Interesting thread. I like the range of opinions - makes for...

Interesting thread. I like the range of opinions - makes for healthy and informed debate.

I think if you're patient, this Co. is a good investment at these prices. Ultimately, time will tell. Wouldn't mind them lowering their divvy for a while though - just till things get back on track.

I don't see renewables/batteries/de-centralised power  etc. making this Company worthless - though I acknowledge that over time, renewables will gradually gain market share at the expense of fossil fuels. Coal is more of a risk than gas though (carbon tax will affect coal generation much more so than gas - coal is far dirtier in terms of CO2 production) - so ERM's generating assets should be fine, for 20 years or so.

Checkout p.13 of the paper by the Oil and Gas major Total, with projected energy generation mixes, from 2015 - 2035
http://www.total.com/sites/default/files/atoms/files/integrating_climate_into_our_strategy_eng.pdf

Regarding retail sales - yes some Companies and individuals will invest in generating assets - solar/batteries etc. These will be individuals who are enthusiasts, or companies looking to lower their cost of electricity (notice lower, not replace). For a company to invest in their own generation/sales, they will be diverting attention from their core business. Yes some will still do it, cause years later they will save money (after they've paid off all the capital costs of setting this asset up - and it's not cheap! And now you have maintenance costs too) but I think most will not. I don't think this will have a significant impact on ERM in the near-to-mid term. I see solar and batteries having more of an effect on 'island' generation - so instead of these remote communities continuing to buy diesel for their generator, they will gradually switch to solar/batteries. These remote communities aren't connected to the grid, so can't sell their excess power back into it.  

ERM have a growth strategy in place and yes this will take time to come about. They are thinking about the future - refer their Greensense and Lumiled acquisitions. I see their USA expansion as the greatest risk - different market to Australia and so what has worked in Australia (and ERM have done this really well), will not necessarily work in USA. So as shareholders, we have to hope/trust that ERM Management have done their homework. If they appoint good USA Management to run Source Power and give them the flexibility to run that business differently from the Australian retail business, things should be ok.

Ultimately, ERM Management will adapt if they see threats (well they will, if they are competent). If the retail or generation market changes, I imagine ERM will make further acquisitions, or change their strategy. I will keep holding this Co. and adding some more at these prices - if one has a long-term mindset, shouldn't be a problem.

Good luck to all,
Asparagii