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Centrica sets ambitious targets for decentralised divisions as group profits slide

Image: Centrica.

Image: Centrica.

Centrica has set ambitious targets for divisions focused on the energy transition after it recorded a slump in H1 operating profit.

The energy giant this morning reported a 4% slide in adjusted operating profit to £782 million for the first six months of the year, a performance which it largely attributed to a more difficult operating climate for its customer-facing divisions.

The company has also responded to further increases in energy prices by alluding to a possible further hike in energy prices, just three months after increasing them once again. Centrica said it was continuing to keep prices “under review” moving forward.

But there was better news from Centrica’s divisions at the cutting edge of the energy transition, specifically its decentralised energy and power (DE&P) and connected home business units.

Centrica’s DE&P, which incorporates the likes of energy trading outfit Neas Energy, CHP specialist ENER-G and demand-side response (DSR) firm REStore, has witnessed its order book soar by around 47% year-on-year after the divisions were united under the Centrica Business Solutions brand.

The firm almost pointed towards a 27MW virtual power plant established at Terhills in Belgium. REStore’s DSR platform was pivotal to the project which also incorporates a 14MW Tesla battery and flexible load and generation from nearby C&I consumers.

On the back of its surging order book, Centrica now expects a 40% increase in DE&P revenues before the year’s end.

Meanwhile, Centrica’s Connected Home division, which involves the technology end of its consumer-facing operations with smart devices such as the Hive thermostat, has already seen a 31% increase in gross revenue in the six months ended 30 June 2018.

And now Centrica wants this to grow exponentially, targeting 500,000 new customers before the end of the year and a doubling in Connected Home revenue.

The two divisions fall broadly in line with Centrica’s strategy of moving towards more of a services offering than operating simply as a traditional utility, and chief executive Iain Conn said the firm was continuing to make progress.

“We have developed new propositions and delivery capabilities in both customer divisions and our cost efficiency programme is on track. Although we are awaiting the final outcome of regulation to impose a temporary cap on all default tariffs for residential customers in the UK, we have plans in place to manage this,” he said.

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