Shell now acquires First Utility to rival Big Six energy providers after strategic take-over of BPV car-charging provider

Shell also recently acquired a BPV re-charging provider
Shell also recently acquired a BPV re-charging provider

The rising risk of serious market disruption – if not, in the longer run, existence-level life threat – from de-carbonising the economy (first electricity, and now heating and battery-powered vehicles, BPVs) continues to quicken the pace of change in the hydro-carbon energy sector.

Oil giant BP is making increased investment in gas (rather than oil) on a global basis, while Shell late last year took over a maker of plug-in re-charging points for BPVs.

And in a further disruptive/ consolidation move, Shell’s recently announced take-over of First Utility –  an independent UK gas and electricity provider – is due to completed by the end of next month.

Shell’s energy supply division, trading and marketing expertise, combined with First Utility’s experience in serving around 825,000 homes in the UK, will enable First Utility to grow and develop more innovative services for customers.

First Utility is one of the largest independent UK household energy and broadband suppliers (ie outwith the Big Six) with a 3% share of the UK residential energy market. First Utility’s 100%-owned subsidiary in Germany is also included in the deal.

Darren Braham, Co-founder and CFO of First Utility described Shell as “the ideal business to acquire us” and added:

“This deal allows First Utility to capitalise on all the opportunities provided by digitalisation, decarbonisation and the drive towards battery technology and electric vehicles”.

Faced with the decarbonisation of its core markets for heating and transport fuels, the logic for Shell to enter retail household energy looks equally compelling.

Mark Gainsborough, Executive Vice-President of Shell’s New Energies Group, said: “The supply and demand of residential energy is rapidly changing, driven by new technologies that enable householders to better manage their energy use, and the need for a low-carbon energy system.

“This combination will enable Shell to enter a new part of the energy market in the UK and to improve choice for customers by delivering innovative services at competitive prices.

“We see a new electricity value-chain emerging in the UK, in which customers play an increasingly important role – managing their use and selling some power back to the grid.

“This agreement complements the Shell group’s growing network of forecourt charging points and our recent acquisition of New Motion, one of Europe’s largest vehicle charging providers, which gives customers the flexibility to charge their electric vehicles at home, work and on the go. 

Shell Energy Europe Limited (SEEL), the Shell group’s European gas and power marketing and trading business, will continue to supply wholesale gas and electricity to energy retailers in the UK and Europe, including First Utility. In 2015, a licensing agreement between Shell Brands International and First Utility enabled them to operate in the German household energy sector under the Shell brand.

The Big Six energy providers dominate around 85% of the British gas and electricity market.
The Big Six energy providers dominate around 85% of the British gas and electricity market.

Meanwhile, the lure of de-regulated (but state subsidised) wind-powered electricity generation is one of the drivers behind the recently announced proposed merger of the retail divisions of Perth-based utility SSE and Innogy – two of the Big Six providers.

The combined new company will have 11.5 million customer accounts – making it the second biggest Big Six energy supplier in Britain if the proposal is approved by shareholders and regulators.

4 Jan 2018

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