For anyone who doesnt know, I work in...

For anyone who doesnt know, I work in energy/sustainability/carbon areas.

As you can see from their figures - ERM are mostly in the commerical/industrial side of business energy where its negioiated rates. They are charging lower rates and winning contracts, but making a better margin through efficiency. The SME will mean higher margains and I think the general attitude is that people dislike their current energy provider so ERM have a good chance.

Further, they've been developing this peak management where clients are paid to reduce demand, With intelligent analytical software and understanding where the peaks are going to be (across their clients) they can hedge accordingly and actually sell excess power back to the other energy companies in the peak demand periods.

Source: http://poweringon.ermpower.com.au/article/article-17/

With enough skill in trading it can make more sense to use your cash for other thans than acquiring the generators. Especially if they can sell the saved energy hedges to the higher margin SME market.

There is huge opportunity coming online for demand managment / peak load shedding through technology deployment.
Its not only highly economically efficient, its very green as well so it has bipartisan support politcally and is a sensible and achievable goal for businesses. The trading arbritage is high, predictable and can be automated.

The idea of a 'young' energy retailer is usually a high risk venture - but they're generally focused at soaking up customer churn in the residential market.

ERM have a proven strategy that is driving huge growth - a 10m CR for a ~500M cap company is just a cheap leading strategy and I'm hoping that they turn this into some big capital growth with positive earnings surprises next year.