Sunday 26 January 2020

John Mullins comes clean: 'The good days are good and the bad days can be bad'

John Mullins' pursuit of clean energy has seen Amarenco open solar farms in France, but there's a big opportunity in Ireland too if subsidies are introduced to back the sector, the former Bord Gáis boss tells our reporter

Amarenco chief executive John Mullins is raising up to €200m for French projects
Amarenco chief executive John Mullins is raising up to €200m for French projects
John Mulligan

John Mulligan

John Mullins insists he doesn't care about how much the solar energy company he founded, Amarenco, is worth. But you can be pretty sure that he's already sitting on a nice return if it was to be sold off tomorrow.

"I'm a different type of animal," he says, chatting over tea at Dublin's Westin Hotel, squeezing in an early-morning interview before dashing off to investor and other meetings.

"Monetary value doesn't bother me too much. Success does. I don't worry about valuations. My shareholders (who include tech guru Bill McCabe's Oyster Capital, former Ulster Bank chief economist Pat McArdle, and Modern Plant's Henry Bolger Jnr) might be more worried about it, but they're not worried about it at the moment," says the chatty Corkman, who was chief executive of Bord Gáis until 2012, and also once worked with NTR.

"They tell me to keep doing what I'm doing and to come back to them in five years. The only valuation that matters is the one at the end of the cycle."

In the space of just a few years, Mullins (48) has expanded Amarenco into a company with a growing footprint in France, and an ambition to open almost 40 solar farms in Ireland. He's even pondering investments in windfarms.

Since its launch, Amarenco has raised over €230m in debt and equity, and has a €180m facility committed by Australian investment bank Macquarie to help fuel the eventual roll-out of the Irish portfolio.

It's all very different from the days of running Bord Gáis (he's still smarting that the company is no longer headquartered in Cork). Mullins left when his second contract as chief executive of the then semi-state company expired. He'd headed it for five years.

"You think sometimes that being chief executive of a semi-state company is a lonely place," he says. "Running a fledgling company is a much more lonely place and can be more challenging. The good days are good and the bad days can be bad. People tell me we've made great progress. That's fine. But you keep on pushing the business to be as successful as it can be."

It's in France where Amarenco has had its greatest success so far (Mullins was recently awarded the Chevalier de la Legion d'Honneur by the French government for his services to the country's solar energy market). It's also where all its working assets are currently located.

Amarenco has eight operational solar plants producing almost 100MW there, soaking up the sun at locations including Avignon and Perpignan. Construction of the latest plant, in Beziers, began just last week. Amarenco secured €25m in financing from a German bank to develop that scheme. The company develops the plants and manages them.

"It's a pleasure to work in France. The French like the Irish. And when you're working down in rugby country, they know Paul O'Connell, Johnny Sexton and the others. It's their religion," he says.

But while Mullins may find himself preaching to the converted in the south of France, in Ireland the experience to date has been significantly different.

Solar power here is perceived to be the poor relation of wind generation.

Under European Union targets, Ireland is mandated to be producing 40pc of its gross electricity consumption from renewables by 2020.

Based on current projections, it appears the target will be missed by Ireland, which would result in heavy fines being levied by Brussels.

The Sustainable Energy Authority of Ireland (SEAI) has said that to meet the goal, Ireland needs to install 250MW of wind turbines a year, retrofit homes and have 50,000 electric cars on the road in less than four years. It's a tall order, and the SEAI effectively sidelined solar power in assessing how Ireland could meet its targets. That, unsurprisingly, has annoyed Mullins, who insists that solar power can be a viable alternative to wind power deployment.

You might not expect him to say anything to the contrary, but he maintains that wind energy development may now have maxed out because it's becoming increasingly difficult to secure planning permission for projects. There's also frequently intense local opposition to windfarms, both because of the visual impact they can have, the potential impact on the immediate environment, and because of perceived health fears.

Mullins, who studied electrical engineering at University College Cork and did his Master's project on expert system for solar operations (he joined the ESB when he graduated, and also worked at one stage with PwC), claims that a low-profile, 5MW solar farm is an easier sell to locals.

"I've developed both," he says. "The reality is that there is quite a difference. Solar is 11-feet high behind a hedge and doesn't have the same visual impact (as a wind turbine).

"We've been very careful in site selection and our worst case so far has been three objections. We need to give communities an opportunity to benefit from the turnover of the plants, and to potentially invest in them."

Amarenco has already secured planning permission for solar farms across the southern part of the country. Mullins hopes to encourage locals to invest in the operations, allowing them to take up to a 30pc stake in such projects.

"This has worked very well in countries such as Denmark and France," he says. "We're just at the point of bringing in about €2m in development money in France from a crowdfunding company there."

He says he doesn't think Amarenco will have any problem enticing Irish people to do the same, citing the amount of cash on deposit here and, the number of PRSAs (Personal Retirement Savings Accounts) and ARFs (Approved Retirement Funds) that could be used to invest in solar farms.

"We have 37 plants in motion now (In Ireland), which would be about 200MW," says Mullins. "All of them could have an element of community funding if there was enough demand."

It all sounds fine in principle. But there's a spanner in the works.

Solar farms will only be viable here at the moment if they receive subsidies. In Amarenco's ideal world, that would see some money from the public service obligation levy (PSO), which every electricity user in the country pays, funnelled towards solar developments. And until that happens, Amarenco's solar farms - and those planned by other companies - are stuck in limbo, with planning permissions left idle.

The PSO has been around for ages, and subsidies renewable energy generation, and incredibly, peat-fuelled power plants. About €138m of the €400m or so raised that will be raised this year from the PSO when the levy rises in October, supports peat-fired electricity generation, while €270m will go to wind power.

Solar doesn't get a look-in, but that could change. The Department of Energy recently said that solar energy continues to be assessed as a potential recipient of State subsidies to make it a viable source of electricity generation.

Mullins thinks it's only a matter of time before it does receive a subsidy and sees 2017 as the likely date by which it will have to happen.

"We're the only country in Europe that doesn't have a tariff (for solar energy)," he says. "But the mood music is such that there's an acknowledgement now that solar is the number one source of new power in the world. Even since we started our business three years ago, our modules are 20pc cheaper. So the capital cost of solar energy is coming down rapidly. We're only half way to our 2020 renewable energy target and we've been 25 years building wind farms."

He says that if the tariff was introduced as part of the PSO for solar power production tomorrow, Amarenco would have five of its plants built next year, which would mean a €35m to €40m investment.

In France, things are moving faster for Amarenco. It's currently raising up to €200m to develop a pipeline of 133MW of solar plants in France, marking the first time that the company has really chased institutional capital.

"All we've done over the past number of years is raise private capital," says Mullin, who's over and back to France about once a month. "We're now moving into institutional capital, which raises the stakes completely. But you have to show a track record. We're confident we'll be in a position to announce a partner by the end of the year."

Indeed, Mullins, who is also the chairman of the Port of Cork, has spent a huge chunk of his time hunting down money to pump into Amarenco. "I said to someone recently that it's like busking on Grafton Street and you get a bit sick of that and want to try concert halls," he says.

Mullins takes personal responsibility for the developments in Ireland, but he says Amarenco is a flat structure and he's happy to let his team in France get on with what they're doing.

"I enjoy it but I thought it was going to be easier," he admits, but adding that at 44 years of age when he left Bord Gáis, time was running out to set up his own business.

"Days are long and the travel is hard (he spends a lot of his time in London securing finance), but I've built a very good team," he adds. "Hopefully we'll have new partners over the next number of months that will help us move forward. It's been a great journey so far."

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