The GFC, coupled with the ongoing debate and delays that have taken place in the political arena surrounding emissions trading and carbon tax policy, has caused a major setback for the industry. The GFC saw investors become risk averse and with ongoing uncertainty in the political arena new investment in Australia has been extremely difficult.
Geothermal has its own set of advantages and, of course, its own set of challenges. We remain hopeful that the Australian landscape for renewables will improve with the introduction of the carbon tax in 2012 and the start of the various renewable support initiatives announced by the government. Having said that the political uncertainty and opposition pledges to overturn the climate change initiatives doesn’t sit well with investors. This will ensure that we maintain a balanced international portfolio of projects to avoid dependence on a single project.
What do you see as your key responsibilities to shareholders?
Being open and transparent to the shareholders has always been important to me. In any technology start-up there will be ups and downs. Engaging with investors along the development path so they understand the business model, the challenges and risks to implementing that model and the upside if it can be delivered builds integrity and trust – two crucial aspects to a successful working relationship.
How did you move from an accounting and finance role into project management?
In the 1980s I was involved in the manufacturing industry. I had my introduction to management standard cost accounting and variance analysis. This brought me very much into the operations side of the business. I enjoyed understanding the key drivers that made the business work and where we could focus our attention to fix the problems. It was a very different role from acting in a strictly financial accounting position, giving me my first taste of management.
In 1982 I made a life-changing decision to go abroad. This decision took me way out of my comfort zone. I was fortunate to join a large project in its development stage and, with my management cost accounting background, I was thrown right into the project capital management. Once again I was involved across multi-disciplines within the business. This was the stepping stone for my next role as a CEO.
How do you identify the potential and manage the risks of commercialising new technologies?
My first start-up was in 1986 and that was a steep learning curve. I’ve also had the opportunity to be involved at the other end of the spectrum when assigned to a project in the Caribbean, where the major shareholder sought rapid exit options from the project.
I think the key to both of these issues is to look at the business and determine where its value lies and who in the market would pay a fair price for that value. I say this because it doesn’t matter if you are packaging a business for a new capital raising or for shareholders wishing to exit. At the end of the day you have to be able to demonstrate to the buyer that he is getting value for money.
My first approach is always to really get my hands dirty understanding the business and challenging the reasons for certain approaches, the aim being to get the business “investment ready” and to ensure that everyone in the team knows what we have, how we can best exploit it and any improvements we may need to implement.
In terms of managing the risk profile for new technologies, the first and most important lesson I’ve learned is to identify the risks early and then attempt to mitigate these wherever possible – but it is never possible to remove all risk. Importantly, only take on risk that you can afford without taking down the company. Sounds pretty frightening I know, but when you are in technology start-up mode you have to get some successes and that first commercial deal is always the hardest. You try to find quality name endorsements of your technology and then leverage up from that position.
What’s immediately ahead?
If I am lucky I’ll be around for the commissioning of our first geothermal power plant in Vanuatu. When you get the chance to do a project that is good for the environment, good for the local community, good for the economy of Vanuatu and good for shareholders, it is very motivating.
