Yahoo Finance Almost half of all UK energy suppliers have now gone bust in the energy crisis - and more could go under
A “bloodbath” in the energy supply industry has made 2021 a record year for the wrong reason: the highest number of energy companies going bust.
Energy consultancy Cornwall Insights said today that the number of domestic suppliers in the UK had shrunk from 47 at the start of the year to just 25 today, meaning almost one in every two suppliers has disappeared. All but one have gone bust.
The latest firms to collapse are Omni Energy, MA Energy, Zebra Power, and Ampoweruk, which all fell into administration on Tuesday.
Soaring natural gas prices combined with the UK’s energy price cap have sent 21 companies to the wall this year. Sky high wholesale costs have left companies supplying customers with energy at loss making prices.
Martin Young, an analyst at investment bank Investec, said collapses across the industry were caused by “unsustainable business models in many cases, but the framework that allowed this to happen has clearly been a failure.”
Over 2 million customers have been affected by the collapses. Ofgem, the energy regulator, has made sure that all of those customers have been transferred to surviving suppliers but many customers will face higher bills.
Young said: “The price of supplier failure will be borne by us all, and it is entirely reasonable that there will be many disgruntled consumers frustrated that a framework was put in place which has allowed this to happen.”
There are fears that more companies could yet go bust. The government and Ofgem are reportedly speeding up contingency planning in case challenger brand Bulb goes under. Bulb has been seeking emergency funding since the end of September. If it does fail, it would be the largest provider to collapse so far this year. The company has around 1.7 million customers in the UK.
“Suppliers are likely to face tough times ahead,” said Anna Moss, head of consumer energy at Cornwall Insights. “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.”
Industry insiders told the Standard in September they feared around 30 suppliers could collapse due to the soaring energy costs. Prices have eased slightly in recent weeks after Russia signaled it would boost supply to Europe but gas remains at elevated levels.
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