Shell said First Utility would continue to operate as a stand-alone business and the group’s 825,000 customers of gas, electricity and broadband would be unaffected.

Shell operates in the wholesale energy market, but this is the first time it will provide utilities directly to people’s homes. The deal is still subject to regulatory approval. The two group’s have been strategic trading partners for a number of years.

Mark Gainsborough, Shell’s executive vice president of new energies, said: “This combination will enable Shell to enter a new part of the energy market in the UK and to improve choice for customers by delivering innovative services at competitive prices.”

The deal will give First Utility a strong parent with deep pockets, creating more competition the energy market and issuing a challenge to the ‘big six’ providers. It made a pre-tax loss of £12.7m last year, but has since returned to profitability.