Since the rapid market increase in August, 20 energy providers have gone out of business – a number that is predicted to rise as large companies struggle to take on thousands of new customers.
Following a range of factors that contributed to a massive market spike across Europe in August 2021, we have seen 20 energy suppliers put out of business after failing to accommodate the hike in demand. This is causing unprecedented strain on remaining suppliers in the industry, with larger organisations like British Gas, E.On, Shell, and Scottish Power taking on thousands of new customers at a record rate under the SOLR (supplier of last resort) process.
The SOLR process has been in place for a while. It involves Ofgem switching customers of failed suppliers over to a new provider. However, fears are growing that this process may collapse under the strain with more than 2 million households having gone through or going through SOLR since August.
In response to this surge, CEO at Scottish Power, Keith Anderson has warned that at least another 20 UK energy suppliers are likely to go bust over the coming months. As gas prices continue to rise, suppliers will face increasing financial pressure which could end with merely five or six energy companies surviving the crisis.
Mr Anderson stated to Sky News that it costs suppliers around £1000 for each customer they take on through the SOLR process. And, although these costs can later be reclaimed through a levy, this is going to “put tremendous pressure on bills”.
To help alleviate this pressure on energy suppliers, Mr Anderson calls for the energy price cap (the limit on what suppliers can charge retail customers) to be abolished as it is hindering suppliers’ ability to accommodate thousands of new customers and will be the cause of bankruptcy for many more suppliers as we near the close of 2021.
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