Close to 50% less energy suppliers operating compared to a year ago

In further bad news for the industry, energy consultancy Cornwall Insights have revealed that there are 50% less providers trading in the UK than one year ago.

Tuesday saw four more energy companies - Omni Energy, MA Energy, Zebra Power and Ampower UK - go under, with Bluegreen going into administration on Monday.

The latest casualties means that out of the 47 domestic energy suppliers trading in the UK In January, only 25 remain. The headcount represents a record for the amount of providers going bust in one year.

Despite the already concerning headcount, there does not appear to be any respite. Head of Consumer Markets at Cornwall Insight Anna Moss put forward a stark analysis o f the months ahead.

“Suppliers are likely to face tough times ahead,” said Moss. “Credit calls on suppliers for electricity balancing are due to increase markedly. The Credit Assessment Price (CAP) will increase further to £259/MWh on 4 November – a record high and the tenth increase in the CAP in 2021.

“The very high wholesale prices have caused significant distress even before winter begins and how suppliers fare is in the hands of wholesale trading parties, and how suppliers can manage their costs through the winter months ahead.”

The unprecedented spike in wholesale energy costs has been caused by numerous factors. Demand began to outstrip supply last year when an especially cold winter in Europe combined with increased usage across Asia caused reserves to be severely depleted.

Unfortunately the issue is especially severe in the UK due to our inability to supplement global supply with local sources. Anticyclones in the summer reduced output from wind turbines, which normally provide around 25% of the countries electricity

Several nuclear generators were out due to maintenance and to top it off a subsea cable bringing electricity from France, caught fire, putting it out of commission for 2 years..

This array of unfortunate conditions has led to a 250% increase in the price of energy. Providers in the UK are unable to pass these onto customers because of the price cap which limits how much a supplier can charge per unit of energy.

So far 2 million customers have seen their provider go under, but, if you weren’t paying attention you might not notice anything had happened. This is because when a supplier ceases trading, Ofgem finds the customers a new one within a few days.

In normal times being allocated thousands of new customers might have seemed like a positive. However, the high cost of energy combined with the relatively low cap has larger firms nervous about taking on any additional business.