The multi-utility is aiming to extent its successful model of 'owning the home' from the UK to continental Europe, and this first step into the region sees it challenging Belgian giant Electrabel. From here the company is aiming to develop across the Benelux region and into northwest Germany. If it succeeds, the rewards could be high.
Centrica, the UK multi-utility and former gas monopoly, has agreed to take a 50% stake in a new Belgian energy supply firm. The partnership, which the company has formed with five Flemish municipal utilities ('intercommunales') places Centrica as the main competitor to Electrabel in Belgium and allows it time to develop its business in Belgium before the residential market begins to be opened up in two years' time.
Already, the company will be able to target the over 20GWh market in Flanders, which opens to competition on 1 July this year, with the 1GWh market open from 1 July 2002. However, it will be the residential market that Centrica will which to focus on, developing the customer base of 595,000 electricity customers and 166,000 gas customers into one similar to its UK customer base, by offering a line up of gas, electricity, telecoms, and financial services.
Belgium and the Netherlands were the most likely first targets for Centrica over others such as France, Germany and Spain, since the first two are currently more favorable in terms of a clear regulatory framework. Once real competition develops in Germany, then Centrica is expected to move into this enormous market, before looking for other opportunities arising from unbundling of assets, so that it can purchase a supply base without the burden of regulated distribution assets.
Overall, this deal is a clear sign that the company, having already exported its skills and expertise to the US, is looking to take on Europe with gusto.