The coming winter will “shake out” the weaker and under-capitalised energy suppliers from the market.
Speaking at Energy UK’s annual conference, Cornwall Energy associate Peter Atherton said that the number of suppliers could fall from more than 50 to as few as 15, as a result of rising wholesale prices and other costs.
“We are back into a price rising world with commodity prices and with an increase in renewable subsidies,” he said. “It is also going to lead to a shake out of suppliers. We’ve got about 50 independent suppliers but there are not enough people in the country to man 50 suppliers.”
Atherton said that as a result of the explosion in the number of suppliers “a lot of these independent suppliers are undercapitalised with financially but also from a human capital perspective” and in a rising price world may be forced to close down.
“A period of sharp wholesale rises will result in a very useful shakeout. How many should we have? Maybe 15 to 20 companies, certainly not 50 plus.”
Speaking to Utility Week, Energy UK chief executive Lawrence Slade said that if smaller suppliers were forced to close over the winter “it comes under the heading of it’s a competitive market”.
He added: “When you’ve got 40 plus suppliers, you have potentially got 40 different purchasing models. You’re right to point to the current volatility of the market we’re seeing.
“However, these costs affect everyone. There aren’t just six or eight players in the market, there are dozens and all responding in different ways as should happen in a market.”