Blu Label Unlimited (BLU) is betting big on its electricity business as it adds energy generation, smart meters and a revenue-recovery service.
The pre-paid voucher and ticketing group recently announced subsidiary BLU Energy Trading had been granted a multi-year energy trading licence by the National Energy Regulator of SA (Nersa) to provide renewable energy.
“Our intention is to produce smaller quantities of energy via solar batteries at a substation level that would feed directly to the municipalities, which would then sell it to clients,” said Mark Levy, joint CEO of BLU Label.
BLU will partner companies with specialised skills in the electricity infrastructure space.
“We have developed a simpler model on how to provide energy at a substation level. Our intention would be to build what we call smaller, 10MW-40MW plants that supply energy directly into a node (substation),” said Levy.
BLU Energy has secured early power purchase agreements, advancing a growing project pipeline.
Electricity is bigger than airtime. It is slightly ahead of telecoms. There is tremendous growth in electricity. We’re probably not even halfway to what we can do
— Brett Levy, BLU Label’s joint CEO
“BLU Energy Solutions emerged as a key strategic priority during the period. While now a modest contributor to group earnings, BLU Energy is expected to become a meaningful medium-term earnings driver as projects move into construction and first revenues are realised,” said Levy.
The energy generation adds to its other electricity services and products that include pre-paid vouchers and pre-paid voucher advances and smart meters. It will also add revenue assurance, a model designed by its subsidiary Cigicell to help municipalities recover electricity revenues.
According to Levy, 30% of electricity is stolen. “We have come up with this unique product, revenue assurance, to help municipalities look for what we call lost, stolen or evaporated supplied energy. What that means is they’re buying it correctly. They are then pushing it into the market, but they’re not collecting what they sell.”
The system will use geolocation technology to track buildings and check if the meter is billed correctly. Two revenue-assurance contracts have been signed, with Tshwane and Ekurhuleni.
According to Brett Levy, BLU’s joint CEO, prepaid electricity has surpassed airtime, which in previous years was the bread and butter of the business.
“Electricity is bigger than airtime. It is slightly ahead of telecoms. There is tremendous growth in electricity. We’re probably not even halfway to what we can do,” he said, adding that “the concentration on telcos is less. It is a solid industry for us, and we want to maintain it. We see growth across the rest of our products.”
Levy said BLU’s universal voucher, or entertainment voucher, which allows consumers to pay for different services and products, including gaming, has grown 40% in the past two years.
He said there were still opportunities for getting more of BLU’s products sold through banking platforms.
“We deal with all the banks, but in some we might do 80% of the product. With others, we might do 15% of the product, so the main focus for us is to get more of our product into the banking world.”
BLU, which has 19 subsidiaries, down from 29 about five years ago, will continue to review its portfolio, with some entities expected to be merged.
“That project will be done by May. [It’s about] putting the best of breeds together.”
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