Royal Dutch Shell has acquired First Utility in a move that will see the oil and gas giant become a direct energy provider to 825,000 British homes.
Shell said it plans to “grow and develop” First Utility as it looks set to compete with the so-called Big Six providers in the UK’s energy market.
Mark Gainsborough, Shell’s executive vice president of new energies, 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.”
It is understood that Shell sees the five million people who use its petrol forecourts as potential energy customers.
Financial details of the deal were not disclosed.
First Utility has become the largest challenger to the Big Six – SSE, Npower, Centrica, Iberdrola (SocttishPower), E.On and EDF – but last year the group sank to a £12.7 million loss, even as revenue rose 7% to £908.4 million.
Shell will continue to supply wholesale gas and electricity to energy retailers in the UK and Europe following the deal, including First Utility.
The deal comes after SSE and the owner of Npower reached an agreement earlier this year to merge their operations to create a new energy supplier in the UK.
The flurry of tie ups come as energy providers brace for a raft of regulatory changes after the Government announced that a price cap will be imposed on poor-value energy tariffs.
Darren Braham, co-founder of First Utility, said: “First Utility has brought significant disruption and competition to the energy market and this move will help us to capitalise on all the opportunities provided by digitalisation, decarbonisation and the move to battery technology and electric vehicles.
“Shell is the ideal business to acquire us. They have an excellent understanding of the business and our people and share our enthusiasm for the opportunities to help customers take even greater control of their household services.”