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Chart of the Week

2019

I’m Still Standing: Medium suppliers lead acquisitions

Jacob Briggs Consultant

Ovo Energy’s acquisition on 11 January of Economy Energy customers via Ofgem’s Supplier of Last Resort (SoLR) mechanism mean that over 1.2mn energy accounts have now moved via the process over the last 12 months. This was Ovo’s second SoLR acquisition after taking on Spark’s customers in November 2018. Ovo Energy is now clearly the seventh largest supplier in the domestic market. Ovo Energy acquisitions have shown how challenger suppliers led recent consolidations. Supplier failures were expected by many to transfer customers back to the Big Six. However, the Big Six have only been involved in one SoLR transaction, when Scottish Power took on Extra Energy’s customers. Alongside Ovo, Octopus Energy and Co-operative Energy have grown significantly, by 35% and 40% respectively. Some small suppliers have also proven acquisitive with Together Energy taking on One Select’s customer book. This represented over 60% growth and puts its new IT system to the test. Under the competitive SoLR programme, the gaining supplier is responsible for transitioning and on-boarding customers and agrees with Ofgem if any costs it incurs can be recovered from the rest of the market. We estimate 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. The consequences of and costs to others of supplier exits will ...

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