Energy switches reach record high
Hold of big energy companies weakens as medium and small suppliers now serve around 30% of consumers.
Customers are switching energy suppliers in record numbers, according to Ofgem’s latest State of the Market report.
Just over 20% of energy customers switched in June 2019, up a percentage point from last year, with more people – 49% – using comparison sites like Compare the Market to find better deals.
In fact, only 29% of consumers said they’d never switched – down from 34% in 2018.
Medium-sized suppliers gain ground
People are turning to the medium-sized energy companies in their hunt for better deals, the report reveals. Their market share grew to over 20% of consumers, up 7% in electricity and 5% in gas. They also gained customers who were transferred to them after several small suppliers failed.
Meanwhile, the hold on the market of the so-called ‘Big Six’ companies – British Gas, SSE, E.ON, EDF Energy, Npower and Scottish Power – is weakening. The report shows their market share has fallen to around 70% of consumers from around 75% in 2018.
But small suppliers also lost customers, with their market share down to 9% from 10%.
Peter Earl, Head of Energy at Compare the Market, said:
“One of the big takeaways from Ofgem’s flagship annual report is the electrified growth of the medium-sized suppliers, such as Octopus, OVO and Bulb, at the expense of the Big Six and smaller challenger brands.
“If the Big Six continue to shed customers at this pace then by 2024 they will have less than 50% market share – a scenario that would be a remarkable change in fortune for our largest energy players and demonstrate a fundamental transformation of the UK’s energy market.
“Encouragingly, the proportion of consumers switching supplier increased to 20%, up from 19% a year earlier, as more consumers turned to price comparison websites to shop around and switch to new deals. The momentum is with medium-sized suppliers, who benefitted the most from increased switching rates.”
The report also shows that renewables, like wind and solar power, generated a record 33% of electricity last year. But progress in cutting greenhouse gas is slowing, with emissions falling by just 2.5% – the smallest reduction since 2012.
“We want the UK to remain a global leader in bringing down greenhouse gas emissions, and our major objective is to help the country rise to the challenge of cutting emissions to net zero by 2050 at the lowest possible price to consumers,” said Joe Perkins, chief economist at Ofgem.
“As well as protecting consumers in the future, our duty is also to protect those today.
“We will continue to enable competition and innovation which benefits consumers, whilst protecting those who need it, as we help build an energy market which works for all consumers.”