A DAY IN THE LIFE

ESCO Pa­cific chair­man

The Australian Energy Review - - FRONT PAGE -

Cur­rently de­vel­op­ing the 148MW Ross River So­lar Farm south-west of Townsville, Queens­land, ESCO Pa­cific is fast be­com­ing one of Aus­tralia’s lead­ing util­ity scale so­lar farm providers. ESCO chair­man Dar­ryl Flukes spoke to El­iz­a­beth Fabri about his ad­mi­ra­tion for the way the re­new­able in­dus­try con­tin­ues to stride for­ward with in­vest­ments and ever smarter so­lu­tions – “rather than try to drown out the naysay­ers, the in­dus­try just gets on with it”. q. de­scribe your ed­u­ca­tion and pro­fes­sional ca­reer.

Grad­u­at­ing as a Chem­i­cal En­gi­neer, this lead me into the oil in­dus­try where I started with BP in the UK in a sup­ply lo­gis­tics role.

Sup­ply lo­gis­tics lead to “sup­ply trad­ing” where I first dis­cov­ered the hid­den value of as­set op­tion­al­ity – a sub­ject which has in­trigued and in­ter­ested me through­out my ca­reer.

Later I joined Vi­tol, a global trad­ing and lo­gis­tics busi­ness.

Here I sought out as­set-backed trad­ing op­por­tu­ni­ties, ul­ti­mately run­ning an oil and chem­i­cals stor­age and re-pro­cess­ing op­er­a­tion.

Fol­low­ing a timely move to Aus­tralia in 1998, when the en­ergy mar­kets were de-reg­u­lat­ing, I joined South­ern Hy­dro, a re­cently pri­va­tised hy­dro-gen­er­a­tion busi­ness.

This per­fectly suited my in­ter­est in trad­ing, and ex­tract­ing value from, as­set op­tion­al­ity.

Fur­ther, to my sur­prise, com­modi­ties trad­ing and risk man­age­ment was lit­tle de­vel­oped in Aus­tralia so the con­cept of trad­ing around an as­set, while min­imis­ing risk, was alien to many in the en­ergy in­dus­try.

So, much mis­un­der­stood, South­ern Hy­dro was pri­va­tised for just $400m and, hav­ing proven its value, was ul­ti­mately pur­chased by AGL in 2005 for over $1.2bn.

Hav­ing demon­strated how ac­tive risk man­age­ment can add value, I was keen to find other op­por­tu­ni­ties to demon­strate and im­ple­ment sim­i­lar strate­gies, so es­tab­lished an ad­vi­sory busi­ness, Flukes Value Man­age­ment.

A key client was In­fratil, which lead to tak­ing on the role of chief ex­ec­u­tive of In­fratil En­ergy Aus­tralia (IEA).

In­fratil’s Aus­tralian en­ergy in­vest­ments were spear­headed by the re­tail busi­ness, Lumo, and in­cluded in­vest­ments in peak­ing gen­er­a­tion (as­set op­tion­al­ity again) and Perth En­ergy in WA.

From start-up in 2006, IEA was sold in 2012 to Snowy Hy­dro for over $600m.

Since then, though se­nior man­age­ment roles have been tempt­ing, ad­vi­sory and board roles have kept me oc­cu­pied, in­clud­ing as a di­rec­tor of Meridian En­ergy (Pow­er­shop) Aus­tralia.

Man­ag­ing risk to add value re­mains a core theme (in fact it is es­sen­tial in any en­ergy re­tail­ing busi­ness) and the chal­lenge I have set my­self now is, hav­ing al­ways been on the sup­ply-side, how can we best ex­tract as­set op­tion­al­ity from the de­mand-side?

Fur­ther, I re­alised some years ago that, some­what sub­con­sciously, I had al­ways been at­tracted to the cleaner forms of en­ergy sup­ply – hy­dro, wind, so­lar, gas – hence the fo­cus on the re­new­ables sec­tor.

q.

You joined esco pa­cific as chair­man in June 2016. What have been some of the high­lights and chal­lenges in your first year?

With­out doubt, the high­light was clos­ing on the 148MW Ross River So­lar Farm project ear­lier this year.

It was a de­light to see the whole team look­ing and feel­ing so proud of what they had achieved – de­servedly so.

I have also en­joyed watch­ing Steve Rade­maker (the man­ag­ing di­rec­tor) grow the team – from just three in a tiny of­fice space just 12 months ago, out­grow­ing that of­fice (very cosy at times) to a happy, multi-faceted crew of 14-strong and grow­ing.

Recog­nis­ing early that speed was crit­i­cal pre­sented chal­lenges from hav­ing to push hard on nu­mer­ous fronts con­cur­rently with a small team.

Other chal­lenges were just typ­i­cal of any start-up – gain­ing cred­i­bil­ity, no one to del­e­gate to, and so on.

q. How is the con­struc­tion at the $225 mil­lion Ross River So­lar Farm track­ing?

The project is on track to achieve com­mer­cial op­er­a­tion in April 2018.

We have a very good and ex­pe­ri­enced in­ter­nal project team lead by Ek­istica over­see­ing con­struc­tion, un­der­taken by Downer Group, and things are mov­ing along well.

q. What are some of the other so­lar farm projects esco pa­cific has in the pipe­line and when do an­tic­i­pate these will be brought on­line?

ESCO has more than 1.25GW of ap­proved projects in the pipe­line, 400MW of which could be­gin con­struc­tion this year.

ESCO is well ad­vanced in a process to raise fi­nance to com­mence con­struc­tion of these projects.

Not con­tent with so­lar de­vel­op­ment alone, ESCO is also in­ves­ti­gat­ing de­vel­op­ing a pipe­line of util­ity scale bat­tery stor­age, whether in­te­grated with so­lar or stand-alone.

q. What do you en­joy most about work­ing in the re­new­able space?

At the risk of sound clichéd, there is some­thing com­fort­ing about con­tribut­ing to pro­vid­ing a cleaner planet for our grand­chil­dren.

I also ad­mire the way in which the re­new­able in­dus­try con­tin­ues to stride for­ward with in­vest­ments and ever smarter so­lu­tions while the de­niers con­tinue to squab­ble.

Rather than try to drown out the naysay­ers, the in­dus­try just gets on with it.

Sure, we all recog­nise the chal­lenges of in­ter­mit­tency but now re­new­ables have clearly demon­strated they are the low­est cost sup­ply, the same en­thu­si­asm will turn to ad­dress­ing the re­li­a­bil­ity is­sue through in­tel­lect and in­no­va­tion – not through ap­ply­ing a 150-year-old tech­nol­ogy.

q. What ad­vice would you give to some­one who as­pires to a ca­reer like yours?

Not sure those grad­u­at­ing to­day will have such in­spi­ra­tions, ca­reers have changed so much over the last 30 years.

How­ever, I would en­cour­age prac­tic­ing some­thing I did re­alise along the way – as soon as you stop learn­ing and grow­ing in your job, move on.

Though not al­ways easy when in­come se­cu­rity is im­por­tant, if you have that at­ti­tude, bet­ter op­por­tu­ni­ties will present them­selves.

Also, don’t un­der­es­ti­mate the value of a broad net­work – take ev­ery op­por­tu­nity to meet new peo­ple and learn.

It can be amaz­ing how a seem­ingly in­nocu­ous con­ver­sa­tion at a ran­dom lunchtime fo­rum can pro­vide sur­pris­ing re­turns many years later.

“ESCO HAS more THAN 1.25gw Of Ap­proved PROJECTS in THE pipe­line, 400mw Of Which COULD be­gin CON­STRUC­TION This year.”

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