Centrica futureproofs flexibility with aggregator acquisition

Centrica has acquired the Belgian demand response startup REstore for €70m.
Published: Wed 08 Nov 2017

With growing need to integrate greater shares of renewable energies the question arises around the procurement of flexibility, both at the transmission level and particularly at the distribution level where much of these new renewables are being installed.

Clearly looking towards this potential, and perhaps also as a means of overcoming the likely regulatory restrictions on own flexibility procurement, UK multinational energy company Centrica has acquired the Belgium headquartered demand response aggregator REstore.

The transaction value was €70m (£62m) in cash.

Flexibility potential

Under the European Commission’s Clean Energy Package, the procurement of flexibility will be a market function with distribution system operators (DSOs) required to exhibit “neutrality” in the options that are selected.

Related to that is the issue of energy storage, which is a key form of flexibility, and the Package restricts storage ownership and use by DSOs to only very limited circumstances.

In the UK, the procurement of flexibility will be key for the distribution network operators to evolve to DSOs.

While the need for flexibility is very localised at the distribution level, the potential is significant. For example in the UK a 2016 study for Ofgem and the Department of Business, Energy and Innovation Systems from the Carbon Trust and Imperial College identified potential savings of flexibility of up to £40bn by 2050.

REstore opportunity

REstore, which was founded in 2010, manages 1.7GW of peak load from more than 150 industrial and commercial (I&C) customers across Belgium, UK, France and Germany, providing ancillary services including frequency response and capacity markets.

Among these are major chemical, steel and food manufacturers including ArcelorMittal, Holcim and Sappi.

The business will form part of Centrica’s international Distributed Energy & Power unit, which provides energy insight, asset optimisation and energy solutions to large energy users under the Centrica Business Solutions banner.

According to a statement the acquisition will enable demand response aggregation as a core part of the offer to customers and is expected to represent a significant growth opportunity for Centrica as global electricity markets evolve.

It will also further expand Centrica’s geographic footprint into new European markets.

“This acquisition is an important step forward in the delivery of our strategy, expanding on our offer to business customers to help them take control of their energy and gain competitive advantage,” says Jorge Pikunic, Managing Director of Centrica Distributed Energy & Power, in the statement.

“REstore’s proprietary technology and track record with large I&C customers will add to our optimisation capabilities and enable growth opportunities as global markets for flexibility continue to evolve.”

 

Jon Slowe, Director of Delta-ee, discusses winning strategies in the emerging flexibility market.

 

Grid edge opportunities

European energy companies are showing an increasing appetite for getting in on opportunities at the grid edge.

Just this year Enel has acquired three such companies in the US – energy storage software and project developer Demand Energy, demand response provider EnerNOC and e-mobility solutions company eMotorWerks

In addition, Enel acquired the standalone Tynemouth battery storage system in the UK to “gain experience” of such projects.

Another 2017 acquisition was that by French energy multinational Engie of the Netherlands-based electric vehicle charging service provider EV-Box. Last year Engie acquired the US energy company OpTerra and a majority share in the battery storage specialist Green Charge Networks.

Centrica itself has made a number of other acquisitions. These include the combined heat and power (CHP) solutions provider ENER-G Cogen, Danish energy management company Neas Energy and the US energy management solutions provider Panoramic Power.

In support of its Connected Home business, acquisitions have included home technology provider AlertMe and the water leak detection solution provider FlowGem.

As utilities look to build new revenue streams with products and services for the future energy system – or as Centrica puts it in reference to its “strategic transformation”, a “shift of resources from asset businesses to customer-facing businesses” – more such acquisitions can be expected.

Since the start of 2016 Centrica has spent over £500m “in growth areas on acquisitions and incremental capital expenditure and revenue investment” out of a planned £1.5bn resource reallocation to 2020.

In its 2017-19 strategic plan Enel expects to spend around €2bn for acquisitions, “mainly in networks”. In a recent interview with Bloomberg, CEO Francesco Starace indicated that energy storage was in the company’s sights.

Related Webinar