How SolarZero turned out to be a live wire

When the world’s largest investor bought out SolarZero, and other global financiers came on board alongside a government green bank to help it grow, its future seemed secure.
But two weeks ago, the New Zealand start-up was put into liquidation by its directors and staff were given the shock news to leave immediately.
Now under scrutiny by the finance minister is the Government’s Green Investment Finance (NZGIF) which has poured $150 million in taxpayer funds into the kit, including solar panels and batteries installed in customers’ homes, free of charge, under a monthly subscription model.
“I don’t see that that money’s going to come back to the Government,” says Newsroom Pro managing editor Jonathan Milne.
SolarZero was founded in the 1970s as Thermocell, a solar water heating company, but it evolved to become the country’s first solar subscription service.
It’s chief executive Matt Ward told The Detail in May that its subscriptions were increasing by 50 percent annually with customers attracted by the prospect of saving hundreds of dollars each year without paying a dollar.
At the time he said the model of SolarZero owning the kit, maintaining it and changing the battery “almost sounds too good to be true. But it is a business model that has been employed through Scandinavia and round the world, because it has the consumer at the heart of it”.
That model attracted the multi-trillion-dollar private equity investor BlackRock to acquire SolarZero outright two years ago, says NBR co-editor Hamish McNicol.
“They were talking up ‘We’re going to invest $100m in this business, we’re going to grow it from what was at the time 8500 customers to more than 100,000 customers. We’re also going to take this outside of New Zealand, we’re going to grow the model overseas, take it elsewhere’,” says McNicol.
At the same time, BlackRock set up a $2 billion climate fund with plans to grow to more than $10b, and has since opened an Auckland office, indicating it was here for the long haul.
Meanwhile, just a couple of months ago a $170m debt facility that finances the SolarZero equipment was topped up to $365m, including $145m from the Government’s green bank, Green Investment Finance, and several big international banks.
“Given that context for the company a couple of months later quietly on a Tuesday night to say ‘Oh actually we’re not making any money, we’re pulling the pin, 170 staff lose their jobs a couple of weeks before Christmas’ – it came out of nowhere,” says McNichol.
Milne says there were warning signs several months ago, at the same time that Matt Ward was talking up SolarZero.
“Even at the time they were laying off about 50 staff in April and even at the time when staff were seeing senior members of management arguing with each other, raised voices in front of the staff. Even then he continued to insist that everything was going well,” says Milne.
By then, the firm was falling well short of customer growth projections. BlackRock was not happy and the company came under scrutiny in the past few months.
Milne starting looking into the amount of public money that could be jeopardised by the collapse and found a lack of transparency by NZGIF.
“I suspect that’s one of the reasons that Nicola Willis and Simon Watts, the climate minister, have been so concerned about their performance in this,” he says.
“The question that I’m left with is, were they not doing sufficient scrutiny, were they not monitoring the money they’d lent to SolarZero or are they being a little bit disingenuous about what they knew and when they knew it.”
BusinessDesk news editor and SolarZero customer Ian Llewellyn says the firm’s backers and the new owner made it look very credible.
“I still think its a credible model, we just don’t know quite what’s gone wrong.”
He signed up in September but not before he did some serious due diligence.
“I quizzed the CEO,” he says.
“I was fascinated by their model. There were two things they had going for it, one was BlackRock, one of the world’s biggest investment managers backing it and putting money into it, and they also had a line of finance from the New Zealand Green Investment Fund.”
Llewellyn’s not worried about losing the solar panels. He’s more concerned about finding out more about BlackRock’s bombshell. So far the directors are not talking.
In a written statement it said it no longer believed SolarZero was a viable business.
“They would no longer put money in and they called in the liquidators, which is tragic for everybody involved.”
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