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Helping you make sense of the energy and water sectors

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Chart of the Week

2020

Chart of the Week | Better together – consolidation in domestic retail

Oliver Archer Analyst

The last 12 months have been a tumultuous time for domestic energy supply. In particular, the high profile sale of SSE’s domestic supply business to Ovo Energy and the transfer of npower customers to E.ON UK have radically altered the market landscape. In this Chart of the Week we look at the market share holdings of the 10 largest suppliers in the market and discuss some of the underlying trends driving recent changes.   The six large suppliers have been losing customers at a significant and sustained rate over recent years. In 2010 they held 99.5% of the market and competed with just a handful of smaller supply businesses. By the end of last year, 50 small and medium suppliers collectively held 31% of domestic energy accounts in GB. Increasing competitive and financial pressures have made sustained profitability difficult for businesses of all sizes, resulting in many taking a decision to leave the retail market, and others being forced to exit through Ofgem’s Supplier of Last Resort mechanism. This has created an opportunity for other businesses to take on large numbers of customers at costs as low as, or sometimes even lower than, traditional routes to growth, such as price comparison website commissions.  While switching levels continue to break records, it is this recent spike in consolidation that has had the biggest impact on market share breakdown in 2019. As shown in Figure 1, Ovo Energy now holds the third largest number of energy accounts behind only British Gas and E.ON ...

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