With the bid to carve a niche in the new energy system, major utilities are on the acquisition trail like never before.
For example, recently Southern Company indicated its intention to acquire distributed generation and microgrid provider PowerSecure International. [Engerati-Southern Company Looks To Microgrids] In the UK, British Gas has acquired the smart home platform AlertMe. [Engerati-British Gas- Now A Broader Smart Home Contender]
More recently British Gas’ parent company Centrica has also been acquiring. In April the company acquired Danish energy trading provider Neas Energy in its strategy to expand its trading and asset management activities in Europe. Neas Energy is a provider of energy management and revenue optimisation services for decentralised third-party owned assets.
Now Centrica has followed this with the acquisition of ENER-G Cogen International, a UK-based supplier and operator with over 30 years’ experience with combined heat and power (CHP) solutions for industrial and commercial customers. The deal is worth £145 million.
Distributed energy for UK and US
According to a Centrica statement, ENER-G has around 1,400 units totalling over 500MW under contract with a growing customer book. The business operates predominantly in the UK but also has operations in the US, Hungary, Italy, the Netherlands and Romania and has a strong, diverse customer base across private and public sectors. It also participates in Australia, Ireland, Japan, Canada and Turkey through sales partnerships with local entities.
The business will form part of Centrica’s new international Distributed Energy & Power (DE&P) business and complements the company’s existing capability in installing and managing distributed systems for customers in both the UK and US.
“We are building an international Distributed Energy & Power business, as demand for CHP products and other distributed energy technologies grow. This acquisition strengthens our delivery capability, both in the UK and internationally,” commented Iain Conn, chief executive of Centrica.
“The team at ENER-G Cogen International are very excited to become an integral part of Centrica's Distributed Energy & Power business,” added Alan Barlow, managing director of ENER-G Cogen. “We believe our combined technology offering, sector knowledge and ability to deliver integrated customer focused energy solutions will leave us well placed to grow in the international distributed energy sector.”
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CHP market to more than double
Centrica’s DE&P business was formed last September bringing together the expertise of the company’s Power and Energy Construction Services teams in the UK and members of the Direct Energy team in the US to deliver distributed energy solutions for businesses and other large energy users.
Market trends indicate that the acquisition is both a viable and timely addition to Centrica’s distributed generation portfolio.
Commercial CHP systems are receiving growing interest from policymakers, utilities and building owners. They can be brought online more quickly and without the inefficiencies of traditional large centralized power stations, while owners benefit from improved site resiliency and reduced power costs.
In a 2015 study, Navigant Research estimated that the global CHP installed capacity will more than double from 32.7GW in 2015 to 74.4GW in the decade to 2024. Currently Europe is the largest market, followed closely by North America, but these will be overtaken by the Asia Pacific region, driven by countries with rapidly urbanizing populations such as China.
Navigant Research also noted a trend toward smaller average installations in the European and North American markets as the economic benefits of CHP become more accessible due to improved standardization and better integration with rapidly spreading building automation tools. Improved access to biogas resources and lower natural gas prices are also expected to drive growth across North America.
This is supported by a recent US Department of Energy study, which finds that of the almost 292,000 potential CHP sites across the US, three-quarters are in the 50-500kW capacity range. Broadly the potential there is concentrated in the states with large population centres and thus a large number of commercial facilities and/or a strong industrial presence.