In just the last year, Verdia – a Sydney-based company that delivers “end-to-end” sustainable energy solutions for big commercial industry and government – has more than doubled its full-time staff and grown its customers and projects 500 per cent, chief executive Paul Peters says, with much of the demand due to electricity price spikes.
What’s unique about Verdia, he says, is an arrangement with Westpac, both in terms of finding or being referred customers, and providing cheaper finance for those customers, thanks to a financing deal with the Clean Energy Finance Corporation.
“We go to market together [with Westpac] and help them deliver big projects,” he says.
Before launching in 2016, Peters, who was previously a senior partner at Deloitte, and his co-founder Frank Paduch, who was previously head of group strategy for Westpac, researched the solar market for 18 months.
“We were setting up for big commercial industry, government, health, infrastructure – anything but a house. It only became really interesting at scale in the last 18 to 24 months.”
The company, he says, is working with 35 of Australia’s 250 largest energy users (companies worth $500 million and above) and hundreds of the 2500 medium (from $50 million to $500 million) energy users.
There are more than 50 full-time employees – among them engineers, project managers, design engineers and subject matter experts, in areas such as batteries/storage or solar, and new staff are coming on board all the time. There are also hundreds of contractors Australia-wide.
Verdia concentrates on four sectors – property (such as Stockland, which has Australia’s largest rooftop solar program, at 10 of its shopping centres), agribusiness, manufacturing and industry, and education and aged care (there’s currently a rollout on 125 aged care sites). They also work with 200 private schools and in Queensland, Peters says, state schools are starting to invest in solar too.
The aim is to “make large projects simple”, providing a complete solution to clients that don’t have in-house teams, and that may lack the confidence to choose providers in a fragmented market. The company scopes, designs and rolls out an energy efficiency plan for each business.
Often there are issues with risk and financing, so Verdia’s due diligence program vets vendors, equipment and proposed projects, while Westpac will provide businesses “with tailored financial solutions” for energy saving projects, typically including solar PV, LED lighting, HVAC, power factor correction, biogas, batteries, building monitoring systems, irrigation and other equipment that reduces energy use.
Westpac’s Energy Efficient Finance Program is supported by $200 million of funding from the Clean Energy Finance Corporation, which allows it to offer finance at a discounted rate.
Aside from solar and onsite energy storage, Verdia does large scale retrofits, for example, businesses with tens of thousands of lights.
“The economics are so compelling. If they haven’t upgraded, they can save up to 20 per cent of electricity by retrofitting lights.”
Big driver is electricity price spike
The driver behind this all, Peters says, is disruption in the electricity sector and the top 250 being hit with a 100 per cent increases for electricity.
The spike started in September 2016 in South Australia with the closure of two very large power stations, spread in October through March 2017 to the east coast, and then things speeded up with the announcement of the closure of Hazelwood power station, the largest in Victoria, in March 2017.
“The east coast is seeing the greatest rise… because of the rise in the electricity costs, which is everywhere except WA. When Hazelwood was announced, with just one power station shutting, the wholesale market doubled.
“The market is great and [grid electricity] is not going to get cheap soon. Our model works where customers are saying, ‘I need significant capacity.’ We find it and see it through.
Number of companies investing in solar doubling every year
Large corporations investing in solar are more than doubling every year, and for those that run out of roof or land on their site, there are power purchase agreements (PPAs), through which they can buy directly from a solar or wind farm.”
Peters says Australia is the beginning of a wave. Business and government will spend between $20-40 billion on solar, storage and other energy projects in the next decade.
“It’s exciting because it used to be lots of people doing pilot projects for sustainability; now it’s about economics, and $20 or $30 million projects are happening.
“Two years ago, a large project was $1 million, now Stockland was $23 million. This is the trend – we have passed the point where it’s no longer just people piloting things; large customers are starting to do this at scale.”
Along with the rise in electricity prices, another factor has been climate, with many more days hitting 40 degrees and the need for energy security.
“All the projects we are working on are lower cost, cleaner and secure because they are not relying on a power station thousands of kilometres away which could turn off any moment on a hot day.”