpy Avatar
    Ren Stimpy

    Well, there were hundreds of company failures in the march towards cheap computers, and there will be similar company failures in the march towards cheap renewable energy.

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