Rooftop solar is booming in Australia, but in the shadows of this billion-dollar industry are operators who appear to be taking advantage of a system where they can “print money” with little oversight.
Hundreds of solar installers have been left in the lurch by one company that went into liquidation owing nearly $90 million.
It’s not the customers — on whose roofs the solar panels are being installed — that owe the money.
It’s the middlemen who sit at the heart of the financial plumbing behind Australia’s flagship green power scheme — the renewable energy target (RET).
Operators say the industry is riddled with “cowboys” and is in desperate need of better regulation.
Matt Harold, who has been in the renewable energy business for more than a decade, spent the past year chasing a debt to save his livelihood.
He’s one of those owed money by Emerging Energy Solutions Group Pty Ltd (Emerging Energy), a company that trades in environmental markets.
“It was more than half of my annual profit,” he says.
“It was stressing me out, I was losing sleep.
“It was making me sick and I was letting a lot of people down, it was having a lot of personal effects in my life.”
Emerging Energy
Emerging Energy’s downfall came after it lost a court case with BP Energy Asia, which had called in a debt of $24 million.
It is now being investigated by the liquidator for possible phoenixing, which if proven would be a breach of corporations law.
In their first report to creditors, the liquidators said “initial investigations have revealed that the company’s business and assets may have been transferred to a related party”.
“We are presently undertaking investigations as to whether the transfer of the business and assets may have constituted illegal phoenix activity.”
In September the Clean Energy Regulator (CER) permanently suspended its registration, saying “it is satisfied that Emerging Energy is not a fit and proper person”.
Behind Emerging Energy, a complex web of shell companies and changing directors has been set up, in what’s known as “layering”.
Layering can have legitimate commercial uses, but it makes it difficult to track and trace who is involved in a company and where the money is going.
The ABC has traced the shell companies and directors of Emerging Energy and found related companies continue to operate and trade in environmental markets in the wake of the liquidation.
Solar installers claim one of those companies is targeting the customers owed money by Emerging Energy.
Printing money
The reason companies like Emerging Energy exist is Australia’s green energy target, which aims to increase the amount of renewable energy in the system.
When a household or business gets a solar system installed, it creates small-scale technology certificates, or STCs, which correspond to the amount of electricity it can produce.
Electricity retailers and big power users are required to buy a certain amount of these certificates every year.
Businesses like Matt Harold’s create these STCs and the amount they are worth is discounted from the solar installation cost.
If it sounds convoluted it is, but what it means in practice is cheaper solar.
Because creating, managing and selling these STCs to the large energy retailers is complicated, the solar businesses use aggregators like Emerging Energy.
These aggregators trade in STCs — a bit like the stock market for environmental certificates — with little regulatory oversight.
An estimated 33.6 million STCs are set to be created in 2024, according to the Clean Energy Regulator.
It’s a massive industry worth billions of dollars each year.
Jeff Bye, the owner and director of trading company Demand Manager, is owed about $4 million by Emerging Energy.
“We are involved in all these environmental certificates across Australia,” he says.
“The value of the market is always increasing, the volume of certificates that are being created and surrendered by liable parties generally increases each year.”
While the system has been successful in helping households and businesses put solar on their roofs, Bye says the lack of regulation is concerning.
“These agents, such as ourselves, that are creating these STCs and effectively becoming a channel of funds back to the installers and the customers,” he says.
“There is very little to no regulation of the financial capacity of those organisations.
“You could, quite literally start a business tomorrow with $1 in equity, become an agent under the STC regime, under the Renewable Energy Target, and start creating these STCs.”
‘The debt kept growing’
Matt Harold says he had been trading about $1 million worth of certificates every year with Emerging Energy.
But about two years ago, he says, the payments started to slow down.
“But you know, you’d upload $10,000 worth of STCs, and they were kind of paying $7,000 or $8,000 every week.
“That debt just kept growing and growing and growing.”
After Mr Harold stopped trading with Emerging Energy, he says they went completely cold — no callbacks, no payments. Nothing.
Other installers have told the ABC a similar story, saying Emerging Energy asked them to keep trading new jobs with them in order to be paid for previous ones. As soon as they stopped, all payments ceased.
Jumping ship
Before Emerging Energy went into liquidation, it began moving its customers over to other companies.
Emails to Jeff Bye in August last year show the company asked him to move his forward contracts from Emerging Energy over to a related company called Greenbot — the app used to create and trade STCs.
“We inquired as to the reasons and sought assurance that the companies involved had the financial wherewithal,” he says.
“But unfortunately, they weren’t forthcoming in any information and we didn’t end up novating the contracts.
“But that was the first red flag.”
ASIC documents show Greenbot and the company that owns Emerging Energy share an address. The ownership of Emerging Energy was changed before it went into liquidation, but the previous owner is the same person as the director of Greenbot.
The regulator suspended Greenbot from trading back in June, but the Federal Court issued a stay, meaning it could continue to operate while the court reviewed the matter.
“The Court’s order means that Greenbot will be allowed to create certificates in the Small-scale Renewable Energy Scheme and to participate in the SPV [Solar Panel Validation] Initiative while the court is reviewing the matter,” the Clean Energy Regulator said in a statement.
“We cannot discuss this matter further as it is currently before the courts.”
Other emails from Emerging Energy to a solar installer in October last year show the company was moving other customers and assets over to another related company called Net Zero Environmental.
Emerging Energy told its customers this was due to a “rebranding”.
“The technical issue arose during the data migration process associated with our rebranding and transition to Net Zero Environmental,” the email says.
“We immediately took action and collaborated closely with the CER to identify and rectify the issue. We are pleased to inform you that the CER has committed to clearing the backlog of pending jobs, and we anticipate a return to normal processing times in the coming days and weeks.”
Meanwhile, another related company called Hello Renewable Trading or Hello Solar, has been attempting to sign up those stung by Emerging Energy.
They have approached many of Emerging Energy’s former customers hoping to sign them up through the Greenbot app, denying they have anything to do with each other.
But ASIC documents show Emerging Energy and Hello Solar share an address.
And while the directors’ names have recently been changed in both companies, the former directors of the companies are also related.
A few weeks after Emerging Energy went into liquidation, Matt Harold was cold-called by a representative from Hello Renewable Trading, who he suspects had his contact details through Emerging Energy.
“[She] was very friendly, and said, look, we’re new on the market,” he says.
“[She said] … we understand that there’s been a few issues with STC traders, and we’re here to be better than everybody else, and we’re going to offer better pricing than everybody else.”
But Matt started to become suspicious when the representative pushed him to sign up, enticing him with making money on some of his bigger jobs.
“That sounded a little bit suspect to me,” he says.
“When I saw the email … that it was sign up at greenbot.com.au, which is owned by Emerging Energy, I straight away warned everybody.”
‘Cowboys’
While rooftop solar has been a massive success story in Australia, the billions flowing through the industry has created opportunities for exploitation from the start, according to Jeff Bye.
“Over the last 20 years of these schemes being in existence, there’s been a continual array of dodgy installers and cowboys that have come in at the installer level,” he says.
“I think what we’re seeing now is those cowboys coming in at the certificate creation level, and it’s a much more serious thing there because ultimately, what we are given by governments … is the ability to print money.
“And unfortunately, I don’t think that the current legislation and regulations match that.”
Carolyn Lee is from the NSW town of Kiama. She owns one of the hundreds of small businesses owed money by Emerging Energy and its related companies.
“Solar installers are pissed off. We’re incredibly frustrated. We’re angry,” she says.
“We feel deceived by these companies, and we feel really let down by the Clean Energy Regulator and by the federal energy minister.
“It seems like an example of yet another government-run initiative that’s been really poorly managed.”
Regulation, or lack thereof
It’s not the first time Emerging Energy has been in trouble with the Clean Energy Regulator (CER).
In 2017, the regulator found Emerging Energy had improperly created STCs based on false information provided to them by third parties.
But the CER says it has no power to ensure legitimate certificates are paid for.
“We understand and share concerns regarding the impact on small solar PV businesses when agents do the wrong thing,” a CER spokesperson said in a statement to the ABC.
“Despite it being out of our legislative remit to assist with matters of non-payment, we have been helping those owed money by referrals to relevant agencies and providing as much information as possible on the status of small-scale technology certificates (STCs) for which payment is owed.”
But solar installers like Matt Harold feel the regulator and the government should be doing more to help.
“We called them [the CER], we rang them, we warned them, we did everything, to which their only comment was get legal advice. It’s not our problem,” he says.
“You’re just coming back to little companies like us … with tens of thousands of dollars in legal bills.
“I would have thought they should hold some sort of responsibility. I mean no Joe Blow should be able to trade government rebates.”
Jeff Bye believes there are some simple solutions that could be implemented, including financial accreditation.
“Ultimately, this is about the fiduciary responsibility of companies to manage other people’s money,” he says.
“I should be accredited via an Australian Financial Services License (AFSL) to make sure that I have the capacity to manage that.”
Of the six environmental trading certificates in Australia, only one is covered by the AFSL regime, Australian Carbon Credit Units, or ACCUs.
“I believe strongly that the governments around Australia should nominate all of these environmental certificates to be financial products and thus covered by an AFSL,” Mr Bye says.
He also says there needs to be more transparency after certificates are created about who has bought and sold them, so that individual installers can see what’s happened with their job.
“From what I’m hearing, it looks like a lot of the certificates flowed through multiple entities that are all related,” he says.
“I know that some installers are concerned. They think they may have a case against these other entities, but they can’t confirm it because they can’t access the information.”
The ABC has approached the companies and directors involved but did not receive a response prior to publication.
In a statement, a spokesperson for the Department of Climate Change, Energy, the Environment and Water said the government expects all agents in the market to pay solar retailers properly.
“In 2024 the three affected entities Emerging Energy Solutions Group, Greenbot and NetZero currently make up approximately 4 per cent of the market share. This has continued to decline and they now make up less than 1 per cent market share for the month of September 2024,” the statement said.
“The government is aware of the administration of Emerging Energy Solutions Group which ceased trading STCs causing some issues with non-payment to installers or solar retailers.
“The government is not able to comment on specific details of the liquidation of Emerging Energy Solutions Group or activities of related entities as there are current court proceedings and ongoing compliance activities.”
Riding the ‘solar coaster’
It’s an added stress on the hundreds of small businesses across the country in an already turbulent industry.
“We call it the solar coaster. It’s quite lumpy,” Carolyn Lee says.
“It can be fabulous, and then it can be really quiet, depending on what’s happening in the economy and with the weather and all sorts of things.”
Ms Lee’s solar business in Kiama is owed about $40,000.
While it’s a lot of money for her small business, she believes she can weather the storm.
“We just don’t feel like we should have to because we’re owed that money,” she says.
And she fears for those who won’t be able to survive.
“I think it will really adversely affect some companies, it may force them to close if they’re owed a lot of money,” she says.
“People could potentially lose their livelihoods because of mismanagement of this government-run scheme.”