Redback burns taxpayer dollars, calls in administrators
Renewable energy firm Redback Technologies, which has received millions of dollars in taxpayer funding, has called in administrators after racking up big losses.
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Brisbane-based renewable energy firm Redback Technologies, which has received millions of dollars in taxpayer funding, has called in administrators after racking up big losses.
Insolvency practitioners McGrathNicol recently took control of Indooroopilly-based Redback, which had developed Chinese-manufactured smart battery packs that it claimed helped people save thousands of dollars on their power bills.
Redback is the second major government-backed renewable energy company to appoint administrators in recent months, with fast-charging firm Tritium going under last month.
Redback has a $10m contract with the Queensland government-owned Energy Queensland Ltd (EQL) but by March this year it had effectively run out of cash and accumulated losses of more than $7m over a three-year period. Creditors last week approved a deed of company arrangement (DOCA) that will see Redback attempt to trade its way out of difficulty.
The proposal will see an initial $500,000 investment by Australia Ebon, whose directors include Dong Hu, the chair of Chinese- based cryptocurrency firm Ebang International.
Redback is facing rising costs and competition in the renewable energy sector that may threaten any rescue package.
The company received $1.96m in taxpayer funds from the Queensland government to fund its expansion in 2017 as well as an equity investment by EQL in 2019.
Former Queensland premier Annastacia Palaszczuk during a visit to Redback’s HQ in 2017 boasted the company had contributed to the creation of quality jobs in Queensland.
The Commonwealth-backed Clean Energy Finance Corporation, which kicked in more than $7m in 2017, holds about 9 cent of the firm while EQL has a 65 per cent stake. That investment is now virtually worthless.
Redback had developed battery systems, which converted and stored electricity generated from rooftop solar panels. The company was founded in 2015 by a “clean-tech enthusiasts dedicated to the transition to renewable energy in Australia”.
Former chief executive Patrick Matweew said in 2022 that while demand for Redback’s home battery systems was increasing across Australia, Queensland was spearheading the movement to solar and battery storage.
Redback’s 35 employees are likely to receive their entitlements under the DOCA, but unsecured creditors including shareholders, even under the most optimistic scenario, will receive only 15c in the dollar or as little as 2c.
McGrath Nicol told creditors in a report lodged with ASIC that preliminary investigations indicate that Redback began implementing turnaround strategies earlier this year after bleeding red ink for three years. Redback was seeking additional capital from shareholders to assist with cash flow as well as undertaking the sale of some assets.
However, the company was unable to secure sufficient funds to enable ongoing trade, and to service existing obligations.
McGrathNicol said Redback’s subsidiary Redback Operations had been unable to repay significant loans to the parent company as it faced increased competition in the solar market, leading to pricing pressures.
Other reasons for the company’s failure included inadequate level of sales to cover the unit costs of inventory, no access to bank finance, poor economic conditions and inadequate cash flow. Redback had posted losses of $7.09m since 2021 with cash levels plummeting from $2.30m in 2021 to nothing this year.
Redback Operations was paid about $10m by EQL for the installation and monitoring of 47,000 smart electricity meters across Queensland.
“One of the reasons for the appointment of the administrators is that Redback Operations was paid approximately $10m by EQL for the installation and monitoring of these devices for five years,” the report said. “The funds have been expended but Redback Operations remains obliged to provide the monitoring service for this contract.”
McGrathNicol insolvency partner Anthony Connelly and Queensland Innovation Minister Leanne Linard did not respond to a request for comment.
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