Twiggy Forrest’s Squadron Energy seeks retail licence to sell renewable electricity to select businesses

UPDATED: Squadron Energy, the renewable energy and storage developer controlled by iron ore magnate Andrew Forrest, has applied for a licence to retail electricity to select and “already identified” businesses in Victoria and other states in the National Electricity Market.

A notice published by Victoria’s Energy Services Commission (ESC) this week says Squadron is is seeking a licence to sell electricity by retail to business customers in the state – a first for the wind farm developer whose project pipeline is mainly concentrated in New South Wales and Queensland.

On Thursday, an application from Squadron to the Australian Energy Regulator (AER), which governs the rest of the National Electricity Market (NEM) states, was published, seeks authorisation to be a retailer of electricity in the broader NEM.

Squadron’s application to the ESC, which is open for consultation until mid-September, says that while the company “does not currently have a retail licence,” it has broad industry expertise and is building a team that will include “executives and officers that have collectively held senior roles in some of the biggest incumbent retailers.”

This team includes director of structured transactions, Nollaig Daly, who alongside prior roles at big-four bank NAB has previously worked as an energy trader with Origin Energy.

Another staff member, Enzo Zhong, is ex-Baringa Partners and is said to have extensive experience collaborating with the Australian Energy Market Operator (AEMO), providing analyses for the Australian Energy Regulator’s (AER) revenue determination process and AEMO’s Integrated System Plan.

This sort of experience will be important – as the recent collapse of Zen Energy has demonstrated, the energy retail business is littered with the failures of small start-ups and innovators, and some medium-sized ones too.

In particular, new contenders get caught out by a lack of sufficient hedging. As Renew Economy reported earlier this week, “it’s an industry that is dominated by the big three private retailers and government entities, and they take no prisoners.”

Squadron, which last week announced the successful refinancing of its $2.7 billion wind portfolio, currently has 1.5 gigawatts (GW) of wind generating capacity in operation, and the under-construction 414 megawatt (MW) Uungula wind project in Wellington, NSW and the Clarke Creek wind farm in Queensland.

In Victoria, Squadron currently operates the Murra Warra I & II wind farms, which have a combined capacity of 435 MW. The rest of the operational fleet is in NSW, as is the vast majority of the company’s extensive development pipeline.

Another two wind farms are proposed for Victoria – the 115-turbine Ballyrogan project, south of Ararat, and the 62-turbine Moreton Hill project, south-west of Ballarat.

Squadron says that expanding into electricity retailing, under the name Squadron Energy Retail Pty Ltd (SQER), offers the company “strategic advantages, leveraging existing renewable energy assets and market position.”

It says that the company’s “robust foundation” in renewable energy production, infrastructure and investment, deep knowledge of energy markets, and extensive experience in managing large-scale energy assets “gives it a unique understanding of the entire energy value chain.” 

“This solid foundation equips Squadron with unique insights that enable it to offer innovative solutions to provide competitive and customer-focused offerings,” the licence application says.

“The SQER leadership and retail team includes a group of professionals committed to establishing SQER as a world class energy retailer. Each team member brings a unique blend of skills, perspectives, and experiences, which together enable the team to tackle complex challenges with creativity, efficiency, and precision.

“As the energy market continues to face unexpected and unforeseen challenges, effective risk management remains crucial for energy retailers. SQER has established a comprehensive risk management strategy to prepare the business for the risks associated with operating in the NEM.

“SQER has extensive measures and processes in place to manage wholesale price risk.”

Squadron says that in the first phase of business, SQER would undertake limited marketing activities and only make offerings to selected commercial and industrial (C&I) customers “already identified as interested” or that have “already agreed to be supplied by SQER.”

In its application to the AER, Squadron says gaining a NEM retail authorisation would allow the company to “adapt to market shifts and establish a strong presence in the delivery of firm capacity in the near to medium term.

“Working closely with C&l customers, SQER seeks to deliver competitive and tailored electricity and energy solutions while also supporting its customers to deliver on their own Environmental, Social and Governance (ESG) objectives,” the application says.

“Supported by the broader Squadron group, SQER possesses the capital, expertise and technology necessary to succeed in the energy market. Becoming an electricity retailer will also enable Squadron to further invest in renewable energy projects across Australia, advancing its efforts to decarbonise Australia.”

In a statement emailed to Renew Economy, a company spokesperson said: “Squadron Energy confirms it is seeking the flexibility to offer retail electricity services to its existing large commercial and industrial customers.”

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