Energy retailing upstarts say they have welcomed hundreds of former Powershop customers deterred by the company’s planned acquisition by Shell, targeting a market they hope will change how electricity is produced and consumed in Australia.
Oil and gas giant Shell last month revealed plans to acquire energy retailer Powershop, and its parent company, renewable energy group Meridian Energy, in a partnership with Infrastructure Capital Group.
The move marks Shell’s latest foray into the consumer electricity market, as the company seeks to diversify its assets — and comply with a Dutch court ruling ordering Shell to accelerate its global emission reduction plan.
Shell said the deal is part of its plan to build a “clean energy business” in Australia, leaning on Powershop’s green credentials.
But many Powershop customers expressed their concern over its acquisition by a major global emitter, given Meridian Energy’s billing as a “100% renewable energy company”, and Powershop’s pledge to offset all the carbon emissions caused by customer energy use.
In the days after the announcement, Amber Electric, a Powershop competitor, took out a full-page ad in the Saturday Age lamenting Powershop’s acquisition.
The retailer also offered to sign-on promotion for new customers transferring from Powershop, granting $100 to a non-government organisation of their choosing.
That aggressive marketing strategy has resulted in some 700 new sign-ups, said Amber Electric co-founder Dan Adams.
“More than 75% of our customers have come from Powershop over the last week,” Adams told Business Insider Australia.
Enova Community Energy, a retailer operating in New South Wales and south-east Queensland, has faced a “flurry” of new customers after the Powershop news, according to CEO Felicity Stening.
Like Amber Electic, Enova Community Energy launched its own sign-up bonus campaign for disaffected Powershop users.
“Often people are annoyed if the business that they are with is sold, or bought by someone that is not value-aligned,” she said.
“But in this case, we’re actually seeing people take action.”
New approaches to green power
Beyond simply joining another ‘green’ retailer which commits to carbon offsets, the fresh sign-ups suggest power users are also interested in new ways to consume electricity, Adams said.
Unlike traditional retailers, which buy power from the grid at wholesale rates and provide it to customers for a premium, Amber Electric charges customers a flat monthly fee. Consumers then pay for the energy they use at wholesale market rates.
Adams said the system encourages users to use less power when wholesale prices are high, and more when they are low — particularly at periods when renewable power generation hits the grid.
When paired with battery storage technology, Adams said this kind of energy usage could encourage investment in renewable power generation.
“The fastest way to make that [green transition] happen is to empower our customers to actually use more, cheaper renewable power when it’s available in the grid,” he said.
While Amber Electric hopes customer demand will increase investment in large-scale wind and solar power projects, Enova Community Energy operates differently.
It uses electricity generated by users’ own solar panels, and from Diamond Energy’s various renewable power generation sites.
Stening touted the organisation as community owned — a model she believes could steer Australian power generation towards more local and distributed sources.
“We recognise that there needs to be large scale renewables,” she said. “But there also can be, and needs to be, in our view, neighbourhood and street storage systems.”
Fresh solutions meet familiar problems
While retailers like Amber Electric and Enova Community Energy have positioned themselves as alternatives to the major providers, they face the same economic realities as their competitors.
Amber Electric is backed by Commonwealth Bank — whose board this year rejected shareholder pressure to end the financing of new fossil fuel projects.
Assistance from one of Australia’s largest banks will help Amber Electric reach its lofty goal of signing up one million users, Adams said.
Stening also recognised that solar panels and battery storage systems are unobtainable for many Australians, who may not be able to afford the upfront costs, or who rent the property they live in.
Renewable energy use is rising, and is projected to carve $77 away from the average power bill by 2024, but climate-focused retailers like Powershop, Amber Electric, and Enova Community Energy still serve a tiny fraction of Australian households.
The latest Victorian Energy Market Report, released Tuesday, showed Powershop commanded a 3% of the residential energy consumption market in June this year. By comparison, AGL held a 23% share.
Adams and Stening say consumers just need to know what’s possible — and Shell’s planned Powershop acquisition has shone a light on those alternatives.
“People are frustrated with lack of ambition from our leaders and they looking for ways to have a positive impact themselves,” Adams said.
“We’ve all got the power in our own hands to make better choices,” Stening added.