Clean energy more than an impulse

Australian
Monday 19/2/2007, Page: 29

GERRY McGowan reckons he added to the hole in the ozone layer as he ran Impulse Airlines.

Now, as executive chairman of the ASX-listed renewable energy company CBD Energy, the former airline chief is doing his best to fix the problem. McGowan's company is working with Hydro Tasmania to develop a storage technology for its five wind turbines on remote King Island.

He is also teaming up with German-based solar energy company Solon AG, which is buying 20 per cent of CBD, to develop solar energy projects in Australia. "These sorts of businesses are important for the country," McGowan says. "We are developing intellectual property. We are trying to produce clean energy. Australia has huge natural resources in solar and wind and it is our responsibility to make the most of them." McGowan signed a five-year non-compete agreement with Qantas when he sold it Impulse Airlines in 2001.

He spent nine years building the airline and believes it could have been viable if some of his backers had been able to hang in for the long haul. But while he still keeps in touch with some people he used to know at Impulse (which turned into Jetstar), he has no more interest in going back into airlines.

His new passion is for renewable energy, which he sees as being on a roll around the world particularly in Europe and California with Australia finally starting to catch up. McGowan says his interest in renewable energy started when he bought a bee farm in the NSW Hunter Valley a few years ago.

He wanted to develop it as a sustainable farm with its own power. Approached by many different people after being bought out of Impulse, McGowan chose to invest $3.5 million in CBD Energy in 2004, attracted by its work in developing storage technology for renewable energy.

Storing the power from wind or solar energy beyond the immediate generation has always been one of the big problems with renewable energy. King Island gets a lot of its wind during the day but needs power at night.

CBD is trying to commercialise a carbon block technology developed by Lloyd Energy Systems, working with Hydro Tasmania to use wind power to replace about a third of the diesel fuel used for the island's power station. The process involves converting the wind power into steam at 800C and storing it in graphite blocks which can be used to run steam turbines later.

"The technology stores heat for long periods of time," says McGowan, who was with transporters TNT and Mayne Nickless before starting Impulse in 1992.

While the wind energy experiment at King Island power station gets under way, McGowan is pressing ahead with plans for the company's first solar power operation in the northern NSW town of Moree. Solon, spending $5 million for a 20 per cent stake in CBD, is keen to use its solar power technology in Australia. "We are actively looking for solar sites," McGowan says.

He says there are several potential sites for solar power in NSW, including Cobar and Dubbo. The company will complete a feasibility study within months on the best site and plans to finance its first solar power operation with a rights issue. McGowan says he is looking forward to working with regional communities again, in the same way he did with his airline business.

He says development of a strong renewable energy industry will depend on more proactive government policies. "In countries where renewable energy has progressed fairly aggressively there has been government incentivisation of the industry." He argues that the cost of coalfired power in Australia has been understated because there is no costing of the long-term environmental damage caused by greenhouse gases it produces.

McGowan says Australia should be leading the world in the development of solar energy technology. He is worried that Australian-based solar energy experts such as Canadian-born David Mills are leaving the country attracted by better opportunities. Mills is going to California where Governor Arnold Schwarzenegger has launched a $4 billion initiative providing generous incentives for people to install solar panels in their homes.

"It's tragic for the country," McGowan says. "I have always admired the Americans' ability to create their own industries. "They are leading the world in an area where we should be leading because we have so much natural resources here such as renewable energy." McGowan's last appearance in the headlines was when he gave evidence against the late stockbroker Rene Rivkin, who was accused of insider trading in Qantas shares.

Wanting to buy Rivkin's house in Sydney's eastern suburbs in 2001, McGowan told him that he was expecting funds to come through from his proposed sale of Impulse to Qantas. But the deal was confidential at that stage and McGowan warned Rivkin he should not trade on what was inside information about Qantas.

It was a brief telephone conversation that eventually resulted in an inquiry by the Australian Securities and Investments Commission looking for reasons behind the rise in Qantas shares before the announcement. McGowan was required by ASIC to testify against Rivkin, who was found guilty of insider trading and sentenced to weekend jail.

He says he is still deeply saddened that the process eventually led to Rivkin's death. "I had no idea he had traded (in Qantas shares as a result of the phone call)," McGowan says. "I found it very distressing. "Do I wish it had never occurred? Of course I do. It was a very sad episode. I never met the man. I only spoke to him for a couple of minutes over the phone." Looking back, McGowan is also disappointed that he was forced to sell Impulse to Qantas when some of his major investors got cold feet. "They were getting worried about the severity of the price war. They were taking a short-term view rather than a long-term view." He says the subsequent success of Virgin Blue shows that Impulse could have been a viable carrier.

"Virgin have proved it," he says. "We certainly had better market share than our main competitors had." McGowan still has some interests in the airline industry. He runs Pacific Aviation, which he founded in 1982. Its business includes delivering newspapers across regional Australia for the Fairfax group.

He also has an investment in a US light aircraft manufacturer in Texas which he and some others bought out of bankruptcy. But his major focus is the commercialisation of renewable energy in Australia.

"The momentum is building and it's going to continue to build," he says. "You are even seeing people like (US department store operator) Wal-Mart taking this seriously. "It's the biggest retailer in the world and every one of their stores has solar panels on the roof. "They have plasma displays in the stores saying how much green energy they are creating per hour. It's going to become mainstream," he says.

It's not a question of whether people want to. We are going to have to. Green energy is affordable now and it will become even more affordable in the future."