Flowgroup powers up with Shell
EFFICIENT energy specialist Flowgroup has signed an exclusive five-year agreement with Shell Energy Europe for the provision of wholesale gas and electricity.
The deal with the AIM-listed Chester company is with its subsidiary Flow Energy Ltd (FEL) and will potentially enable significant growth in the company’s customer base for its mCHP Flow boiler.
Under the terms of the agreement, Shell will provide access to wholesale gas and electricity on extended credit terms and without the requirement for cash margining.
The agreement could be extended by Shell for a maximum of three further one year periods, dependant on volume targets.
Shell will receive a warrant to subscribe for shares (or the equivalent in cash at Shell’s call) in FEL equivalent to 10% of the growth in value of FEL until after a liquidity event (asset sale, IPO or sale) or on termination of the supply agreement or default by FEL.
Flowgroup chief executive Tony Stiff said: “We believe that the current domestic energy market is favourable to the growth of smaller suppliers, and that the value ascribed by the market to an energy customer is rising as the potential for the cross-selling of a wider variety of energy related products and services has increased.
“Some analysts suggest that as many as five million customers will switch away from the Big 6 suppliers over the next five years.
“With increasing brand awareness, an excellent reputation for customer service, the management and systems already in place to support growth, and now this agreement with Shell, we believe we are in an excellent position to build a large energy supply business.
“We believe today’s announcement could lead to a significant increase in the Company’s revenue, cashflow and value prospects and also provide a readymade route to market for the Company’s electricity-generating Flow boiler, as well as the broader range of energy products the Company intends to offer to its customers.”
