Royal Dutch Shell will acquire First Utility, a broadband provider and supplier of household energy in Britain. This is expected to increase competition among the six largest energy suppliers in the country. Shell did not disclose how much it will pay for the purchase which will allow to supply energy not just in the United Kingdom but also in Germany.
Prior to the deal the two companies had enjoyed a business relationship lasting four years during which Shell provided First Utility with wholesale power and gas. And in Germany the energy supplier traders under the Royal Dutch Shell brand.
According to First Utility’s co-founder, Darren Braham, discussions between the two firms of a possible takeover started three months ago. The deal is expected to be concluded next year before March.
Big 6 customers
“The customer base of First Utility helps bring together the investments Shell has made through its New Energies business in electric vehicle charging and the connected home and come up with some really interesting propositions to target big six customers,” said Braham.
First Utility has a customer base of about 825,000 households which it supplies gas and electricity. Recently First Utility has moved into the provision of broadband.
The big six energy suppliers are under increasing threat from new energy rivals who have emerged and who have lured away customers numbering hundreds of thousands. The traditional suppliers of energy are also facing heavy financial pressure as there is a looming price cap the government is set to introduce on standard energy deals.
Clean energy ambitions
Shell’s acquisition of First Utility is expected to assist in unlocking the ambitions of the Anglo-Dutch oil major in clean energy. It will also assist in rolling out electric vehicle charging services and infrastructure. Shell has identified getting into clean energy as the solution to the threat posed by the move away from combustion engine vehicles which will mean reduced demand for diesel and petrol.
The head of the New Energies unit at Royal Dutch Shell, Mark Gainsborough, has indicated that investments in the expanding electricity market will be doubled to $2 billion in the coming year. According to Gainsborough the energy market will witness the largest growth in electricity due to the adoption of electric vehicles.
Earlier in the year reports indicated that Shell had made plans to open UK’s first no-fossil fuel service station next year in London as part of the oil major’s push towards cleaner motoring in order to lower carbon emissions.