The AFR’s annual Rich List was published late last week. Essential reading for the nosy amongst us who want to know how much resource magnates Gina (Reinhardt) or Twiggy (Forrest) is worth these days, it also tells a story of the industries in which Australians build their wealth. Many industries that are fundamental to the Australian society and way of life feature heavily, such as property, finance and resources. Technology is coming up strong, with the founders of companies like Atlassian, Afterpay and Canva amongst the fastest risers up the list in recent years.
One industry conspicuous by its near absence, however, is energy. To be sure there are a few resources barons that bult their fortune on extracting coal or gas, but in terms of the business of generating power, energy networks or retailing the stuff, there is only one. Trevor St Baker, a veteran of the power sector comes in at number 149 with an estimated fortune of $727m.
Trevor started out as an electrical engineer at state-owned utilities in Queensland and NSW, before spotting the opportunities that would come with the progressive deregulation of the power sector. He began with a consultancy, which he was able to lever into gas plant development and then ownership, and eventually a retailer. ERM Power, as the retail business was called, grew to become the 4th largest retailer in the NEM and was listed in the ASX until Shell bought it out in 2019.
While his share of ERM power had already made him a multimillionaire, his real coup was yet to come. Teaming up with fellow rich lister Brian Flannery (who made his fortune in coal), Trevor’s Sunset Power vehicle bought Delta coal power plant from the NSW government for $1m. It’s now worth an estimated $700m. Ever the contrarian, Trevor made a big bet against climate policy and won – making him something of a bête noire for the environmental movement.
To write Trevor off as a dinosaur would be to misunderstand him though. His third fortune is being made through his St Baker innovation fund. The fund’s investments include lighting companies, a solar retailer, battery technology, and several e-mobility businesses. The jewel in the crown appears to be a quarter share of Tritium, a fast EV-charger manufacturer, that is being listed on the NASDAQ via a SPAC at a valuation of over $1billion.
So why is Trevor the only industry figure on the list? It could be that energy is a hard industry to break into, given it’s very capital intensive and until a few decades ago was almost entirely government owned. Of course, one could say the same about telecommunications, which has produced at least three entries on the Rich List.
It could also be that energy is not that attractive a sector for entrepreneurs. Despite the headlines of price gouging in recent years, retail margins have remained in single figures and are now constrained by regulation. Power generation had a couple of good years following the closure of Hazelwood, but revenues have subsided back to the modest levels the NEM has experienced for most of its existence. Networks are also price regulated and are the sort of staid business that attracts super funds more than speculators. Having said that, some of the world’s richest people have amassed large portfolios of regulated energy companies, including Warren Buffett and Li Ka-Shing.
Whatever the reason, things are about to change, with several Australian magnates who made their fortunes elsewhere looking at the opportunities arising from the energy transition. This, and the broader decarbonisation drive are what serial US entrepreneur Jigar Shah calls “ the greatest wealth generation opportunity on the planet”. Notably the 3 richest Australians are all turning their attention and business acumen to these opportunities, two of them in a very vocal manner
At no. 3, Mike Cannon-Brookes, co-founder of tech firm Atlassian, is an evangelist for renewable energy. His tweet exchange with Elon Musk helped spur the construction of what was at the time the world’s largest battery, the Hornsdale Power Reserve in South Australia. He has several investments in the energy transition, with the most notable perhaps being the mooted SunCable project, which ambitiously seeks to send Aussie renewables nearly 4,000km under the sea to Singapore. This will be a stunning project if it ever gets off the ground, as it entails 3 “world records” – the largest solar farm (14GW), the largest battery (33GWh storage) and the longest subsea HVDC cable.
At no. 2, Andrew “Twiggy” Forrest, has ambitions for renewable energy development on a scale that puts even SunCable (in which he also has a stake) in the shade. He has talked of having secured access to 300GW of hydro and geothermal power capacity globally and thinks he could help Australia become a leader in green steel production, which substitutes hydrogen for coking coal. Despite these zero carbon ambitions, his next step is apparently to build a new gas plant at Port Kembla (look, he promises he’ll switch it to hydrogen as soon as he can, OK?)
While Gina Rinehart, the richest Aussie, keeps a lower profile than her fellow billionaires, she is quietly building up a stake in self-styled “zero carbon lithium” play Vulcan Energy. This ASX listed company aims to produce lithium from German deposits with the mine site powered by geothermal energy. Lithium is an essential component of most “big batteries” and electric vehicles.
All three of these multi-billionaires have plenty of money to burn. And burn it might if these forays into different industries from the ones they built their fortunes on fall over. Trevor might be a comparative minnow in wealth terms, but with his six decades’ experience in the power sector, would you bet against him being the one to strike it richest from the energy transition?