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Can emerging energy player Genesis Energy Ltd (ASX:GNE) vie with the big guns?

New Zealand based ASX-listed diversified energy company Genesis Energy Ltd (ASX: GNE) released its annual report today, detailing its strategy to become the first choice in energy management for customers.

Genesis operates across the residential, commercial and industrial sectors in New Zealand, selling natural gas, LPG and electricity.

Its customer churn has improved 5 percentage points to 16% in the first quarter of FY19, with Genesis labelling FY18 “foundational” in terms of integrating its portfolio.

Electricity sales are up 4% while gas sales volume has increased by 8% and while carbon emissions fell, so too did total generation volume, by 15%.

With its 83% drop in NPAT to $20 million for FY18 – off the back of revaluations of $119 million – convincing investors of its worth could prove difficult.

Shareholders may have found its 2% dividend rise to 16.9c per share a sweetener and operating cash flow did increase by 33% to $331 million, but Genesis will likely need to make better inroads in terms of production volume to convince investors.

Genesis shares have had a volatile 12 months but are up 0.4% to $2.25 at the time of writing.

Life is tough as an emerging player in the energy sector, just ask $550 million market cap company Infigen Energy Ltd (ASX: IFN).

The developer and operator of renewable energy generation assets in Australia released its monthly production results today, showing production rises at its Capital, Lake Bonney and Woodlawn wind farms, but a drop in production at Alinta.

Infigen reported a revenue uptick of 7% for FY18 – up $13.4 million on FY17 to $210.1 million.

Its FY18 results showed underlying EBITDA also rose 7% to $149.1 million with NPAT up 41% to $45.7 million and the stabilisation of its business structure seeing corporate costs drop 16% from FY17 to FY18.

Infigen shares are up 0.3% to 57c per share at the time of writing but have not fared well over the last six months, down from a 75c share price high back in June.

Big-name energy players AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) still dominate the space with investors awaiting the announcement of a new AGL CEO by year’s end as its shares hover down near 52-week low levels at $19.64.

Integrated energy company Origin has fared better in terms of its share price of late, although down slightly today, Origin shares seem to be back on the incline after all but bottoming out in August after the release of FY18 results.

Origin’s reported net profit for FY18 fell short of expectations, with FY19’s outlook appearing weaker than expected also.

Origin management warned underlying EBITDA for its energy markets segment would fall between $1.5 billion and $1.6 billion in FY19 compared to an FY18 increase of 21%.

There is no doubt Origin is struggling with intense market competition at present and with AGL shareholders at least getting the benefit of a dividend, Origin really needs to look closely at re-starting its own in FY19.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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