Thread by @FootnotesGuy

This is the story of how a fund chaired by former Labor PM Julia Gillard acquired a wind farm project just six days before Labor Energy Minister Chris Bowen underwrote its future revenues with taxpayer money.

Today we've learned Julia's fund is trying to flip it. For a profit.

HMC Capital's 'Energy Transition Fund' rushed to acquire the Neoen Victoria portfolio. They hadn't even raised any money in their fund. They closed with almost a billion dollars worth of borrowed money and IOU's.

Less than a week later, Chris Bowen announced Kentbruck Wind Farm to be successful in the first round of the Capacity Investment Scheme. My rough calculations suggest they will receive something like a billion dollars from taxpayers (and maybe much more) over 15 years.

Sweet deal. A billion dollars of fancy financial monopoly money one week. A billion dollars of promised taxpayer dollars the next.

I want to emphasise that I have no evidence of anything illegal or improper taking place. Rather, I want to point out how odious and repugnant the official, proper, legal business of renewable energy has become.

Yesterday Chris Bowen announced he wanted to supersize the CIS subsidy scheme, yet again.

Today Ross Garnaut seemed to cheer this on, whilst pointing out "There are now virtually no new investment commitments for solar and wind generation that do not have CIS or other Government underwriting,"

What happened to a sense of propriety? Since when do we celebrate people rushing to put their snouts in the trough? Or rushing to fill the trough even higher?

Unlike the UK who publish a 'going rate' for technology subsidies, our renewables are subsidised through a secret tender process. Every project gets to ask for whatever revenue they want to proceed. @AEMO_Energy facilitates a secret beauty pageant, where they award points for things like indigenous participation or community engagement, alongside financial value.

And Chris Bowen makes the final call.

The bids remain secret. There's no cap to the pay-outs. Since AEMO is a private company, there is no scope for an FOI request, and AEMO aren't not subject to parliamentary oversight through Senate Estimates.

So no-one can ever prove an allegation that Bowen has bestowed special favour on a friend's project if that was what he did. But equally, he can never prove that he selected strictly according to merit. We are just expected to trust the black-box of Bowen's subsidies.

So I'm going to say out loud, with full voice, that I hope everyone can agree on:

If this is what the future of 'clean energy' looks like in Australia, it looks absolutely FILTHY.

Any firm that talks about ESG seriously should start taking the "G" a bit more seriously and steer clear of projects that thrust their snouts into Bowen's hopelessly opaque, bottomless trough of government funds.

Or at the very least, purge their boards and senior leadership of all the former Labor staffers, donors, and industry lobbyists who have had a hand in designing the trough, and filling it up.

The reality is that there are no natural profits to be made in generating renewable electricity in Australia.

Every dollar of profit in this industry is really a cheque signed by a politician, with Chris Bowen signing all the biggest cheques, worth untold billions, in the next three years.

It's all legal. It's all official. And it's absolutely obscene.
Mega-thread below.
(It'll come in stages)
1/

I'm going to start with the epilogue. This just dropped a few hours ago from the @australian.

HMC is trying trying to sell the portfolio. For a profit. Having done nothing with it, not even settled on it, but landed a massive subsidy. 2/
theaustralian.com.au/business/datar…

To be clear, they're just trying to salvage what is really a train-wreck. They couldn't raise the fund. 😱🤭🤣Leaders are fleeing.

Again, I'm not alleging any wrongdoing. This looks more comical and clumsy than coordinated and conniving.
3/
afr.com/companies/ener…

Here is their official release. Confirming that they couldn't raise the funds to settle in July. We'll find out at the end of this week whether they manage the August 1 deadline.
And yes... they were doing this all with borrowed money. "without the need for new equity..." 4/

Let's go back to the middle, when they jumped into this deal. Here's their announcement of a successful acquisition.

5 December.

Fancy debt arrangements.
20% returns to equity!

Back-slaps and champagne all round. 5/

And here's the official announcement from Chris Bowen six days later, 11 December, that Kentbruck was awarded revenue underwriting. 6/

Also claiming bids were "rigorously assessed through a fully independent third party, AEMO Services Limited."
7/
minister.dcceew.gov.au/bowen/media-re…

Here is AEMO Services clarifying that it's actually the Minister, Chris Bowen himself, who is the ultimate decision-maker. 8/
aemoservices.com.au/-/media/07a3b8…

Originally it always appeared to me that @DCCEEW would administer the scheme.

But Bowen is determined they don't administer it. In fact, going so far as to change the National Electricity Law to make it possible for AEMO Services to do it, and making an interim request to AEMO.

Note that the confirmation from Chris Bowen that it is in fact AEMO Services conducting the CIS means that the employees of AEMO Services actually didn't and don't have immunity from prosecution for any errors/omissions etc in their work. As only AEMO employees proper are covered by Bowen's interim request. This is one significant procedural line that has been crossed, and ignored, in the rush to roll out this process.

He could have just used the department, but that would make the process more transparent and accountable to parliament. He's basically cutting corners to cut out any chance of oversight. 9/

storage.googleapis.com/files-au-clima…

Back to champagne and back-slaps. The head of HMC, David Di Pilla, is the spitting image of deal-making over-confidence.

We get some hints of his strategy too... It's hard to not read it as though he knows he's bought a ticket to the trough. 10/
afr.com/companies/ener…

Honestly, what are we supposed to think?

Bragging about how he can get 20% instead of "high single digits" that the previous owner openly cited.

Are you gonna "do the heavy lifting" mate? Or just suck up the subsidies? 11/

Here's the head of the Neoen before the deals went down. 24 June 2024.

He seems completely sober about the challenges. Points to the fundamentals: the renewable honeymoon ends around 20 or 30%. Cannibalisation starts. Transmission...

What does HMC know that he doesn't? 12/

The best clues come from this article from Infrastructure Investor, featuring Julia Gillard from 6 September 2024.

What can I say... this stuff is DUMB. Dumb with a capital D-U-M-B.

It's almost as if they believe their own BS.

Let me show you. 13/
infrastructureinvestor.com/hmc-capital-a-…

They want to build a... Clean Energy Gentailer!

ROTFL. 🤣🤣🤣

Is this Julia's idea? Is this what her "niggling sense" suggested?!

Everyone knows the gentailer's edge comes from coal (or hydro). That's the ultimate hedge for selling a floating price for a fixed one. 14/

Oh no... Di Pilla believes it too. 🤯

Unreal. He actually says he thinks their "fossil fuel fleet" is holding them back. 🤭

Does he not get that's what underpins their gentailer viability? So when the spot price skyrockets (as it does, increasingly) they catch the upside? 15/

How does this come about? News to me... Di Pilla and Angela Karl were buddies with Julia back when she was in government!

They're getting the band back together!
Same motivation... new outfit!

But she "doesn't want to relitigate"?
Julia, do I have news for you... 16/

For years, us energy realists have been shouting that wind and solar don't scale up like you thunk they do.

And now events prove us right.

Which means lots of our time is spent dissecting corpses. Finding really putrid bits to force up the nostrils of the establishment. 17/

Julia's calling?
"Capital isn't flowing the way we would want it to."

So... provide "entry point"... for other "institutional investors" by...

Catching all the subsidies for unviable projects as they're granted by your former political mates?

Is that it? 18/

Seriously, what are we supposed to think?

"Absolutely delighted that a person of Julia Gillard's global standing..."

How does that look? A former Labor PM, crowned chair of a fund that's reliant on one of her former minister's subsidies? 19/

The thing is, Julia isn't really the brains or brawn behind the fund. When it was set up (February 2024), Angela Karl was hired as the full-time leader.

She's the energy heavy-weight. Serious experience.
(She's just left btw...)
20/

hmccapital.com.au/insights/hmc-c…

So how does one avoid the conclusion that some kind Julia's clout or connections are what added value, when she joined in May?

Since Angela has left, the serious heavy-lifting is now being done by Gerard Dover, who was acqui-hired last July. 21/

Gerard's experience in developing renewables is... massive. He's been deep in network businesses, wind, remote gas/diesel, now batteries.

He impressed the socks off Angela and David.

So again, Julia is hanging around... to look good? On subsidy applications? 22/

Actually, Gerard is a rockstar at the renewables game. This line catches my eye in his LinkedIn.

He knew the ropes of government well enough to get nearly $300mil of public money to help Transgrid invest in Project Energy Connect. Whilst he was CFO of Spark Infrastructure. 23/

Julia's only humble brag about her achievements as PM (when discussing joining HMC) was the creation of @CEFCAus, which Gerard tapped for Transgrid.

Everybody agreed that this CEFC loan got the project over the line. Critical to it proceeding. 24/

@CEFCAus Of course, that's exactly the time, early 2021, that Spark identified Dinawan as a high quality opportunity for an "Energy Hub"

Dinawan is a major substation on Project Energy Connect, which Gerard secured crucial finance for.

They now have 1GW of access rights there. 25/

@CEFCAus And what we now know about Project Energy Connect is that nothing about the "consumer benefits" that were claimed at the time of the regulatory test will come true.

It's blown out so badly, it's total a disaster for consumers. 26/

afr.com/companies/ener…

@CEFCAus Or... if finding a path to private profit, that (accidentally) leaves consumers and taxpayers reeling in pain were a martial art, that manoevre to get CEFC to nudge that PEC over the line was the five-point-palm-exploding-heart-technique. Gerard Dover looks like Pei Mei. 27/

@CEFCAus So again... What the heck is Julia Gillard doing here?
Does she not understand how brutal and bloody this sport is?
What could her special skills or powers possibly be, if collecting subsidies from Chris Bowen is not meant to be one of them? 28/

And... (to stretch a Kill Bill metapor too far😆, and not suggesting anything any of this is intentional or nefarious in any way)

The 'fifth step', where consumers' hearts explode with their energy bills... is not yet taken.

That will happen with the @aergovau approve Transgrid passing the massive cost increase of PEC along to consumers.

We know from this FOI (first time shared publicly) that as of January this year, there was some discussion between Transgrid and the AER about the scale of the overspend and how much Transgrid will reclaim. 29/

@CEFCAus @aergovau It'll all get passed on. Transgrid can't afford any less. They're up the creek, flailing for a paddle.

My point is: consumers always lose from renewables. Taxpayers too.

So Julia can't escape relitigation of those delusions in this role. 30/

https://x.com/FootnotesGuy/status/1930030536854290846

@CEFCAus @aergovau Yes, I do know the backstory about how Neoen was being acquired by Brookfield.

Yes, that got reported just after Gillard joined HMC.
No, that doesn't mean anything. 31/

afr.com/street-talk/ba…

@CEFCAus @aergovau Yes, I'm aware of the divestiture order from the ACCC, which required the Victorian portfolio, which HMC acquired. Yes, this means Julia Gillard (and HMC) didn't lodge the application for the CIS themselves. 32/
afr.com/companies/ener…

@CEFCAus @aergovau The deadline by which the divestiture must occur is part of a confidential schedule. But it was signed end of October.

I'm pretty sure they'd have more than one month to divest a billion dollar portfolio!

So I stand by my statement that HMC rushed to close the deal. 33/

@CEFCAus @aergovau All of which is to say that they did have another "event" that drove the "event driven" acquisition.

But that event might explain the acquisition, but not the timeline for closure.

They planned to raise their fund within six months.
Just deal pressure I guess?
33/

@CEFCAus @aergovau Filling in details.
I made a submission on behalf of a community group and appeared before a hearing for the Kentbruck wind farm in question.

In the submission, I did a back-of-envelope calculation of scale of subsidy they'd receive. Relevant excerpts here. 34/

@CEFCAus @aergovau I tried my best to expand the evidence on the costs argument in the hearing. But the barrister's for the proponent fiercely shut that down, by saying it wasn't in my paper submission.

The $1 billion estimate, in my submission, was never challenged. 35/

https://x.com/FootnotesGuy/status/1940599249089314869

@CEFCAus @aergovau It was in July, between Julia Gillard joining HMC and the deal going down that Chris Bowen started publicly hinting that he might expand/accelerate the CIS funding being dished out. 36/
reneweconomy.com.au/bowen-hints-at…

@CEFCAus @aergovau Late October, Chris Bowen confirms that he's so impressed with the pipeline of projects lining up for subsidies in the first round of CIS (of which the Kentruck wind farm is one), that he's going to supersize the next round. 37/
reneweconomy.com.au/bowen-says-nex…

@CEFCAus @aergovau By late October last year, long after the divestiture of Neoen's Vic assets was publicly foreshadowed by ACCC in July, maybe six weeks the deal was announced, one would suspect HMC was angling at a bid? 38/

@CEFCAus @aergovau Of course none of these timings indicate anything at all. I'm sure everyone is just trying to do their job.

This week Chris Bowen committed to expanding the CIS. Again. That's great news for anyone with a pipeline of development projects. 39/

afr.com/policy/energy-…

@CEFCAus @aergovau This is amazing timing for...

Anyone "quietly courting buyers" for a "2.8GW renewable energy growth pipeline", that you are have "rerated in terms of value.

Oh wait, that's Julia Gillard, at HMC. Chris's old boss!
What a look.
40/

theaustralian.com.au/business/datar…

@CEFCAus @aergovau Of course, we can't prove anything. It's all above-board and official. I'm not alleging any deliberate wrongdoing.

But are we not supposed to notice which pig has their head most deeply in the trough right when the farmer comes out with new slops? 41/

@CEFCAus @aergovau Again, contemplate... A 25% increase in an uncapped public subsidy scheme that he personally signs-off on every award for. Worth untold billions.

Announced just 4 days before a looming deadline for HMC Capital to on Julia Gillard's marquee investment. 42/

@CEFCAus @aergovau Remember, when they announced they'd missed the 1 July deadline, and were back at square one for the Energy Transition Portfolio, aiming for August 1 (Friday), and Angela Karl had left, that wiped out 17% of HMC's value, ~$400million. 43/

This is the very latest from @australian, and @perrybwilliams and @PDGarvey.

The story is all sad and sorry about the whole industry flagging a bit. Targets being missed. All this is true of course.

And I think this expanded article shows I mis-understood Ross Garnaut's a little... 44/

theaustralian.com.au/nation/politic…

@CEFCAus @aergovau @australian @perrybwilliams @PDGarvey Garnaut seems to miss the irony that Chris Bowen's attempts to blow more wind in the sails of the whole energy transition will quite possibly provide an existential puff, worth hundreds of millions THIS WEEK to Julia Gillard's investment platform? He worked under her too! 45/

@CEFCAus @aergovau @australian @perrybwilliams @PDGarvey Do we just pretend to not notice the scale and distribution of the private benefits that Bowen's allocation of public funds affords?

Again, I allege no wrongdoing. It probably all legit, but it still stinks.

Please share, and help make trough-feeding un-cool again! 46/46

@CEFCAus @aergovau @australian @perrybwilliams @PDGarvey @threadreaderapp unroll please