In June this year, a decade-and-a-half after founding Zen Energy, Richard Turner stepped away from the company that pioneered the solar battery home energy industry in Australia.
Sanjeev Gupta’s GFG Alliance – through its energy division, SIMEC Energy – had acquired a majority stake in the company in 2017 and the layers of corporate management didn’t really suit Turner.
He’s one of the state’s most successful serial entrepreneurs, now turning his attention to educating the next generation of company founders.
But stepping away from daily involvement in the South Australian renewable energy industry (he remains a major shareholder in Zen) hasn’t dimmed Turner’s enthusiasm for its extraordinary potential.
With an array of renewable projects in the pipeline threatening to inject competition into the highly concentrated energy industry here, it’s a short logical step for Turner to see South Australia, with the world’s most plentiful renewable resources, becoming the “Middle East of the New World”.
And if we can get cheap energy, Turner says, it’s only one more short logical step to a new national commodity-refining and manufacturing economy.
InDaily: What do South Australian businesspeople need to know about renewable energy?
It’s probably the greatest economic opportunity that this state’s ever going to have.
We’ve simply got the very best renewable energy resource in the world. So it’s just something that businesses need to be backing. It’s such an old, embedded, complicated industry. And people just, by default, stay – a bit like mobile phones – stay with their current providers. But it’s going to be cheaper – long-term – to transition to renewables.
Under the old fossil fuel regime, we didn’t fare so well in this state. We had the lowest quality reserves of coal and gas. As we transition to renewables, we go from the bottom of the table economically to the top of the table. And with opportunities emerging like the interconnector to New South Wales, we can export excess power to the eastern states.
There’s talk now of exporting power on a direct cable link to or line link to Indonesia, Singapore. There are just massive economic opportunities that the state will suddenly have going forward.
What gives South Australia such an advantage in this space?
We have these diurnal wind patterns coming across the Great Australian Bight and we have amongst the best solar in the country. Yes, other states have got some solar but they don’t have the wind and they don’t have the geology that we’ve got. Even our wave and tidal resources – we know that half of the average demand for energy can be drawn from tidal energy.
One of the best tidal resources in the world is our Backstairs Passage where we can produce about 700 megawatts of power, which is about half our state’s average demand.
Now it’s down the cost curve a bit: it’s not as economic as solar or wind, but in years to come, the reserve is there. We’ve just got all these unique assets here.
A lot of new renewables projects have been announced during the past several years but we’re yet to see a lot of finished projects. Why is that?
Yeah, and very few of the announcements will actually turn into projects because they’ve got to get security of off-take of their power. They’ve got to actually get people to buy the power.
So we’ve got to get commercial businesses and industrial customers – the biggest energy consumers to start with – to start transitioning and moving away from the incumbents. We’ve got to fire up competition that will then, in turn, translate to building new power generation, new low-cost power generation. And that will change the scene in South Australia dramatically because we’ve got the best potential to build low-cost power here.
We’re in transition. We’ve got to build these new plants to get the full impact economic impact and that’s still a couple of years away.
How do you see these projects changing South Australia’s economic outlook?
We mine a lot of minerals here but we don’t refine minerals because refining is a very heavy, energy-intensive thing to do.
Grinding rocks down is very energy-intensive – but we’ve got some of the best graphite reserves in the world here and lithium, and rare earths. Graphite makes up 30 per cent of the weight of lithium-ion batteries, too. But they take a very refined form of graphite so that’s a lot of energy.
So if we’ve got low-cost energy, we can mine and refine elements like graphite and lithium which means we can start manufacturing car batteries here. We should be talking to the likes of the LGs and the Samsungs of the world and get them to set up operations here. If we can get a supply chain here and we have the raw minerals and the ability for low-cost energy to refine those products, that would be fantastic.
Silicon for solar panels… we have some of the best clean silicon reserves in the world here but again we send it overseas because we haven’t got the low-cost electricity here. If we have low-cost electricity here, we could refine that silicon and start manufacturing solar panels here.
And hydrogen… you produce it by running electricity through water. So if you’ve got low-cost electricity to produce clean hydrogen, we’re in the box seat to produce the lowest cost hydrogen, which will be the fuel that will replace gas.
If we can be the world leader in producing hydrogen, that puts us in the position of possibly becoming the Middle East of the New World – which is remarkable.
What will be the role of coal and gas?
Our major coal power plants (in Australia) are 40 years old, or thereabouts, so there’s not much life left in them.
We have a great solar and wind resources here, but they are intermittent, and you’ve got gaps in the supply. Those gaps initially will be filled by the old coal technology – coal or gas – for the next two or three years. Going forward, it’ll be technologies more like pumped hydro.
Will renewable energy be a big job provider for SA?
The first question we get asked when they’re building a solar farm or a big battery, or whatever, is how many jobs is it going to generate.
Well, we don’t want to generate many jobs; we want the lowest cost power. The lowest cost power will provide long-term, sustainable industry (in the broader economy). And that’s where your long-term sustainable jobs are going to come from. You have high-cost power because you’re employing lots of people. That’s not what you want.
What’s your ongoing association with Zen?
Well, yeah, as a significant shareholder but not my day-to-day job any more. I’ve given that business everything that I can give it. And the great things that it’s going to do, it’s going to do, whether I’m there or not.
But you know, one thing I don’t enjoy – and entrepreneurs generally won’t enjoy – is the corporate mentality. When you’ve had full control of your business for probably 13 years and you can walk in and say, ‘guys, we’re going this way today’ – and then suddenly you’re reporting to layers of management and CEOs and boards… it’s just not something I enjoy personally.
I’d rather get back to the basics and you know, help people, share my experience and help people get businesses going and avoiding the pitfalls.
So, what are you doing now exactly?
There’s a great ecosystem or a subculture of entrepreneurialism developing in South Australia, which I’m a great supporter of, and I’d like to do some work with the universities to help them leverage that, and help the State Government leverage that as well.
There’s not many people in Adelaide that have seen companies go from inception through to major exits or even the capital markets. So, to see that three or four times is quite unique. I can help students come through and understand what it takes to be an entrepreneur, and help them through a lot of the critical errors that they can make easily in the early stages.
What are some of those key lessons?
Well, to be successful in entrepreneurship, you’ve got to basically reinvent markets, reinvent industries and disrupt industries. If you go in trying to compete on the same terms as your competition, and you’re starting up, and they’ve got the market, they’ve got the customers, they’ve got the supply channels, they’ve got the people that get everything going, it’s going to be a very tough, uphill battle to compete in an existing market on their own playing field.
And they’ve got the financial backing. So chances are you’re going to fail unless you can reinvent the way that business operates.
My first company, which I founded with my brother Greg, was a company called Regency Food Services. We founded that in 1987 and we sold it in 1999. We literally reinvented that industry to run 24-hour warehousing and distribution network to our market.
If the market’s not ready for it, you’ll waste a huge amount of money trying to educate the market. And chances are you will fail doing that.
We were working, back then, traditional warehouse hours of sort of six in the morning till three in the afternoon. And after a few years I said to Greg, ‘you know, we’re supplying a market that works opposite hours of the clock. Why don’t we try doing things a bit differently?’ So we introduced three telemarketing shifts: we were talking to the chefs at 10 o’clock at night, when they finished their shifts.
We were actually able to have a proper conversation with them on what they needed. They picked all the orders, we had our trucks loaded and on the road by about four in the morning. So we were last to take orders, we were first to deliver and the company just went crazy after that. In 1996, we won the state Entrepreneur of the Year. But that’s just one example of how you can reinvent an industry and have it on your own terms and then you set the pace.
It’s about controlling everything around you, and being able to navigate all of that and to be a successful entrepreneur, and none of it’s easy.
And timing is everything in business – you can have a great idea for a business but if the market’s not ready for it, you’ll waste a huge amount of money trying to educate the market. And chances are you will fail doing that. And if you’re too late for the market, you know, it’s going to cost you money to catch up.
When we entered the market with Zen, it was just at the time John Howard was talking about climate change. They were talking about the first incentives for reducing energy consumption at home. Mike Rann had introduced the first feed-in tariffs for solar.
One of the key things you need to do to reinvent a market is actually give it a new name.
So we invented this market called home energy. And if you create a market and you give it a new name, and you do it differently, then suddenly you’re the leader of that market. And if you use PR wisely, and you position ‘home energy’ as the new big thing, then suddenly, your company is the leader because there are no other home energy companies.
The company just grew ridiculously for the first few years. We launched the Zen Home Energy System in about 2006, which was a fully branded, fully integrated system. In 2010 and ’11 we were the fastest-growing company in South Australia; from 2012, we were the fourth fastest-growing company in the country.
What are some of the main pitfalls of entrepreneurialism?
If you look at the Mark Zuckerbergs or a Bill Gateses or whatever, they’re all widely known to be on the spectrum – high functioning spectrum – where people have this unique ability just to focus, focus, focus, focus, but to the detriment of everything else that’s around them.
They just, you know, they get so focused on their business, and they forget their family and they forget everything else that’s around them. And when all that falls down, they will lose two or three years of their life and half or most of their finances and it just stuffs everything up.
So it’s not just the funding, the equity, the reinvention and the innovation – it’s about controlling everything around you, and being able to navigate all of that and to be a successful entrepreneur, and none of it’s easy.
So, what do the next five years look like to you?
I really haven’t made any final decision. I’ve got lots of ideas for businesses, but at my age, look, I think four businesses is enough. I think I’d rather just give back with my experience.
But probably getting on to boards of companies that want to reinvent themselves and want to make change for good. I’d rather help companies that want to improve the planet for the future generations in one way or another. I don’t think I’d want to be on a board that’s just producing another me-too product that doesn’t really service any future impact. I’ll be looking for boards that have some social good about them.
What about politics?
I certainly have been tempted – just through frustration. But yeah, I have posed the question to my wife and she said ‘no way’.
This interview has been edited for clarity and concision.
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