Insights / April 4th, 2018

Energy market - insider's update!

At our client seminar held at Adelaide Oval on 22 March 2018, the SIMEC ZEN Energy team gave us a presentation on some of the ZEN Energy high points and achievements since the company was formed in 2004. The team also addressed us on Sanjeev Gupta’s GFG Alliance Group that lead to ZEN’s rebranding to SIMEC ZEN Energy and on the company’s opportunities going forward. After discussing the status of the Australian energy market, the SIMEC ZEN Energy team then answered several questions on topics of high relevance and interest to our clients.

The following is a brief summary of some of the key points from the presentation.

  1. ZEN Energy formed in 2004; Australian Entrepreneur of the Year award 2010; fourth fastest growing company in Australia 2012; formed alliance with GFG Alliance Group 2017.
  2. Joining the GFG Alliance will enable the company to access capital and other resources to significantly grow its business.
  3. South Australia presents one of the best locations in the world for establishing and growing a renewable energy sector, with perhaps the most abundant renewable resources in the world.
  4. From historical price lows of approximately $50/megawatt hour to $130/megawatt hour in recent times, market forces have brought down prices to approximately $80 - $90/megawatt hour.
  5. It is not realistic to expect that gas prices will ever come back to historic lows.
  6. SIMEC ZEN Energy’s business is changing. 3 or 4 years ago, 90% of its sales were in the residential sector. Today, approximately 90% of its sales are in the commercial sector. In addition to generation and behind the meter sales, it is developing a full service electricity retailing business. Solar and wind generation and storage (battery) prices have approximately halved in the last few years. As a result, pay-back periods for customers have dramatically reduced. There is a strong economic case for many commercial operators to invest in renewable generation and storage.
  7. The nature of the traditional energy industry is changing quickly. It is becoming far more dynamic so that there is no longer the “one way” generation, transmission (high voltage), distribution (poles and wires) and retail models. The move to increasing renewable energy generation will continue. There has been a rise in small scale grids and the energy market will continue to evolve. One example is the opportunity for commercial property owners to install solar generation and battery storage and to sell energy to their tenants, thereby providing another revenue stream in addition to premises rental.
  8. Smart energy demand management by commercial and residential consumers will be an important and increasing aspect in managing cost and overall demand.

The SIMEC ZEN Energy slide deck can be downloaded by clicking on the link below.