SACOME awards long-term supply contract to GFG Alliance

GFG Alliance's Sanjeev Gupta and SACOME CEO Rebecca Knol

The South Australian Chamber of Mines and Energy (SACOME) has awarded an eight-year supply contract to renewable energy retailer SIMEC ZEN Energy, part of GFG Alliance.

The contract represents a successful outcome for the bulk-buying consortium formed by SACOME in 2016.

The consortium arose out of discussions among SACOME members on how to respond to the doubling in electricity costs experienced after the closure of the Northern Power Station.

The ACCC authorised the group to go to market to find a more competitive supplier of electricity.

“We did this because, as a group, they had a better chance of securing supply from a new source of generation that would bring new competition to the market,” ACCC chair Rod Sims said.

“New independent generation capacity is critical to improving competition and helping bring down electricity prices.”

SIMEC ZEN Energy chairman Sanjeev Gupta said the outcome demonstrates what can be achieved when businesses decide as a collective the status quo is not acceptable.

“Ultimately, what is needed to fix the energy market in this state is more competition in wholesale generation and retailing – this result delivers both,” he said.

“While delivering SACOME members with electricity at a price below what could be achieved through a standard market tender, this contract also allows SIMEC ZEN Energy to fast track plans to replace the capacity lost when the Northern Power Station closed two years ago.

“This capacity will be a mix of generation assets suited to the new energy landscape, such as the Cultana solar power station and our other projects in the Upper Spencer Gulf.”

Mr Gupta said the deal proves renewables are the future of energy in South Australia.

“Although this initial contract may not seem overly significant in its own right, it is a hugely important step that marks the turning of the tide,” he said.

“It’s not only a disruption to the market by slashing prices and for the first time providing a long-term pricing mechanism to all sizes of buyers, it’s also proving that renewables are the future of energy in South Australia.

“I would like to sincerely thank the ACCC’s Rod Sims for his efforts in this initiative.

“Through his work with SACOME, he’s demonstrated the vital role of the ACCC in promoting competitive disruption in the Australian market – it’s enabled new competitive forces to come into play and start the disruption of the exorbitantly-priced Australian energy market.”

SACOME CEO Rebecca Knol said the “cross-sectoral collaboration” has delivered affordable power to some of South Australia’s largest energy users and underpinned the development of new supply for the benefit of state.

“Following the ACCC’s green light in May 2017, SACOME’s flagship joint-purchasing electricity group banded together to leverage their strength in numbers and bring down electricity prices for their businesses,” Ms Knol said.

“The group’s approach to this complex commercial negotiation in a fast-changing electricity environment has been inspirational.

“The outcome is a credit to the stamina and commitment of our participating members who represent a diverse slice of South Australian business.”