First Utility Ltd.

John R. Wells; Benjamin  Weinstock

Case | HBS Case Collection | December 2018

First Utility Ltd.

by John R. Wells and Benjamin Weinstock

Abstract

At the end of 2017 First Utility Ltd. was the largest of the middle-tier domestic energy suppliers in the United Kingdom, serving 808,000 of the country’s 27 million households with electricity and gas. In Q1 2017 First Utility captured 3% market share. The company had grown rapidly from 2011 to 2014, doubling in size each year, and CEO Ian McCaig had signaled that he was considering an IPO. However, in 2015 growth slowed, and profits fell by 84%. The same year, the company began expanding into Germany and Poland and building its own billing system. Growth slowed further in early 2016, and First Utility recorded a loss of £12.7 million for the year. Plans for an IPO were shelved. Instead, the company began looking for strategic partnerships to offer new products and services to its UK customer base. Whether First Utility’s new geographies and product lines would revive growth was unclear. Meanwhile, in May 2017, CEO McCaig announced that he would step down in September. In December 2017, the company announced that Royal Dutch Shell would acquire First Utility for an undisclosed sum. The deal was approved in February 2018, and First Utility was rolled into Shell’s New Energies division.

Keywords: rapid growth stage; Power/Energy; energy efficiency standards; Energy; Competition; Diversification; Acquisition; Expansion; Growth Management; Energy Industry; United Kingdom;

Language: English

Format: Print

21 pages

Educators

Citation:

Wells, John R., and Benjamin Weinstock. "First Utility Ltd." Harvard Business School Case 719-425, December 2018.

Case | HBS Case Collection | May 2019

State of Charge: The Massachusetts Energy Storage Initiative

John R. Wells, Benjamin Weinstock, John R. Wells and Benjamin Weinstock

In early 2017, Judith Judson (Harvard Business School MBA, 2000), Commissioner of the Massachusetts Department of Energy Resources (DOER), was reflecting on the results of the initiative she had led to identify the contribution advanced electricity storage could make to electricity generation and distribution in the Commonwealth of Massachusetts. The study was the first major output from the $10 million Energy Storage Initiative (ESI) launched by Massachusetts Governor Charlie Baker’s administration in May 2015. The advanced simulation techniques employed in the study indicated that over a ten-year period, the optimal deployment of storage capacity would cut the cost of electricity for consumers in the Commonwealth by $230 million per year, deliver $110 million in annual revenues for storage providers, and reduce CO2 emissions by 100,000 tons a year, the equivalent of taking 22,000 cars off the road. Moreover, neighboring states would benefit from $250 million in lowered wholesale prices. To deliver these benefits, 1.77 GWh of advanced storage would be required across the grid, costing between $970 million and $1.35 billion. Incorporating the perspectives of a wide body of stakeholders (from utilities to municipalities to generators), the study wound up recommending a suite of policies that would facilitate the installation of 600 MWh of storage capacity by 2025, representing about six minutes of the state’s daily electricity consumption and delivering $800 million in benefits to ratepayers. It would also make the Commonwealth a leader in advanced storage technology and deliver substantial greenhouse gas reductions. At the end of 2015, according to figures from the Department of Energy, Massachusetts ranked 23rd in the United States in energy storage deployment, well behind the leader, Arizona, with nearly 300 MWh, and Texas, with over 150 MWh. However, with advances in storage technology, California promised to become the leader and had plans for nearly 1 GWh of storage capacity over the next five years. The ESI was seeking input on how to spend the balance of its $10 million budget and whether to authorize an additional $10 million on proof-of-concept deployments of the technology. Commissioner Judson pondered. Was this aggressive enough? And where did advanced storage stand in the priorities for the energy future of the Commonwealth?

Keywords: energy storage; Energy Generation; Programs; Policy; Strategy; Energy Industry; Utilities Industry; Massachusetts;

Citation:

Wells, John R., and Benjamin Weinstock. "State of Charge: The Massachusetts Energy Storage Initiative." Harvard Business School Case 719-448, May 2019. View Details

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Electric cars had long been championed by environmentalists as a superior solution to the internal combustion engine (ICE), but, despite large government incentives and strong pioneering efforts by a few automakers over the years, electric and hybrid cars and light trucks still accounted for less than 1% of total global production in 2016. However, events took a turn in 2017 and 2018, when many governments committed to banning ICE vehicles. In response, leading automakers announced plans to launch hundreds of electric vehicle models within five years. Early pioneer Tesla, which, in 2017, had built a stock market valuation exceeding that of General Motors (GM), despite only delivering 103,000 cars compared to GM’s 9 million, looked as if it were about to be engulfed by this new competition. But not all were convinced that electric cars would soon displace conventional ICE vehicles. It was not clear that the infrastructure was in place to charge all these electric vehicles. There were also questions concerning the electrical generating capacity to meet the new demand. Would battery prices fall enough to make mass-market demand a possibility? In low gasoline cost jurisdictions, such as the United States, the economics of owning an electric vehicle didn’t appear justified, unless subsidies were maintained indefinitely. In Europe, where gasoline taxes were high, the case for electric vehicles was stronger. But European governments depended on those taxes to meet their budget needs. Would a significant uptake of electric vehicles necessitate higher taxes on electricity? In 2018, electric cars were an expensive novelty for the rich subsidized by the poor. Would the sudden rush of new models change the balance?

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First Utility Ltd.

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