Belfast Telegraph

Friday 22 August 2014

Company Snapshot: Airtricity Energy Supply (NI)

Rapid growth from small beginnings

Airtricity Energy Supply (NI) is a wholly owned subsidiary of SSE (Scottish and Southern Energy Ltd).

It operates in Northern Ireland only as a supply company which has signed up, by 2012, 288,000 customers. The company advertises that it now supplies 21% of all domestic households that use electricity and 29% of the electricity to commercial businesses.

Airtricity has grown rapidly from small beginnings in 2007-9 when it began business selling renewable electricity supplies to a smaller number of customers. Recently it advertised that it now supplied 288,000 and, in the most recent financial year, turnover at £204m was 74% higher than a year earlier.

In comparative terms, turnover for Airtricity is now the equivalent of 30% of the annual turnover for Power NI.

Its principal activity is described as the purchase and sale of electricity generated from renewable energy. The electricity is purchased from other companies in the SSE group as well as from third parties. To mitigate commercial risks the company has a power hedging arrangement with another group company.

In a development just after the end of the last financial year the company agreed to acquire the entire share capital of Phoenix Supply which is the regulated supplier of natural gas formerly owned by the Phoenix Group. The purchase price was £19.1m.

Since the company is a large and growing distributor on natural gas, profit margins are largely determined by the achieved margins between purchase costs and retail prices. Since the company has built up market share by offering retail price advantage to many customers, its success to date has relied on the ability to run a small efficient (IT-led) organisation and combine this with successful wholesale purchasing arrangements.

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