KUHN CAPITAL Tuesday, March 20, 2018
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The Flight of Energy IT

April 6

We’ve earlier commented on how the slow-down in energy industry deregulation has driven US software vendors overseas in search of freer markets. For them, a deregulated industry is about as important as oxygen: it forces utilities to deal with multiple suppliers and end-users, and to better manage sales, expenses and assets, all this requiring cutting-edge automation.

US-based Excelergy was born back in the rosy glow of US deregulation, operating data hubs that allowed local distribution companies (LDC’s) and independent retail marketers to coordinate operations. But as deregulation slowed or even reversed in the wake of Enron and the political meddling that brought on California’s energy melt-down, the fortunes of retail marketers declined.

In response, Excelergy nimbly moved its focus to Europe, blessed as that region is by more enlightened bureaucrats who understand how deregulation leads to lower energy prices and stronger utility investor returns. The Europeans plan to complete the shift to free energy markets in 2007 and already more than 50% of Excelergy’s revenue is derived from "over there".

So in this context, we note with interest Excelergy’s recent sale to Dutch-owned private equity group, Brinvest. Brinvest’s portfolio includes Xelion (custom software), Xemex (automated meter reading [AMR]) and companies selling outsourced billing services.

With the transaction, Excelergy says it will dig deeper into its utility industry niche with software and services that support the retail energy market: customer care and billing, pricing, transactional systems, and hedging for large energy consumers, stuff unfortunately not much in demand here.

It’s also unfortunate that many US energy software vendors, once global pioneers in their field, find themselves forced to leave the country for clients and capital.

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