Powershop looks to Aussie expansion

Powershop, the specialist online electricity retailer, is researching an expansion across the Tasman after being named one of the fastest-growing companies in Asia Pacific.

A subsidiary of state-owned Meridian, Powershop was placed sixth in the Deloitte Technology Fast 500 Asia Pacific index of the region's fastest growing tech companies, the highest ranking by a New Zealand company.

Powershop more than doubled its customer base to just over 40,000 in the year to October 31, and, according to Deloitte, recorded revenue growth of 5280 per cent in three years.

Chief executive Ari Sargent said although Powershop expected to maintain a similar rate of customer growth, the percentage figure would inevitably drop because they would compare to a higher base.

However, now international expansion beckons.

The Wellington company is in the early stages of planning an expansion to Australia, a market approximately five times the size of New Zealand, but, according to Sargent, one where customer offerings are poor. "There's an obvious opportunity to go in with a new business model which will serve customers better and our record in New Zealand supports that, so it's an obvious next step from now."

No firm decision had been made about the move, although market research was under way.

"It's at the market exploration stage. We know it's five times the size, and have done some preliminary margin analysis, but there's nothing in terms of concrete plans, of how or who we might go into that market with."

Powershop buys electricity from the spot market or by signing agreements with competitors, although it has the backing of Meridian, New Zealand's largest electricity generator.

Sargent said should Powershop commit to expanding across the Tasman, it would be likely to do so in partnership with an established player.

"Our initial thinking is that it makes sense to do it with a partner.

"In an energy market where you don't have any involvement, market knowledge is probably critical," he said, adding, however, that the Australian wholesale market had deeper liquidity, giving more scope for retail-only players to compete.

"There might be opportunities to get the right people on board and do it ourselves."

Sargent said the company expected to experience the same kind of linear growth it had seen in New Zealand over the last 12 months.

"What we're planning on, which is probably a bit conservative, is about the same level of absolute growth, so around 1500 and 2000 customers a month.

"We're probably expecting to do a bit more than that, but for planning purposes, more of the same."

- © Fairfax NZ News