Key points:
- Shell announced it was buying Powershop in late November
- Data given to the ABC shows Powershop has likely lost 6,000 customers since then to its competitors
- Customers are angry about a small ‘clean’ energy retailer being bought by an oil and gas conglomerate
Thousands of Australians are cutting ties with an energy retailer that sold itself on its clean and green credentials after it announced it was being bought by Shell.
The Anglo-Dutch multinational oil and gas company announced in November that it was buying Powershop for an undisclosed price.
The ABC has since gathered data from Powershop’s competitors that indicates it has likely lost at least 6,000 customers following the announcement.
Claire Harvey is one of the people who ditched Powershop after having it as her energy retailer for a decade.
“When I heard about the purchase by Shell, I was frustrated and sad,” she says.
“Shell is still in the fossil fuels and oil business.
“I know they’re trying to branch out and transition into a greener, cleaner future. But they’re still in that space.”
The councillor on Frankston City Council near Melbourne has since switched over to a small cooperative that on-sells energy provided by another company.
Why is Shell buying Powershop?
Shell noted in its announcement that the acquisition of Powershop was part of its move into providing energy to Australian homes.
Shell doesn’t currently sell power directly to Australian households. Its core business for years globally has been in producing and selling oil and gas.
“Our aim is to become a leading provider of clean power-as-a-service and this acquisition broadens our customer portfolio in Australia to include households,” Shell’s representative Elisabeth Brinton says in a statement.
Powershop operates across Australia, New Zealand and the UK, and is currently owned by New Zealand’s Meridian Group. In a complex arrangement, Meridian is also partially owned by the NZ government.
The looming sale – which is subject to regulatory approvals – will see Meridian Group’s Australian arm entirely sold off.
As well as Powershop, Meridian’s Australian wind farm and hydro projects are being bought by Infrastructure Capital Group as part of a consortium deal with Shell.
How green is Powershop?
Powershop was founded in 2007 and has since built up 185,000 customers in Australia.
It credentials in the renewable energy space included being Climate Active Certified.
That is a standard certified by the Australian Government that shows when a company is guaranteed as being carbon neutral. That’s usually achieved by a company buying carbon credits to offset emissions.
Victoria University energy economist and the director of the Victoria Energy Policy Centre, Bruce Mountain, says this is usually the way energy providers in Australia can claim to provide customers with greener energy.
That’s because most of the power they’re providing to customers is coming off the national grid – and the power circulating on that is always a mixture of renewable and non-renewable sources.
“Green power is essentially an offset scheme,” Professor Mountain says.
“Many of these (small operators) really want to make a difference and they’re not in it for the buck.”
As well as being Climate Active Certified, Powershop’s website also notes that its head company invests in renewable energy projects including wind and hydro.
Professor Mountain says this is another way that energy providers boost their green credentials.
Whether this achieves much, he says, comes down to if the energy provider is actually investing in new renewable projects that boost the grid’s overall renewable capacity, or investing in existing ones. He’s cynical about the latter’s benefits.
Powershop’s website notes all of this complexity.
“Because of the nature of how electricity is provided to homes and businesses across Australia, no-one can guarantee where the electricity at your power point has come from,” it says.
“So we double down by making sure that any potential carbon produced in the making of our customers’ energy is offset by the planting of trees and other green initiatives around the world, all accredited by the UN and at zero additional cost to our customers.”
Customers leaving Powershop due to Shell
Powershop’s reach was boosted by affiliations with several organisations, including GetUp and Environment Victoria, which encouraged their members to sign up to the energy provider. They also got a commission for doing this.
Both have since blasted the Shell deal.
In a email to members, Environment Victoria described the announcement as a “sudden and extremely disappointing” move that “changes everything”.
“(Powershop) will now be owned by one of the world’s biggest climate wreckers.
“While we appreciate the dedication of the terrific staff at Powershop – and recognise that many of them will be just as disappointed by this announcement as we are – we have chosen to terminate our agreement.”
GetUp has also been running a campaign on its website encouraging Powershop customers to switch to other providers.
And it appears this vocal outcry is having some impact.
The ABC approached a range of Powershop’s competitors and all reported a surge in customer enquiries in recent weeks from people making the switch since the Shell announcement.
Cooperative Power – the small operation that Claire Harvey went over to this week – has just had the biggest customer surge in its history.
It’s gone from a humble 200 customers to more than 2,000.
“We’ve had plus just a bit over 1,750 people switch over,” co-founder Godfrey Moase says.
“It’s been really great and really positive. But very tiring with an unexpected surge of traffic and switch on requests.”
The co-operative on-sells power for EnergyLocals, and takes a $50 fee for doing this.
It uses this $50 fee to reinvest in community projects including supporting unions, workers who lose their jobs and renewable energy projects.
Godfrey and the rest of its small team do this as volunteers in a “labour of love”.
Other energy retailers are seeing an influx too
Like Powershop, EnergyLocal’s clean credentials come down to offsetting carbon and investing in renewable energy.
Chief executive Adrian Merrick says they’ve had 1,400 new customers sign up to them since the Powershop announcement.
That’s a 14 per cent rise in its usual customer sign up rate.
“At one point, it was insane, the level of interest,” Adrian says.
“The speed and volume of this reaction has taken us by surprise.”
The company gets notes from customers when they switch over, and Adrian says the absolute bulk of them in recent weeks have been from ex-Powershop customers with scathing comments.
“Powershop is still being mentioned very strongly,” he says.
Another Powershop competitor, Amber confirmed it has signed up 1,000 customers from Powershop, while rival Enova has seen 700 convert.
Energy retailer Diamond also estimates it has converted 1,000 customers since late November.
“We would like to think this will inspire more companies and more people to move to smarter, newer and green electricity retailers,” Diamond’s executive chairman Tony Sennitt says.
All up this totals at least 6,000 customers that have likely left Powershop.
The ABC approached Powershop about the exact number of customers it has lost and whether it expected this to impact the deal with Shell.
In a response, a spokesperson for its owner Meridian said it couldn’t comment on the deal.
“However, the Powershop team are busy supporting their customers and will continue to provide the high levels of interaction and service that they always have during the transition,” they said.
“It is natural that some customers want to understand how and whether they can expect ongoing support as ownership changes and we are working with those customers.”
Experts unsure if Powershop rage will continue
The Powershop deal is still subject to regulatory approvals.
How much Shell is paying has not been revealed – but it’s unlikely to be a huge amount for such a big multinational.
“This is actually fairly small change for Shell,” EnergyLocal’s Adrian Merrick says.
“I can understand why Shell is buying its way into the energy market.
“Strategically this is really important. I think the choice of Powershop is interesting given it was a very green customer base who’d naturally feel a little strange that the new owner is now an organisation that’s not 100 per cent renewable.
“We’ve seen customers react to that news. The reaction has been somewhat predictable. It would be interesting how much reaction Shell expected.
“Shell can absolutely weather it. They could buy those customer (numbers) back and they probably will.
“Their concern would come if the deal goes through and then they write to people saying they’re the new owner, we’ll see another uptick again, and then it’ll die down. There’s a lot of apathy in the market.”
Shell didn’t respond to questions by the ABC about what regulatory approvals were needed and if it was concerned about the reaction by Powershop’s customers.
‘Mixed feelings’ about Shell buyout
Energy economist Bruce Mountain is one of many that’s been following the Powershop debate since news broke of Shell’s acquisition.
“It has captured so much discussion. I actually have found it quite incredible,” he says.
He says he’s got “mixed feelings” about it all.
“(Shell) has got a huge balance sheet and I think they can make a big difference,” he says.
As well as making a move on Powershop, in Australia Shell has already invested in home battery storage company Sonnen, carbon farming specialist Select Carbon, a solar farm, commercial energy retailer ERM Power, and solar developer ESCO Pacific.
It also just announced a deal with BlueScope for a so-called “green” hydrogen plant in NSW.
That means it’s getting harder for environmentally conscious renewable energy consumers to avoid Shell.
Bruce believes that a loss of 6,000 customers will be an easy write-off for the multinational and that most Powershop customers won’t make a switch.
“Switching is difficult. It’s a sticky market overall,” he says.
“I think many customers will kind of probably have a sense of things the same way I have and be a little bit skeptical of it overall, but then think, it’s better the devil you know, and can I really do better?”
For her part, Claire Harvey doesn’t agree.
She believes Shell is trying to “buy green credentials” and that it’s important for consumers to stand up against this in whatever way.
“Some of us are idealists,” she says.
“It reminds me of a chocolate company that might have one product line that’s ethical, and the rest of your chocolate involves slave labour.
“I’m looking for a greater degree of integrity across the whole company, which is hard with a multinational.”
Extracted from ABC