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British Gas Joins Hive of Activity in Home Automation With AlertMe Deal

This week British Gas completed its acquisition of connected home technology firm AlertMe. British Gas already owned a 21% stake in the firm, and was using AlertMe technology to power its Hive Active Heating thermostat. It has now paid an additional £44 million for the remainder, taking its total investment in AlertMe to £65 million. Following the acquisition British Gas is advertising plans to provide a full suite of connected home solutions to UK customers, and other utilities also in the Centrica group.

The deal follows a high level of acquisition activity in the smart home market. In 2014 firms such as Google, iControl Networks, and Samsung all purchased smart home technology firms. Notably Google bought Nest Labs – a start-up that makes smart thermostats and smoke-alarm systems – for $3.2 billion. Whilst global tech firms have been digging deep into their pockets, an acquisition led by a utility is a bit more unusual.

So the big question is – what’s in it for British Gas? The power utility has already had success in attracting customer interest in its heating automation service: 10,000 homes have installed its Hive Active Heating thermostat and tens of thousands have installed its early Remote Heating Control product. With full ownership of the AlertMe platform, British Gas will be able to tailor the technology development around its own needs, and develop a broad suite of home automation services for customers.

Our analysis finds in the near term this deal will support with customer retention and acquisition strategies as British Gas can build a unique set of home services. British Gas has also been upping its game of engaging its commercial customers by providing them energy insights and personalized advice using EnerNOCs software platform. Customer retention is a strategic focus for UK Big Six utilities, particularly with increased competition from smaller utilities like First Utility, Opus Energy and Smartest Energy.

Whilst the deal puts British Gas on the front foot in the UK market for smart home services, Verdantix expects other UK Big Six utilities to start moving in on this space. They have already been forming partnerships so they can offer smart thermostats to their customers, such as SSE partnering up with Tado, RWE npower partnering with Nest, and E.ON working with GreenWave Reality. Ultimately the partnering route may prove to be the most successful and without a doubt the least expensive.