‘Crippling’ loss of millions of dollars in solar rebates under investigation

Carolyn Lee has sold thousands of solar panels to households in and around Kiama on the NSW South Coast. For nine years, she has provided discounts, knowing that she will recoup the money through a government scheme to encourage solar uptake.

Most solar retailers in Australia operate this way, since the alternative is to convince the consumers to pay thousands of dollars more for their solar panels up front and wait for their rebate.

Carolyn Lee from Kiama-based retailer The Energy Experts says she is owed about $40,000 for solar certificates.Credit: Rhett Wyman

Small business owners such as Lee don’t provide the discounts free. They do it by claiming the rebate that would otherwise go to the consumer. The process is complex so they usually rely on middle men to do the paperwork and send them the money.

A company in Victoria is accused of harvesting the rebates and failing to pass the money back to small retailers and installers throughout Australia.

The company, Emerging Energy Solutions, is in liquidation owing millions to hundreds of trade creditors, mostly small retailers and installers in almost every state and territory, with the liquidators raising the possibility of insolvent trading, illegal phoenix activity, a shadow directorship and unreasonable transfers to related companies and individuals.

Lee, founder and director of The Energy Experts, says she is owed $40,311 by a different company, but one linked to Emerging Energy Solutions, for 12 solar panel systems, and she knows of other small companies owed hundreds of thousands of dollars.

Energy and Climate Change Minister Chris BowenCredit: Michael Quelch

“As far as we’re concerned ... they’ve done the wrong thing by our industry and we want our money back,” Lee says. “There are other companies that are owed way more than us. I know of up to $800,000 for one company, which would be crippling – it would be enough for them to close their doors.”

It’s a major test of the government-backed incentive scheme for rooftop solar in place since 2011, and has attracted the attention of Energy Minister Chris Bowen.

Bowen says he has asked the Clean Energy Regulator to do what it can within its statutory functions to assist businesses and other regulators investigating these companies.

“The Australian government expects all agents in this market to pay solar retailers properly,” Bowen says.

“Solar retailers are often small and medium businesses doing great work to accelerate our transition to renewable energy.”

How the rebate works

When rooftop solar is installed on a home, the consumers earn “small-scale technology certificates” based on the size of the system that serve as a rebate on the purchase price of their panels. In practice, they receive an upfront discount from the retailer or installer if they surrender their solar certificates to the retailer or their nominated agent.

Under federal laws to encourage renewables, electricity retailers must buy these certificates and surrender them to the regulator every quarter. (They can also buy “large-scale generation certificates” for big renewable projects).

Managing and trading the certificates is complex, so an industry of middlemen has sprung up. Most retailers use a registered agent, also known as a solar aggregator, which bundles the certificates together and sells them to the companies that need to buy them. The agents normally repay the retailers promptly.

Australia’s rooftop solar rollout is the most successful in the world, contributing more than 11 per cent of the nation’s total energy supply. In 2023, the solar certificates funded rebates for 330,000 systems across Australia.

The Clean Energy Regulator is involved only at the start and end of the process. It checks that the system installation, creation of the certificates and assignation to an agent has occurred correctly at one end, and that liable entities have surrendered the correct number of certificates at the other. Overseeing the part in the middle where retailers engage agents is, a spokesperson says, not the regulator’s job.

“The [regulator] understands and shares concern about the stress this causes small business, however the use of agents and any associated contractual matters, including those of [certificate] price and payment are outside the legislative remit of the [regulator],” the spokesperson says.

The spokesperson said the regulator had referred matters to the Australian Competition and Consumer Commission and various state and territory consumer authorities.

The collapse of Emerging Energy Solutions

The most dramatic event to rock the solar rebate scheme is the collapse of Melbourne-based aggregator Emerging Energy Solutions, trading as GROUPSOLARBUY.COM.AU.

The company went into liquidation in July owing $107.03 million to 256 trade creditors, including hundreds of solar retailers as well as big companies such as BP. The updated liquidators’ report dated October 23 shows creditors are owed from a few thousand dollars to millions.

The liquidators, Graeme Beattie and Matthew Kucianski at Worrells, identified links between the collapsed company and two other companies: Greenbot and NetZero Environmental Group. They were all agents trading solar certificates, and Greenbot also had a software platform used by other companies including Emerging Energy Solutions.

The reasons for the company’s failure, the liquidators’ report says, include “adverse legal action, lack of financial control/poor record keeping, unprofitable trading, and possible phoenix activity/disposition of assets”.

Emerging Energy Solutions was owned by a holding company that in turn was owned by two brothers, Mohammad and Ali Sayed, who were also employed by Emerging Energy Solutions. Mohammad Sayed is also a director of Greenbot.

The liquidators found Mohammad Sayed may have been a “shadow director” of Emerging Energy Solutions, meaning he was not formally a director but acted like one. The Sayed brothers have a claim for $383,103 in annual leave listed in the company debts and usually employees are treated as priority creditors, but the shadow directorship could exclude them from this benefit.

The liquidators also identified more than $18 million of the creditors’ claims are from Greenbot and NetZero Environmental Group, which they believe are related parties.

The liquidators’ report says the company’s business and assets, including millions of dollars’ worth of renewable certificates, may have been transferred to related parties, in what could be “illegal phoenix activity”.

The building at one of the addresses in Melbourne linked to the three solar aggregator firms named in the liquidators’ report. The address is also linked to HELLO SOLAR.Credit: Internet

The liquidators identified a significant number of transfers and payments to third parties that may be legally voidable. These included an unexplained one-off payment of $100,000 to Ali Sayed and $139.36 million in unknown payments.

The report says the Westpac overdraft facility for Emerging Energy Solutions had a debt of $4.48 million and this was transferred to NetZero Environmental Group upon the request of Ali Sayed.

The liquidators’ report says the sole director of NetZero Environmental Group is Ahmad Reshad Ali Ahmadi, who they believe was formerly employed by Emerging Energy Solutions. The liquidators also found the principal place of business for Emerging Energy Solutions was owned by two people with the surname Ahmadi, suggesting another possible link.

Beattie says he is trying to minimise the impact on smaller creditors by seeking funding from larger creditors to continue investigations, including public examinations of key players in court.

“I commonly see the stress and uncertainty caused by the failure of major companies on small creditors who are often family-owned small businesses,” Beattie says. “I empathise with all creditors.”

If creditor funding is not forthcoming, Beattie says, it would be up to the Australian Securities and Investments Commission to pursue the matter.

Greenbot’s suspension

Lee says she used Greenbot as her agent for years without any problems. When $40,311 was outstanding from Greenbot, the payments stopped and one day she logged onto the platform to find that the reseller was listed as NetZero Environmental Group instead. Then she was locked out.

Months later, Greenbot has not paid up. The cost of a lawsuit would probably exceed the debt.

The Clean Energy Regulator tried to suspend Greenbot from the scheme in June, but the Federal Court granted a stay and allowed it to continue operating from July to October pending an upcoming case. Greenbot could also seek a review of the suspension in the Administrative Review Tribunal.

Carolyn Lee, founder of The Energy Experts, believes the Clean Energy Regulator should do more.Credit: Rhett Wyman

Lee says the regulator was told of issues back in January, but took until May to investigate, exacerbating the damage to the industry. The regulator did not address this claim directly.

Greenbot, NetZero Environmental Group and Emerging Energy Solutions are facing multiple lawsuits from disgruntled retailers.Their collective market share fell to 1 per cent in September.

As well as the links identified by the liquidators’ report, ASIC records show the three companies share multiple current and former addresses, in both the CBD and suburbs of Melbourne. A fourth company, HELLO SOLAR, also has links to two of these addresses, and retailers are taking to social media to warn each other not to deal with this company.

NetZero Environmental Group and HELLO SOLAR are still registered agents, and the regulator said it could not comment on whether it was investigating.

Ali Sayed confirmed Mohammad was his brother and promised to respond to this masthead in writing but did not. None of the other companies or directors responded.

As Lee sees it, the viability of the solar industry is at stake, yet no one is taking responsibility: “If this isn’t addressed it leaves the whole system open to the same players or other players continuing to take advantage of what is effectively a loophole in the scheme.”

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