Zen Energy put into administration just days after regulatory approvals for sale and transfer

Zen Energy, one of the leading lights of a new breed of renewable-energy based utilities in Australia , has been placed into voluntary administration, just days after receiving regulatory approvals for the sale and transfer of its retail licence.

The South-Australia-based company – founded by economist Ross Garnault and headed by his son Anthony – blamed the volatility in wholesale electricity prices for its decision to appoint McGrathNicol as voluntary administrators, despite a potential sale of the retail business and some key renewable and storage contracts to global commodities trader Gunvor.

As Renew Economy reported last week, Gunvor gained approval from the Australian Competition and Consumer Commission for its proposed purchase of Zen Energy’s retail business, and just four days ago the Australian Energy Regulator gave conditional approval for the transfer of ownership of the business.

That approval was conditional on Zen Energy having the “financial resources sufficient to meet the obligations of a retailer”, immediate access to funding of $A60 million and available funding of up to $S100 million, and a written statement from the CFO and CEO stating that “the company is a going concern.”

But by Friday, it appears that Zen Energy could find no way of its difficulties in meeting its retail obligations – mostly to business customers – despite negotiating the separate sale of its renewable and battery storage development business.

In a statement issued late in the day, Zen confirmed it had “been pursuing a restructuring and recapitalisation exercise” in recent months, but said its viability had been impacted by volatile wholesale electricity prices.

“The retail business has continued to be impacted by continued wholesale electricity volatility, that has undermined the viability of a going concern sale, despite significant support from a range of stakeholders, including the SA Government, SA Power Networks and various regulators,” it said in a statement.

However, it also emerges that SA Power Networks, the main distributed network operator in South Australia, had filed an application for the winding up of Zen Energy Retail Pty Ltd on June 26, according to a filing to the Australia Securities Investment Commission.

That application was due to be heard in the Federal Court in South Australian on August 5.

A spokesperson for the South Australia government told local media outlet InDaily that Zen Energy’s retail business had been transitioned to AGL – the dominant retailer in the state – because of its role as default electricity retailer (supplier) of last resort.

McGrathNicol said its restructuring partners Rob Smith and Jason Preston were appointed as joint administrators and would undertake an assessment of the business.

“We are urgently engaging with key stakeholders to determine the most appropriate strategy for the business which will deliver the best possible outcome for all stakeholders,” Smith said in a statement.

The sale to Gunvor was to include three power purchase agreements, including those linked to the Tailem Bend 2 solar and battery hybrid project in South Australia, along with the 400 MW New England solar farm (stage 1) and the Moree solar farm, both in NSW.

A virtual toll agreement with Zen’s 111 MW, 270 MWh Templers big battery in South Australia was also included in the proposed deal.

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