Good Energy has put its 47.5MW power generation portfolio up for sale to fund a transition from a renewables utility to an energy services provider. It wants to dispose of the plants, which it said were under-valued at £56.8 million in an assessment in June, in the first quarter of next year and it plans to drip-feed the cash into growth in electric transport and decentralised generation. The disposal further differentiates Good Energy’s business from fellow green supplier Ecotricity, after Good Energy fought off a takeover bid from Ecotricity in the autumn.
Good Energy will start its new investment programme with a further investment into EV charge mapping app Zap-Map, which is expected to raise £7 million by spring to expand internationally. It is also investing £1 million in a new platform for its decentralised energy service business. It has over 175,000 small-scale Feed-in Tariff generation customers who will exit the support mechanism over time and Good Energy said the new platform “will enable smart export for solar customers and the ability to pay actual as opposed to deemed rates, providing material benefits to the business and customers”. It will roll out the platform in the first half of 2022 to support growth in this customer segment and said it expects payback within 12 months.
£1 million bill for supplier exits
In its market update the company admitted that “continued volatility in the energy industry will put short term financial pressure on the business”. It said the impact of supplier market exits will be unforecasted costs of up to £1 million through the Renewables Obligation and Feed in Tariffs levy mutualisation processes and £1.5m of additional commodity costs from a higher number of business and domestic customers than expected. However, Good Energy is exempt from the price cap, so it has flexibility to change tariff pricing, and it said that option would be “monitored closely” over the winter.
The company said it expects “a certain normalisation to have occurred within the domestic market” by spring 2022, “with significantly fewer participants competing in a more balanced manner on product attributes, differentiated service and price.” It welcomed what it expected to be “ a degree of industry restructure, with an increased level of regulatory scrutiny particularly on capital adequacy, consumer protection and operational and financial governance.”
Nigel Pocklington, chief executive, said:”Our job is done as a developer and asset owner as we focus on the new frontiers – the electrification of transport and decentralised energy generation.
Bigger investment in Zap-Map, will reinforce their market position and help deliver the products and services for EV drivers. We see significant opportunities to scale this business internationally.
We are also increasing investment in a brand-new platform to better serve our decentralised energy customers. With one of the largest feed in tariff customer bases, we are investing in new products and services to better serve their needs.
Whilst the retail energy market continues to experience some short-term challenges, we remain positive about the future. We will largely be a debt free company, with a strong balance sheet for growth.”