19 March 2014 — ASX-listed energy management firm Energy Action has purchased Dr Paul Bannister’s energy efficiency consultancy Exergy for $4 million, with the merger giving EA an integrated set of capabilities across energy procurement, contract management, energy-efficiency auditing and sustainability engineering.
Dr Bannister, founder of Exergy and the original technical developer of the NABERS energy rating system, will now head up EA’s Sustainability Solutions division. All 30 of Exergy’s staff are being retained in the transition, as is Exergy’s Canberra office, which will now become a base of operations for EA in the national capital.
EA has been in operation since 2000 and at the point of merger had 100 staff across offices in every mainland capital city except Canberra.
Chief executive Scott Wooldridge told The Fifth Estate the company has been experiencing extremely strong growth over the past four years, with increasing demand for sustainability advice a key factor in the decision to acquire the Exergy business.
A reverse auction platform for energy procurement
EA’s reverse auction platform for energy procurement, Australian Energy Exchange, is used by clients including DEXUS, Charter Hall, Mirvac and Brookfield.
In total, Mr Wooldridge estimates the company manages around 10 per cent of the energy used in the commercial and industrial sectors, with 10,000 large market sites and 8000 small sites under management.
Increasingly, the company’s clients were seeking services to assess, manage and minimise energy use. These services are among Exergy’s core capabilities, while EA has the data feeds of 15-minute captures of every client’s energy use dating back as far as 10 years.
Wooldridge said that these complementary resources, in addition to already having some shared clients, made linking the teams together logical.
“Efficiency is becoming more of a driver [in the energy market],” Mr Wooldridge said.
“Exergy has a solid reputation [in energy efficiency consulting], and it is very good for Energy Action to have those skills.
“Both teams are very excited about [the merger] and about being able to offer the three pillars – procurement, contracts management and sustainability engineering.”
One of the ways in which EA assists clients to achieve greater efficiency and better pricing is through improving a site’s energy use structures, smoothing out the peaks and valleys of demand. This requires an understanding of the energy use intensity profile, which is where the data collection streams are valuable.
Mr Wooldridge outlined how the combined capabilities create an effective synergy, with EA data giving an accurate baseline picture, while Dr Bannister’s team calculates the best possible footprint for the site and formulates the strategies to achieve it.
“On the consulting and auditing side, it’s become a very tight science,” Mr Wooldridge said.
The business case is getting better
He explained that the growth in the market for sustainable and energy-efficient technology has improved the business case for implementing those energy footprint reduction measures.
“The technology for lighting, solar and power correction has all decreased in capital cost, whereas [some years ago] there was a return on investment inhibitor on the type of equipment available. [In the current market] a lighting change-out now has an 18 month ROI. Solar used to be a 15 year payback, now there is an eight year payback for an industrial site for solar installations.
“Increasingly, customers [in the commercial sector] who are looking to increase to a six star NABERS rating from a five star rating, and seeking to achieve zero emissions, are very interested in solar.”
EA also provides a platform for new retailers to enter the marketplace, such as Red Energy, a subsidiary of the Snowy Mountains Hydro Scheme, one of Australia’s earliest and easily the largest renewable power generator.
Mr Wooldridge said the platform provides a low-cost point of entry into the market for such firms, who are first assessed for their acceptability as an energy retailer.
“[Introducing new retailers] keeps the larger groups more accountable and price focused,” Mr Wooldridge said.
Green power percentages and generation method can be made a specification for clients seeking providers through the EA reverse auction platform.
Renewables in demand even if the cost is greater
“We also have full green auctions; we see it occasionally in the commercial building [market] that a client will decide that even though it will cost them more for the energy, they want 100 per cent renewable energy. That decision can turn a base building level five star NABERS into a six star NABERS rating.
“Most people do make a cost justification for sustainability measures; for the commercial sector it is about increased value of the building and increased rents.”
Links to ANU
Exergy had developed a close alignment with the Australian National University, which is engaged in research into sustainable energy through the ANU Centre for Sustainable Energy Systems and ANU Energy Change Institute.
Exergy has provided what Mr Wooldridge described as a “valuable learning ground” for students on work experience in the firm, giving them a sound induction into commercial consulting practice and also provided Exergy with a pool of graduates for employee recruitment.
Mr Woodridge said he expected this relationship to continue, adding yet another valuable resource to EA’s newly enhanced capabilities.