Although the past 12 months have seen several failing suppliers exit the UK energy market, a group of small to medium-sized energy suppliers have seized the opportunity to increase their customer book as a result.
This is according to an analysis from Cornwall Insight.
The acquisitions by these suppliers have seen them grow significantly. Octopus Energy and Co-operative Energy have increased by 35% and 40% respectively, and the recent Ovo Energy acquisition see it become the seventh largest supplier in the domestic market.
Companies that were once known as “challenger” energy suppliers are now sizeably positioned in the market and are evolving towards shares in the market equivalent to some of the big six.
The graph below highlights the number of accounts transferred since 2018 under the SoLR mechanism and how this has boosted the number of accounts on the individual energy suppliers’ books.
Robert Buckley, Head of Retail and Relationship Development of Cornwall Insight, said: “Ovo Energy’s acquisitions have shown how suppliers that got through market entry several years ago and have been operating in this market for a while are leading the charge on consolidation and growth.
Many observers may have naturally assumed that the customers of failed suppliers would have transferred back to the Big Six. However, the bigger players have been involved in just one SoLR transaction.
“There has been a lot of negative press surrounding the exits, focussing on fragile business models and rightly so. However, currently, there are no signs that these exits have caused any real degradation to competition in the retail market.
“The shake-up has presented an opportunity for several suppliers to grow, changing the face of the retail landscape in the process. Failure of suppliers has come at a price to bill payers, however; with Cornwall Insight estimating the costs of the eight SoLR domestic market exits since the start of 2018 could come to around £2.50 per household.
“On top of this will be the costs under the expected Renewables Obligation and Feed-in-Tariff mutualisation processes, likely to total many tens of millions of pounds. These are issues Ofgem will consider in its Supplier Licensing Review.