Shell sells UK, German home energy businesses to Octopus Energy

Shell has sold its UK and German energy retail business to Octopus Energy home energy businesses for an undisclosed sum, the oil major said Sept. 1.

The business provides gas, power and broadband services to 2 million customers under the Shell Energy brand.

"To drive performance, discipline and simplification, we are prioritizing countries, projects, and routes to market where we can deliver the most value," said Steve Hill, Executive Vice-President, Shell Energy.

The deal is expected to complete in the fourth quarter of 2023 subject to regulatory approval.

Shell is also winding down its home energy retail business in the Netherlands "and is in the process of transitioning those customers," it said.

Shell Energy domestic retail businesses in the US and Australia as well its wholesale and small to medium enterprise customer supply businesses were unaffected, it said.

Shell flagged its intention to divest its European domestic retail business during its June 14 capital markets day.

The UK retail energy market has suffered severe financial losses and multiple business failures in recent years, with 19 suppliers exiting in the fourth quarter of 2021 alone.

There were 21 active suppliers left as of March 2023, down from a peak of 70 in 2018.

Octopus' meteoric rise has been built on absorbing the customer bases of failed UK suppliers, notably Bulb Energy's 1.5 million accounts.

Its UK home power market share has risen from 1.3% in Q3 2018 to 16.6% ahead of the Shell acquisition. The deal will push it close in size to the UK's biggest domestic power supplier, British Gas (see table).

As part of the agreement, meanwhile, Shell and Octopus have signed a memorandum of understanding to explore "a potential international partnership" on electric vehicle charging services.

In July, energy regulator Ofgem said it would apply minimum capital requirements on UK suppliers to strengthen the sector's financial resilience.

Ofgem has had to find suppliers of last resort for around 4 million consumers of failed businesses since 2021. Supporting Bulb Energy alone has cost the UK taxpayer GBP6.5 billion ($8.4 billion) to date, according to the Office for Budget Responsibility.