Wall Street Cut-Offs Wake Up an Eager New Zealand

The failure of the Solar Zero distributed energy project backed by the biggest names in global finance continues to stun into silence exactly the sectors that should be evaluating it. They cannot bring themselves to believe that the nosecone signature venture in global progressive alternatives has failed.

Solar Zero went out of business leaving a total sun spot hole of at least $500 million. How could this have happened when all the backers were in lockstep with exactly the same global transnational institutions encouraging as core policy precisely the same venture?

The legendary parties involved were viewed as being a guarantee that whatever happened the Solar Zero venture would proceed and exceed all expectations.

The parties behind Solar Zero included the world’s biggest asset manager, Europe’s most influential bank, and a state investment fund dedicated to progressive ventures.

The investment fund was Blackrock of the United States, the European bank was France’s Societe General e and the state investment fund the New Zealand government s own Green Investment Finance fund.

Solar Zero unbelievable as it now seems was one of three pivotal global renewables ventures in Blackrock’s international portfolio.

Blackrock’s requirement to stock its portfolio of investment ventures of the Solar Zero category began to fade toward the end of last year.

Its strong alignment with renewables investments did it no harm with California’s gigantic pension schemes, or New York’s

But the reversal of presidential fortunes in the United States became an impetus to quit for example the Net Zero Asset Managers Initiative.

It is still unthinkable that an organisation of this size could walk away from an investment approaching $300 million.

Yet organisations the size of Blackrock operate on a scale base beyond the comprehension of most New Zealand institutions.

They will walk away from an underperforming venture which looks like carrying on that way.

The New Zealand Green Investment Finance fund from its outset had about it an evangelical aura and thus its people would have had limited comprehension of the algorithms governing Blackrock ventures, even the ones with the noblest of intentions.

This government fund remains deeply invested in renewables. It has for example $62 million in the form of an asset facility and a $78 million in a finance facility for Far North Solar Farms Ltd.

This developer is financed by a German investment fund.

Blackrock arrived in New Zealand at the high noon of the former Labour government’s open-handed and unquestioning exuberance for any energy source that did not derive from beneath the earth’s surface.

This government fund management never envisaged that such a lead party could and would close up a business just before Christmas and without regard to such niceties as staff holiday pay.

New Zealand institutions from the government downward have demonstrated a persistent blindness in dealing with very large scale foreign entities simply because they become flattered and dazzled by the counter-party’s enthusiasm to do business with New Zealand.

This vulnerability becomes multiplied when there are external global movements involved which in the instance of Solar Zero were the New York-based multi laterals cheering on the value to the world at large of the project and thus the eminence and wisdom of those sponsoring it.

The Solar Zero experience by the time attendant and long tail liabilities are accounted for will cost the New Zealander taxpayer most of the more than $100 million committed to it.

Even now those involved in the unquestioning public investment fervour that still surrounds anything to do with alternative power seek to divert attention away from the savage outcome of the venture.

There remains a cultural reluctance to accept such inevitable factors as disguised subsidies, political shifts and especially that fund operators in the United States and Europe require hard-nosed early and substantial ROI percentage returns.

There is a lesson here. It is not entirely that financiers of the scale of the ones that backed Solar Zero have thresholds that will be inexorably invoked when an investment turns sour.

It is also this.

What looks nice can turn nasty.