Ross Garnaut-backed Zen Energy targets tenfold increase in its power sold into the grid

Zen Energy has set a massive growth target to meet demand from big customers for renewables.

Zen Energy has a 10-year deal with ACCIONA Energía’s Waubra wind farm, near Ballarat in Victoria.

The Ross Garnaut-backed Zen Energy plans to lift its share of energy sold in Australia’s grid tenfold by 2025 to capitalise on demand from commercial customers for renewables.

Zen, which buys energy from 17 wind and solar farms around Australia, was originally part of a joint venture with industrialist Sanjeev Gupta’s SIMEC,agreed to in 2017. However, the deal was dissolved in 2020, with Zen split off so it could focus on building up its retail business.

Zen – which counts the South Australian government and a consortium of big industrial players in the state as customers – has now set an internal target to expand the amount of energy sold to 10 terawatt hours of electricity by 2025, from 1TWh currently. That would mean moving to a 5 per cent market share from just over 0.5 per cent currently.

“There are a large number of customers currently supplied by coal and gas who won’t be in 10 years’ time,” Zen chief executive Anthony Garnaut said. “That’s the opportunity.”

Zen Energy chairman Professor Ross Garnaut. Picture: Peter Wallis

The South Australian power retailer has pledged net zero scope 1 and 2 greenhouse gas emissions by the end of 2023 and scope 3 emissions of its customers in line with Paris goals of limiting temperature rises to 1.5 degrees.

To meet demand, it plans to build on a string of recent offtake deals, which have included a 10-year supply deal with Acciona’s Waubra wind farm in Victoria and a pact with CSIRO.

It estimates the cost of power purchase agreements where renewables are backed up by storage at about $100 per megawatt hour, still well below soaring wholesale prices which have set new records over winter. Alinta Energy chief executive Jeff Dimery predicted last week that power prices would increase by at least 35 per cent in 2023, a cost jump the Zen chief fears could be repeated again the following year.

“We are looking at prices going up by 60 to 100 per cent from a 2021 baseline,” Mr Garnaut said. “Wholesale prices have been at that $200-plus a megawatt hour level since May, which is four times what they were a year ago in NSW.”

The Australian Energy Regulator has warned prices are set to remain high for years, driven by elevated fuel costs, coal station closures and a looming gas shortfall on the east coast.

Spot prices for east coast gas and electricity markets soared in the June quarter, hitting fresh records in the first two months of winter, with the Ukraine war pushing international coal and gas prices up while a shortage of the two fossil fuels at home meant domestic generators offered less energy to the market.

The Australian Energy Market Operator, which runs the ­national electricity network, said the country was undergoing a “complex, rapid and irreversible” change to its energy system that would need a nine-fold increase in wind and solar capacity by 2050 to meet targets.