Energy firms invest billions in UK SMEs

Report highlights growing importance of British small and medium-sized businesses

More than £5 billion has been invested in deals between large energy companies and British small and medium-sized businesses (SMEs) over the last four years, according to a new report.

The report by law firm Bond Dickinson, entitled Close Encounters: the power of collaborative innovation, found there were 179 deals between April 2013 and April 2017, worth a total of £5.4 billion.

Speaking to Utility Week, Bond Dickinson’s head of energy, Paul Stockley, said the figures highlighted the growing importance of SME’s in the energy field and their ability to innovate.

“They [SMEs] are faster moving, much more so than the bigger energy firms,” said Stockley. “If you think about super-majors like Shell or some of the bigger utilities, they have a history in the way they have grown, and they are unable to innovate or move as fast.”

According to the study, the majority (56 per cent) included minority stakes and 44 per cent were mergers and acquisitions.

Around a third (32 per cent) of the deals were between two energy companies, while six per cent were between an energy company and a manufacturing SME.

Stockley said some parts of the energy sector, such as the oil and gas industry are renowned for “being quite traditional”, while there is a “lot more innovation coming through” with renewables SMEs.

“From the oil and gas side of things, the oil price crash has meant that firms need to be looking at greater innovation and collaboration to drive down costs,” said Stockley.

“Then of course, in the wider scheme of things, what we have right now in the North Sea is the government’s drive for maximum economic recovery, which has started to break down barriers between companies and try and encourage everyone to collaborate for the greater good of the North Sea.

“You get people who have said the North Sea is gone, but the government won’t let that happen because it’s too important a prize in terms of energy security and the economy. So, the government is right behind making a success of the North Sea. From the oil and gas perspective, the future is challenging, but promising, and SMEs will definitely play a part in that.

“And the UK has had a burgeoning renewables industry for some time. Onshore, the subsidies have been cut, but offshore wind is still big business and will remain so. Clearly technology and innovation play a big part in that sector.”