The profitability of the electricity embedded network sector is notably diminishing, signaling an end to the previously more lucrative era. The implementation of policies by Energex in Queensland, particularly regarding NMI abolishment, has made the conversion of existing (brownfield) sites almost unfeasible. Furthermore, the Australian Energy Regulator's (AER) requirements add another layer of complexity to this challenge. The competition in new development (greenfield) sites is intense, with numerous companies vying for developers' attention by offering various incentives. This intense competition forces developers to negotiate aggressively for complimentary infrastructure and reduced electricity rates for their buyers, thereby compressing profit margins further in the quest to secure a site or customer.Additionally, site body corp companies have grown increasingly knowledgeable about the embedded network market over the past decade, due to the expiration and renegotiation of contracts. This has emboldened them to demand lower electricity rates, intensifying the competition among providers. The gap between wholesale and retail electricity rates has become critically narrow, leaving little to no room for profit once operational costs are accounted for.LPE, previously leveraging wholesale contracts with entities like Shell (formerly ERM), is now branching into the embedded network sector, a move whose outcome remains to be seen. I might speculate about Shell considering a takeover of LPE. I feel that LPE primarily focuses on electricity, potentially overlooking for a more aggressive sales tactic into other profitable central services such as gas hot water, which could offer better margins.
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