Sunergise brings unique business model to NZ

A young solar power company making waves in the Pacific is now bringing its business model home.

Started two years ago, NZ-registered Sunergise set out to break the mould according to co-founder and CEO Paul Makumbe. "We had seen what was happening in the renewable energy space and looked at the existing business model. It was broken."

The Sunergise "point of difference" is to provide and fund everything, from solar panels to installation, maintenance and even insurance. The customer just pays an agreed rate for the electricity their roof generates which is less than that they would buy it from a power retailer.

Initially the company targeted businesses in the Pacific Islands. "The generation and consumption profiles matched," Makumbe says. "And a lot of generation in the Pacific is diesel. The case was compelling."

While saving CO2 emissions, the business case is winning the day with customers; "We could offer our panels' power cheaper than the grid." It is an approach he refers to as "marrying missionaries and mercenaries."

Before finalising his company offer, Makumbe travelled to the US and spoke to leading solar power CEOs, while creating a uniquely Pacific solution. One of those contacts, Danny Kennedy of Sungevity, is now sitting on the Sunergise board. He brings the experience of growth pains in a renewable energy business.

It is the make up of the board and management team that, Makumbe believes, has brought the company growth in what he admits is a capital hungry business. Recruiting ex-ANZ managing director Bob Lyon as chairman was a crucial step in building a board that had credibility with the banks. Next step was attracting an institutional investor who would back the business model and potentially be in for several funding rounds. The International Finance Corporation, part of the World Bank, came on board bringing credibility and reassurance that the company's due diligence gets the pass mark. They now own 30.3% of Sunergise and are expected to add a member to the board.

Backing has also come from the Fiji Investment Bank's sustainable energy financing facility and other institutional investors could be in the pipeline. Funding has reached close to $10 million already and along with growth has come larger installations. The biggest yet is a 1MW scheme under construction in Vanuatu and Sunergise's portfolio already stretches across Fiji, the Solomon Islands, and Papua New Guinea, with customers from supermarkets and resorts to a poultry farm.

There are no plans to move across the Tasman as the market is seen as too fragmented and risky. Which leads us back to New Zealand, where Sunergise now has its first three customer projects underway in Auckland. Colenso BBDO is a business customer but the other two are houses, signalling interest in the residential market here. Part of Sunergise's approach is to provide enough power for the customer site, without feeding excess electricity back into the grid. This removes an area of uncertainty for Makumbe's business, an issue perfectly illustrated when both Contact Energy and Meridian slashed their buyback rates earlier this month.

The company is careful to target businesses with solid credit ratings; Sunergise need to be sure of payment for the length of the power purchase agreement, typically ten years or more. Competing suppliers are taking notice, offering leasing and finance options. In fact, Makumbe believes much of the innovation to come in solar power is in the business models rather than the technology. Adding storage is one possibility and the company could incorporate utility charges and provide the customer with one bill in the future. "There's a lot more innovation to come," says Makumbe. "It's an exciting time to be involved."