SSE, one of Britain's big six energy suppliers, said it had agreed to sell its energy services unit to OVO Group for £500m, including debt, as it looks to focus on renewable energy and electricity networks.
Proceeds from the sale, which involves £400m in cash and £100m pounds in loan notes, will be used to reduce SSE's net debt, the company said today.
"We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders," its chief executive Alistair Phillips-Davies said in a statement.
"SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions," he added.
The deal is expected to be completed in late 2019 or early 2020, subject to regulatory approvals.
All of SSE Energy's about 8,000 employees will transfer to OVO, SSE said.
The deal comes after SSE kicked off the process to sell its 140 million cubic feet per day portfolio of North Sea gas fields in a single package.
SSE is the third largest supplier in the UK energy market, with around 3.5 million household customers and 8,000 staff. It also owns SSE Airtricity here.
Ovo is the UK's largest independent energy supplier, with 1.5 million customers and about 2,000 employees.