Niche Australian Electricity Retailers

Hi there, I’m Jervis Whitley. Today is 1st of November, and you’re listening to WindFront, the weekly roundup of the Wind Industry from Australia and around the world. Today I’ll cover niche Australian Electricity Retailers.

There are over 40 registered market customers in Australia. These are people that buy into electricity from the National Electricity market on behalf of ordinary businesses and households. Origin, Energy Australia, and AGL are just the big three. But beneath that, sit a 2nd tier retailers like Lumo, Momentum and Red, but still further down the chain are the niche retailers. These are companies that aren’t looking to upset the market as a whole, but they have tailored their branding and product to fit a small number of customers.

So one such company, which caught my eye, it applied to the AER to become an electricity retailer recently, and it’s called Pooled Energy, P-O-L-E-D. Now, Pooled Energy isn’t a play on the NEM pool, the electricity pool. It’s actually a privately owned company whose business purpose is retailing electricity to owners and operators of swimming pools for the purpose of providing energy efficient, safe bathing while providing integrated demand management services for the purpose of optimising electricity grid operations. Now, the written plan is to seek an electricity retail license so they can sell electricity to swimming pool owners and operators. And for approximately the 1st 12 months of operations, they’ll be selling primarily to small customers like residential households with swimming pools and may subsequently address other markets.

Now, it’s impressive and perhaps surprising about this electricity retailer, is it has some heavyweight directors. There’s the former CEO of Worley Parsons, the former CEO of Honeywell, and the former managing director of McKinsey. And the co-founder of the company has been around in tech for over 35 years. So there’s an impressive history there behind this niche pool electricity retailer.

So it got me wondering, where can a niche retailer go in the NEM? Now, in the case of this pool retailer, it looks like it is a complimentary business to another tech business that they have going which sells pool filters, which are apparently very energy efficient and potentially could be controlled. And I guess they may be able to send a signal which would reduce electricity use and would be of some benefit to a retailer.

So traditionally, a niche retailer in the NEM, they could get purchased by a larger company. That was one of the main exits. There was a company called Greentricity, and that was purchased by Australian Power and Gas for around about $250,000 back in 2006. It was interesting that Australian Power and Gas, who acquired Greentricity, is now being purchased itself by AGL. And Australian Power and Gas originally purchased Greentricity, because they needed their electricity license. So definitely, retailers, niche retailers anyway, can be purchased by other retailers.

They can attempt to grow big. So Click Energy is an example of a smaller retailer who is rapidly growing. They just switched 10,000 customers in Queensland and 20,000 in New South Wales as part of this One Big Switch campaign, which I spoke about a few weeks ago. So they’re the big benefactor of 2 of those campaigns so far, which means they’re probably paying this One Big Switch campaign quite a lot of money, to switch, you know, a significant number of customers into their network.

Now, you could double down on your niche, like WINenergy. Now, WINenergy, some of you may have heard of, they control most of the embedded network electricity retailing. Embedded networks pop up in like shopping centres, retirement villages and large apartment blocks. Essentially no one that owns or rents in these places has any choice in their retailer. They must purchase their electricity from WINenergy. So it’s a monopoly. Potentially maybe not for much longer. It looks like there might be some rules coming in place to give people choice of retailer in these situations as well.

And, I mean, for other retailers, they might partner with a power company. So to provide that sort of physical hedge there, have become more vertically integrated. But now there’s another choice as well. As I spoke about last week, where retailers have the choice to go down the demand management path, and potentially use their own customers as their physical hedge against high electricity prices. So that’d be an interesting one to watch too, to see if using your own customers as a potential physical hedge can give niche retailers a bigger sort of fighting chance in the market, and I guess this pool energy would be one of those who would benefit.

So now on to the top 3 in wind, very slow week this week. Macarthur failing to get over half a million dollars, and Waubra and Woolnorth just behind on 450 and $350,000 for the week.

So that’s it for me this week. Hope you like the discussion about niche electricity retailers. I’m interested to hear if you have any thoughts about if niche retailers would be a big winner out of these demand management rules that are going in. Until I see you next time, keep buying those green electrons.