It seems incredible to me, but every time a bulb is changed on the London Underground it apparently costs Transport for London anything from £100 to £1,000.
Only £12 of this is the cost of the new bulb, so you can deduce that each seemingly trifling task involves site preparation, scheduling, ladder shifting, skilled light bulb fitting, contingency planning, health and safety checks, billing, payment, accounting entries, re-stocking and managerial oversight.
There are four million light bulbs on the London Underground! Each one lasts for about a year. So Transport for London must be spending anything from £400m to £4bn per year just changing light bulbs.
These are the facts according to Gavin Little, the new chairman of Active Energy (AEG). Formerly known as Cinpart, this was a successful investment for readers of my Red Hot Penny Shares newsletter.
We bought in at 7.75p in 2009 and checked out at 14.5p within nine months. That proved to be a good decision. Cinpart failed to deliver on its promises to sell its voltage optimisation box, and the share price has slithered back to 2.5p today.
Now though, the company has adopted a new name: Active Energy. It has a new chairman, Gavin Little, who has an interest in the shares but takes no salary; and it has a new strategy. And once again, it looks a very exciting prospect in what is now a booming industry.
How Active Energy is slashing corporate energy bills
Active Energy is looking to become a consultant and service provider in a sector that is enjoying serious growth – energy management. Anybody who pays the energy bills for a big building knows that they have been rising fast, and would like to bring them down. Saving energy, saving money and reducing the carbon footprint are all either commercial or regulatory imperatives, and with every twist upwards of gas and electricity prices the matter becomes more urgent.
The difficulty is not finding products that claim to generate savings – they’re ten a penny – but knowing which of these products work, and which combination of products represents the best solution for each company. Building managers are besieged by salesmen touting energy saving devices, but they do not know the best way to spend their limited budget.
Active Energy still sells its voltage optimisation box, and has a marketing arrangement with Scottish and Southern Energy. By regulating the amount of voltage that passes into a building this can achieve cost savings of 15%-25%.
But while this may make perfect sense for some buildings, it is not necessarily the case with others.
A new alliance that could resurrect Active Energy
Gavin Little quotes an example of a visit to Great Ormond Street Hospital. Active Energy’s assessor looked at the hospital’s energy saving arrangements and concluded that there was little more that could be done.
“You are the first person who has not tried to sell me his product”, was the response of a duly impressed hospital manager. “Now I would like you to look at all of our other buildings, starting with the hospital down the road…”
What Little saw was the need for an independent consultancy. To this end, Active Energy struck an alliance with Epoda. The latter offers software that automatically measures a building’s energy consumption, and then recommends the products that will give the best energy savings. This is particularly pertinent for multi-site property owners such as Punch Taverns that want a consistent appraisal of all their buildings.
Active Energy has built on its energy audit business, now additionally offering installation and maintenance services. This follows the acquisition of Red Line Engineering Services, which has an all-important Transport for London accreditation. Little believes that other transport groups, including the colossal overground railway companies, will pay attention to energy saving moves made by the London Underground, and follow its lead.
So this is a rebirth for Active Energy. It is ambitious and, to his credit, Gavin Little admits that the theory has yet to be turned into practice. On the surface though, the business plan makes good sense. Active Energy is offering a comprehensive solution to confused facilities managers. If they bite, these shares could jump up off the floor. I’m going to be following the fortunes of this great stock very closely in the months ahead.
• This article is taken from Tom Bulford’s free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.