News last week that Meridian Energy has inked a deal to sell green energy company Powershop sent people heading for the exits. It seems the acquisition by global energy behemoth Shell and its investment partner Infrastructure Capital Group struck customers and environmental groups as a betrayal of the promises they signed up to.
Powershop positioned itself as “proudly owned by a 100% renewable energy company” and promised, “our customer’s energy usage is 100% carbon neutral”. Both statements make the Shell sale an odd fit until you look at the deal’s flip side.
Shell is on a green energy acquisition spree, spending $2-3 billion dollars each year on its “Powering Progress” cleaner energy strategy. The company recently purchased a grab bag of renewable energy companies, including German home battery storage Sonnen, and bought a chunk of solar energy company Esco Pacific.
The company is under pressure to do more to curtail the impact of its business on the climate crisis, with shareholders who see no profits on a dead planet ramping up the pressure to diversify and accelerate the reduction in carbon emissions from fossil fuels.
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More than a bit tone deaf to customer concerns, Powershop parent Meridian is quoted saying the move is, “positive for both, knowing customers will get the same great service and knowing Shell Energy and its partner ICG’s vision is to significantly invest in a transition to a cleaner energy future”.
But while Meridian’s estimated $729 million dollar payout seems like a juicy return on investment, the bottom line is only one part of the trade it is making. On the line are also Meridian and Powershop’s reputation, energy partner’s trust, and customers’ confidence.
These aren’t trifling matters. Selling can quickly become selling out if people feel what you stand for is being for sale to the highest bidder. Which returns me to the cost of Powershop’s promises and the eroding impact selling to Shell is already having on their brand.
Obviously, the first promise about ownership is in tatters. “Proudly owned by one of the world’s biggest polluters” doesn’t have quite the same ring.
Assuming the deal closes in early 2022 as reported, Powershop may have enough goodwill stored to rebound from the damage caused by that broken promise. Although the erosion of value stored in the brand, and the loss of energy it provides to do more work, will make conducting business harder.
Getting new customers could cost more as people shy away from the Shell association, and potential energy partners may likewise get scared off. Good customer service won’t be enough to keep customers who feel betrayed.
Which goes a long way to explain the reported influx of Powershop households switching to other alternative power companies such as Energy Locals, Cooperative Power, Enova Community Energy and Diamond Energy.
Only time will tell if the second promise of 100% carbon-neutral energy sources will hold up. Shell has committed to continuing Powershop operations as-is, for now. However, the assurance is likely small comfort for those that care about the who, what and how of their purchases.
Companies considering new owners would do well to ask: what promises have we made and will this break them?Unfortunately, Powershop made promises it never had the power to keep. Something that became abundantly clear when Meridian decided to sell the company to Shell.