Late on December 23rd, Energy One signed a share purchase agreement to acquire 100% of eZ-nergy. Energy One already owns UK-based Contigo, a leading solutions provider in the UK power and gas space, so the addition of eZ-nergy, with their continental European energy presence provides considerable synergies, and appears to position Energy One as a formidable emerging competitor in the broader European energy markets.
eZ-nergy is a French vendor that has established itself over the last few years in the operations, scheduling and logistics side of power and gas in Europe and has recently entered the algo trading area. Established in 2013, eZ-nergy is headquartered in Paris and has 44 customers in 8 countries and a staff of 20. Its software suite includes the modules eZ-Ops balancing, eZ-Ops scheduling and eZ-Ops automated trading all running under a single UI. The company’s business model is interesting in that it not only offers software but will also use that software to manage operations on behalf of its clients.
Contigo (acquired by Energy One in 2018) offers enTrader, an ETRM solution as well as enVoy, a solution designed to manage UK ECVN, EDT and EDL Physical Notifications and bid-offer submissions, as well as a number of other energy-focused solutions. Based in the UK, the company has developed a strong installed base in that country and has in recent years begun to successfully expand into continental Europe.
What is interesting about this acquisition is the lack of overlap between the eZ-nergy and Contigo. Contigo has been working to expand its presence in Europe where eZ-nergy has had good success, and eZ-nergy has sought to expand into the UK market. Having worked together informally over the last several years, Contigo’s EnTrader ETRM already works with eZ-nergy’s eZ-Ops and the two companies already share three customers. The products are written in the same language with little or no functional overlap. In fact, eZ-Ops fills a gap for Contigo’s EnVoy in that it provides the UK gas support that Contigo still needs to add to it. In terms of SaaS, there is also potential for eZ-nergy to continue to offer 24hour support more cost effectively by using Energy One resources in a follow the sun approach as opposed to using a night shift, for example. The result of this union is that the combined entity can now offer users an end-to-end solution for European power and gas physical, financial trading and scheduling.
Energy One’s CEO, Shaun Ankers told ComTech that “Energy One’s approach is to put together like-minded suppliers with strong product sets and a culture dedicated to serving customers with easy-to-install, reliable solutions. Both Contigo and eZ-nergy individually have proven track records delivering value with products and services that assist customers across Europe. Together, they offer a pan-European solution for the entire portfolio of wholesale energy trading needs, for both physical and contract energy – backed by a global Company group. We are very excited to work with Johann, Adrien and Jean at eZ-nergy.” Meanwhile, Contigo CEO, Simon Wheeler tells us that everyone at Contigo is excited to be working more formally with eZ-nergy going forward. He anticipates that “it may yet be 3-4 months before the acquisition by Energy One is complete as French Government approvals are still needed but should be readily forthcoming.”
According to Mr. Wheeler, both eZ-nergy and Contigo will retain their current branding as Energy One business units but they do expect to see some back office and sales & marketing synergies as a result of the acquisition. There will also be no change in management at either vendor with the three co-founders of eZ-nergy keen to leverage the new relationships to grow the business. In fact, Simon doesn’t see much changing in the near-term as they build a new strategy and start to implement it. As previously noted, with little functional overlap in the two product sets, there really isn’t much to resolve. As such, Simon expects both eZ-nergy and Contigo to quickly benefit from being part of a wider product offering.
Simon further reinforced that it would be ‘business as usual‘ for the eZ-nergy team who will provide the same responsive, high-quality and flexible service its clients have experienced. It will stay focused on European power and gas nomination & scheduling services as well as automated and intraday trading solutions with both software solutions and 24/7 services.
Since the two companies have worked together, share customers and the Contigo executive and technical team were all involved in the due diligence process, Simon expects the pairing to hit the ground running – hence the excitement at Contigo. With BREXIT looming, having an office and a business in France, also provides a BREXIT hedge for the business, he told us.
ComTech sees this as a coming together of two largely complementary businesses under a common umbrella helping to reduce costs, increase efficiencies and stay focused on delivering solutions for the European industry. Having followed both vendors for some time, we expect this new combined business will compete with entities like Brady and Powel as the premier vendors of Europe-wide integrated gas and power solutions. Though there are other ETRM vendors in many of the regional markets, most lack the Europe-wide logistics coverage; and the available logistics solutions from vendors like Belgian-based EGSSIS, for example, lack the ETRM part of the solution.
In terms of the market, although ComTech has seen a bit of a slowdown in European power & gas procurement and does expect the market there to grow more slowly than in the past, there is plenty to play for. We expect to see replacements becoming common in European power & gas as platforms age or lack support, and we do see a lot more smaller traders, marketers and energy producers procuring solutions in the cloud in order to minimize or control costs. For a combination of Contigo and eZ-nergy, the potential market offers a large opportunity for growth and everything to play for.