Integrated Gas Deal a Landmark for Deregulation of Gas Markets in Ireland and UK
Thursday 30th April 2015: Irish gas supplier Naturgy Energy has signed a new deal with C&C Group plc which adds C&C’s production sites in Glasgow and Somerset to Vayu’s existing gas and electricity supply arrangements with C&C in Ireland, with a combined value of €5M over the next three years. The deal represents a milestone for European energy deregulation by enabling, for the first time, a multinational company with operations in the UK and Ireland to procure natural gas centrally from a single supplier. This means that natural gas for C&C’s key manufacturing and distribution sites across Ireland and the UK are now supplied by one provider: Naturgy Energy.
The deal announced today provides C&C Group with direct access to wholesale gas prices in the UK and Ireland, allowing the company to achieve significant cost savings by taking full advantage of cheaper prices available in the wholesale gas markets. As part of a fully managed service, Naturgy Energy will also provide C&C Group with a suite of procurement tools to manage consumption risk in addition to continuous market analysis and advice to minimise energy spend.
Since its expansion into the UK in 2014 targeting the business gas market, Naturgy Energy has invested heavily in winning customers in the industrial and commercial sector – including those with operations spanning both the Irish and UK markets. The Irish energy supplier, which is backed by international commodity group Glencore as its largest shareholder, has grown steadily since 2003 when it became the first independent supplier to be awarded a gas shipping and supply licence in Ireland. The company now supplies 22% of Ireland’s largest natural gas business customers and 15% of the mid-sized gas user segment. Gas customers include companies such as William Grant, Argos, IBM, Debenhams and DHL.
Denis Cronin, head of energy procurement at C&C Group commented: “The deal is an important part of our strategy to drive continuing efficiency across our operations and will significantly streamline our approach to gas procurement in Ireland and the UK. The deal provides our business with increased flexibility and cost benefits and is backed up by Vayu’s deep expertise and understanding of the gas market.”
Colm Kennedy, managing director of Naturgy Energy says that the deal is a landmark for gas procurement in the UK and Ireland given the number of businesses with operations spanning both countries – providing a more integrated and effective model for managing energy related expenditure.
“The energy market is undergoing a fundamental change with businesses seeking more effective ways to procure and manage their energy – moving toward more sophisticated solutions that minimise the per-unit cost of energy purchased,” says Mr Kennedy. “Energy services based in the cloud is the future, and Naturgy are at the forefront of this change.”
Having shaken up the Irish gas market, Mr Kennedy says Naturgy Energy is focussed on becoming a leading provider of gas and energy procurement solutions to businesses across the UK, giving customers a competitive alternative to other suppliers in the sector. Valued at over £7 billion per annum, the UK’s business gas sector is almost ten times the size of Ireland’s, offering significant growth potential for Naturgy.
“We have established a business model that has worked exceptionally well in Ireland, creating flexibility for gas users that wasn’t there previously. Our model is highly transferable – similar to the approach used by telecoms – which means we can follow our existing customers into the UK while also pursuing new business wins in this market. In large part, this is made possible by the continuing evolution of Europe’s energy markets and our backing by Glencore – one of the world’s largest natural resource companies.”