SolarZero had about 15,500 customers – representing about 40% of NZ’s rooftop solar market – liquidators Russell Moore and Stephen Keen (both of Grant Thornton) said in their first report.

Another sizable player, Lightforce Solar – which has carried out about 7000 commercial and residential rooftop solar installs, according to its owner and executive director John Harman – has also reduced its workforce.

“We’ve got 90 staff. We had 120, we’ve removed 25% of our workforce over the last couple of years,” Harman told the Herald.

Despite the belt-tightening, Harman said his firm was well-positioned to keep growing.

Mike Casey, chief executive of pro-solar group Rewiring Aotearoa, said: “The best analogy I can make is that Kodak going bankrupt didn’t define the camera. SolarZero had a business model that had reached the end of its life”.

He said the economics had become compelling as the price of the technology fell.

A family home could now get a 5000 kilowatt system for about $5000.

Casey said his Cromwell cherry orchard – which features all-electric machinery and vehicles – was generating rooftop solar at 12 cents per kilowatt hour next to 34 to 36c from the grid.

His orchard would have its first full crop of about 90 tonnes this year, Casey said. He anticipated it would be profitable.

“SolarZero was a finance company,” Harman said.

“We’re vertically integrated.”

Lightforce solar buys its panels and batteries from China. Customers own them after the install.

“The price of solar panels has come down 25% per year for each of the past three years,” Harman said.

The price of batteries had held up, but customers now got a lot more bang for their buck.

The price crash – which the Financial Times recently pinned partly on tech gains, and a lot on Chinese over-production – had made it more attractive to buy your own kit rather than take on a 25-year SolarZero subscription, he said.

SolarZero wasn’t tenable but rooftop solar is very tenable, said Harman, a breast and general surgeon who went into property development before founding Lightforce.

Earlier this year, Lightforce Solar installed 957 panels on the roof of produce logistics firm Poulter Group’s Wiri ripening facility.

“That’s a couple of huge cool stores that had a million-dollar a year power bill, and we’re taking $250,000 off that. They’ll have a four-year payback and then they’ll have free power for the next 20 years,” Harman told the Herald.

Director Steve Poulter said his firm was still in the process of establishing how much it would save, but it would probably end up being 25%. The switch to solar had also been a pull for new customers.

Regulatory change urgently needed

Regardless of his bullishness about commercial rooftop solar, Harman described the industry overall as “barely profitable” and soon after SolarZero’s collapse he took to LinkedIn to post:

“The regulatory environment does not favour competition, does not support disruption of the energy market, does not support a favourable outside investor in the renewable sector NZ.

“Politicians favour drilling or importing coal and gas. Individuals who invest in the green economy are at a disadvantage.

“We urgently need… change.”

What reform does he want? Harman later told the Herald he wasn’t interested in Australian-style subsidies (across the Tasman, the focus has recently switched from solar panels – which are now pervasive – to interest-free loans for batteries to store their output to be used during downtimes).

Harman said in New Zealand it took about two months for a lines company to sign off on an install and facilitate a meter upgrade.

“In Australia, it takes two days”. He wants red tape cut.

A surprisingly green-ish Brown

SolarZero’s collapse could make the industry an easy target for some politicians – and on the subsidy side, Finance Minister Nicola Willis is at loggerheads with NZGIF – New Zealand Green Investment Finance – or at least still pressing the ‘green bank’ set up by the previous Government for better answers (more on which below).

But Energy Minister Simeon Brown responded with specifics when the Herald put Harman’s call for regulatory change and red-tape cutting to him.

Brown was not immediately able to provide a timeline for any of the below measures, which form something of a wish-list for home solar installers.

“Reducing regulatory barriers and cutting through red tape to deliver affordable and secure electricity is a key part of our plan to rebuild the economy and double New Zealand’s supply of renewable electricity,” Brown said.

The Government is delivering a number of changes to support greater uptake of solar, Brown said, including:

Additionally, the energy competition task force led by the Electricity Authority and Commerce Commission is also investigating a further two actions to support the uptake of household solar panels and batteries, Brown said.

The latter two moves could address a sore point for the solar industry: Buy-back rates, or what power companies will pay for rooftop solar owner’s surplus power.

Buyback rates vary widely, depending on demand and other factors, but Casey said: “The wholesale market over the last five years has been close to 15 cents a kilowatt hour, and you still have a number of retailers gentailers paying south of 10 cents a kilowatt hour”.

The Electricity Authority-funded Powerswitch tracks solar buybacks here.

Overall, buyback rates are well below the level they were at before the wave of partial privatisations under John Key’s Government.

“Solar energy will play a key role in New Zealand’s future energy system and support the transition to a low emissions economy, and these changes together will help make it cheaper and easier to install solar including rooftop solar installations,” Brown said.

Complex structure

SolarZero’s model saw a household pay no money up front for a solar system, instead paying a monthly subscription – $177 per month was quoted for 12 to 14 panels for a household of four over a 25-year term that included one free battery upgrade.

If a household’s solar was not enough, it could buy electricity from the grid via SolarZero’s partner, Genesis-owned Ecotricity.

Veteran startup advisor and CFO Centre principal Ralph Shale speculates that if a SolarZero system with $20,000 was installed, the lenders would fund 70% or $14,000 with SolarZero funding the remaining $6000.

SolarZero then sold the solar gear, and the monthly contracts – for a still-to-be-established sum – as securitised debt to one of two special-purpose vehicles, SPV1 or SPV2.

SPV1 and SPV2 received the cashflow from the customer contracts.

SPV2 split its revenues, with monthly customer fees going to the Customer Series and ancillary revenues to the Battery Series, the liquidators said. NZGIF was the primary beneficiary of the Battery Series.

“NZGIF Solar Investments has oversight over the SPVs, as programme manager,” the liquidators’ report said.

NZGIF Solar Investments was the vehicle for NZGIF’s $145m credit line ($115m of which was drawn down at the time of the liquidation), plus $90m (in 2023) and $130m (in 2024) from offshore investors.

‘Unsustainable payments’

The liquidators are still establishing the full details and shape of the structure.

Notably, Moore and Keen said they and their solicitors “intend to further investigate the companies entry into the securitisation”.

But they have already established that it was busting at the seams.

“The liquidators understand that SolarZero had underwritten certain aspects of the securitisation, resulting in unsustainable regular payments to the SPVs,” Moore and Keen wrote.

Where did all the money go?

After buying SolarZero for $110m in mid-2022 – from owners who included its founder (and a former Greenpeace director) Andrew Booth, Pencarrow and Sir Stephen Tindall’s K1W1), BlackRock tipped in additional capital of $147.5m, the liquidators say.

(BlackRock has not released any figures.)

“Of the $150m invested by Blackrock, maybe $53m is a cash investment in the special purpose vehicles,” says Shale told the Herald.

“The rest must have covered two years of operating costs.”

The BlackRock top-ups were required because SolarZero was losing money (the amount has yet to be specified). The liquidation came after the US owner turned off the tap.

Shale adds, “If you look at the assets of SolarZero, the major ones are its $29.5m equity in the SPV and $59m in subordinate debt – they say this is non-cash”.

He notes the unsecured claims include $24m in intercompany payables, which he guesses is to the SPV.

Wills vs NZGIF

A Thursday morning fact-finding meeting between NZGIF chairwoman Cecilia Tarrant and Finance Minister Nicola Willis and Climate Change Minister Simon Watts only threw up more questions.

Shortly after the meeting, Willis said she still needed to know more about:

“The failure of SolarZero raised questions about taxpayers’ money being used in this way and those are questions ministers will be giving consideration to,” Willis said.

Willis had sought assurances about NZGIF’s other investments.

These include solar farm start-up Lodestone Energy, to which it provided a $15m working capital facility in FY24.

“This facility remains current,” a spokesman told the Herald.

A full list of its investments has been posted online here.

While its various SolarZero debt facilities have been easily the largest bits of business for the self-styled “green bank” (it is not a registered bank), NZGIF has also extended chunky credit lines to EV fleet leasing firm Carbn ($42.4m), United Kingdom firm Zenobe ($20m), which is doing work on electrification of businesses in NZ, solar farm firms Far North Solar Farm ($78m) and Lodestone Energy ($15m).

And although a lot of NZGIF’s dealings have been with startups, it has also done business with established players including a $1.2m debit facility for Genesis Energy (“to help industry switch from fossil fuels”), a $10m mezzanine debt facility to NZ Post to co-finance $10m spent on electric vans and a $15m “green credit facility” to CentrePort for “accelerating projects to decarbonise Wellington’s port”.

‘We are not responsible for what the company has done’

As she emerged from her meeting with Willis and Watts, Tarrant initially refused to comment, then said to Newstalk ZB’s Jason Walls: “We do feel very bad, as we all do, about the people who have lost their jobs, but we did not lend to SolarZero the company and we are not responsible for what the company has done”.

Tarrant said: “Let’s step back a minute and understand that we did not lend to SolarZero itself. We lent on the receivables; the panels and batteries that were installed on people’s houses and those contracts.

“Those customers are fine. They are now being serviced by Verofi as the standby servicer who has stepped in to take over from SolarZero.”

The NZGIF debt was securitised and held by two special-purpose vehicles, both of which were taken over by the Public Trust shortly before the liquidation.

The special purpose vehicles are not in liquidation.

The first liquidators report says: “The Liquidators understand that SZL [SolarZero Limited] had underwritten certain aspects of the securitisation, resulting in unsustainable regular payments to the SPVs”.

BlackRock move ‘a surprise’

Later on Thursday, Tarrant added in a statement: “Our Shareholding Ministers rightly have questions about how this all happened, and so do we. The change in stance from SolarZero’s owner BlackRock came as a surprise to NZGIF and other lenders, and indeed appears to have caught SolarZero’s CEO off guard given recent public comments.

“We are extremely frustrated by this outcome. NZGIF and other international lenders worked to support the growth of this business. BlackRock has not explained its sudden change in stance toward this company, which has severely impacted its staff, suppliers, contractors and partners.

“Prior to early November we had no indication from the SolarZero board or BlackRock that the company did not have the support of its owner, which had been funding the ongoing operation of the group.

“NZGIF takes an active role in monitoring and engaging with investee and client companies and it is fair to say we, along with staff, suppliers and customers, have been shocked by BlackRock’s decision to place the company in liquidation,” Tarrant said.

An NZGIF spokesman said earlier that it had less than a day’s notice of BlackRock’s intent to liquidate.

BlackRock had no comment on Tarrant’s remarks.

Some early bites

The liquidators say they’ve “received expressions of interest from parties seeking to buy all or part of the SolarZero business. We are keeping an interested parties register and we are working to develop options for a possible sale with all other stakeholders”.

Shale said the true level of interest could only be gauged once the liquidators opened the books for due diligence, with all of the costs that came with that.

He said it was also possible that some of SolarZero’s intellectual property – such as the “virtual power plant” platform it developed to pour electricity back into the grid from multiple solar rooftops during the March 10 cold snap – could draw buyer interest.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.