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Summary

In a deal estimated to be worth £65m, British Gas has announced its acquisition of its long-term smart home technology partner AlertMe. We believe that the acquisition will benefit both companies. It is a clear statement of intent by British Gas to be the driving force for the British smart home market, while AlertMe will gain access to British Gas’s international markets and the financial strength to accelerate its product development and platform-as-a-service offering.

British Gas reaffirms its leadership of the British smart home market

For some years we have cited British Gas as one of the leading utilities in the world, if not the leading utility, in terms of smart home innovation. For the past five years, the company’s strategy has focused on the development of residential energy services (as opposed to simple energy supply), and smart home technology has played a leading role in this. British Gas has deployed far more smart meters – 1.3 million – than any other British supplier. This deployment is, in effect, a large-scale trial that has allowed British Gas to develop smart home services in conjunction with smart meters.

Innovation is central to British Gas’s strategy to drive growth and customer service improvements, and AlertMe’s technology has helped it to develop its smart home proposition. The two companies’ relationship solidified in 2010 when British Gas took an equity stake. Since then, AlertMe has delivered a number of smart home products to British Gas’s customers, including its remote heating product Hive. AlertMe’s business has grown well beyond British Gas: it successfully supplies smart home products to the Lowe’s store group in the US.

The AlertMe acquisition is a timely move for British Gas. There is only a year to go before the start of the mandated smart meter rollout in Britain, and the Department of Energy and Climate Change has recently announced how home area networks will interoperate with smart meters. It is also a clear statement to British Gas’s UK competitors: it believes that the smart home will shape energy services in the future and it wants to lead the market in this space. AlertMe will also benefit in a number of ways: the size and scale of British Gas give it significant financial security, and, through British Gas’s sister companies Direct Energy and Bord Gais, bolster its presence in the US and Ireland. AlertMe expects that being part of a much larger company will give it the scale to expand and accelerate its product offering beyond smart energy into other smart home applications. It also hopes to develop a platform-as-a-service that it can offer globally.

Appendix

Further reading

“Energy suppliers with the worst customer service invest the least in smart energy technology,” IT0002-000315 (January 2015)

“Britain to deploy HAN platform with smart meters, but competition may be stifled,” IT0002-000316 (January 2015)

Author

Stuart Ravens, Principal Analyst, Utilities Technology

stuart.ravens@ovum.com

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