More than half of UK energy suppliers exit the market – study
Research from Cornwall Insight’s ‘Domestic suppliers insight service’ shows that while consolidation has been a market feature in recent years, 2021 now holds the record of the most energy supplier exits in one year.
At the start of the year, we had 47 domestic energy suppliers – 5 large, 12 medium, and 30 small. Today, that has fallen by over half with only 25 suppliers remaining in the market.
So far, the majority of customers have been moved to larger energy suppliers, growing the market share of the large supplier group from 68.5% at the start of the year to 70.1% today.
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Anna Moss, Head of Consumer Markets at Cornwall Insight, said: ”Suppliers are likely to face tough times ahead. 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.
“This is further compounded by high futures prices for the remainder of winter, consistently over £230/MWh for monthly baseload power and 240p/th for monthly NBP gas on 1 October. As a result, trading arrangements with wholesale trading parties are critical to the retail parties’ survival to reduce exposure to uncapped imbalance prices.
“Terms which the suppliers will find acceptable may not be forthcoming as wholesale counterparties will be concerned about the long-term viability of businesses whose input cost is higher than their incoming revenue. Those without longer-term deals in place may be forced to pay up-front, offer additional collateral (either in cash or equity), or buy on spot markets, increasing pressure on cash flow management.
“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.”
