Energy-efficient specialist eEnergy Group PLC (LON:EAAS) made a steady start as trading got underway in AIM’s first float of the new year.
The company joined the junior market through a reverse takeover of Alexander Mining and a £2mln placing at 7.5p with the shares changing hands at 8p early on, valuing the business at £10.5mln.
Currently focused on LED lighting, eEnergy is promoting the message that reducing energy use and carbon emissions can be profitable.
Harvey Sinclair, chief executive, says that a lot of organisations are put off by the high capital cost that comes with energy-efficient projects.
“We take that cost away for schools and businesses and allow them to take advantage for a fixed monthly fee"
Schools, especially, are a market eEnergy is currently targeting.
Lighting can account for up to 50% of a school’s energy budget.
An LED upgrade can cut that cost by up to 75% with a 30% reduction in energy use and carbon emissions or about ten trees per year per classroom, says Sinclair.
Energy cost savings are greater than the monthly service fee while the quality of lighting is improved and carbon emissions reduced.
Subsidiary eLight does all the procurement, funding, installation and maintenance and in cash terms the savings can generate up to £250,000 over ten years.
It is numbers like these that underline the huge opportunity in the sustainable energy space, says Sinclair.
He sees the sector following the trend of mobile technology and cars, where monthly subscriptions have become the norm with no capital requirements for the customer.
So far, eEnergy has completed around 800 LED lighting projects in the UK and Ireland, but there are 25,000 schools in the UK alone of which 80% have yet to switch to LED.
eEnergy’s ambitions stretch further than just lighting, however.
Reasons for the listing are to fund a new app to help it push in the small business space and also to give it the currency to start a buy and build consolidation strategy among sustainable energy businesses.
That would take it into areas such as energy management, where it can both acquire customers and apply the experience it has built up during through its LED projects to offer a range of greener alternatives for their energy requirements.
Average contracts currently are sized around £130,000 but this will get larger as it moves up the value chain.
For example, Sinclair is hopeful of retail contracts that will see between 600-700 stores converted.
Revenues in the year to June were £4.5mln, but house broker Turner Pope forecasts this doubling to £8.4mln in the current year and rising again to £12.6mln in 2021.
That is also the year the broker sees eEnergy moving into profit after a loss of £1.6mln last year.
How fast the buy and build strategy progresses will have a bearing on these numbers, but there is no doubt the demand is there.
Estimates across the EU are for the energy efficiency market overall to be worth €50bn by 2025 and with pressure mounting on governments everywhere to take more radical action on climate and environmental issues it might be a lot higher.