They may only supply a little over 7% of the UK’s energy, according to Energy UK, but energy companies outside of the traditional Big Six are undoubtedly in the ascendancy, having grown their collective customer base by 50% in the last year, Energydesk analysis has found.
Beyond the industry’s six-way oligopoly and their several subsidiaries, there are 20 energy suppliers in the UK, according to Which, the consumer watchdog. And that’s not counting a new rival – city and community suppliers which could quickly outstrip some of the smaller firms.
Of these 20, there are several worth highlighting as emerging alternatives to the six ruling energy companies. These not-that-small suppliers are largely young, progressive, affordable, well liked by their customers and, most significantly, they are growing.
Before we list Energydesk’s Alternative Big Six, its important to appreciate just how dominant the actual powerhouse house-powerers are. The collective household reach of all our listed up-and-comers is dwarfed by even that of the smallest in the big leagues – Scottish Power at 3.2 million (see graph below).
But it might not be smooth sailing any longer; the Big Six are under investigation over competition issues and might even be broken up.
And as small suppliers have finally gained traction in the energy market, the Big Six have seen their profits plunge to record lows, according to Ofgem (though they are still a pretty healthy £2.8 bn). A recent forecast from Citigroup investment bank projected that the Big Six utilities may lose a quarter of their customers by 2020.
So, here they are – our alternatives to the suppliers at the top of the UK’s energy chain (plus there’s one bonus selection, which we don’t have current data for):
Biggest small energy company: First Utility
Though it’s only been around for six years, First Utility is the 7th biggest energy company in the UK.
In January 2012 it had 50,000 customers; now it has 475,000 – a steep increase of 850% in two and half years.
How did First Utility achieve such rapid growth? Born of First Telecom, the firm offers internet and phone packages along with its energy – plus it’s relatively cheap.
Last December the FU announced it would partner energy giant Shell, essentially acting as its intermediary. In fact, it doesn’t generate any of its own energy, instead purchasing it on the open market. Its relationship with Shell was designed to cut prices. Consequently, it has has seen its growth accelerate since the turn of the year, increasing by over 50%.
But let’s clear about this, First Utility is not a green company. Its energy mix reads a lot like the traditional energy companies: Coal (52.3%), gas (30.7%), nuclear (4.7%), renewables (8.3%), and a mysterious other (4%).
Word of mouth is good, though nothing special. It received a 58% satisfaction rating in the Which survey – that brings it to eighth place of all the UK’s energy suppliers, and last among our chosen ones.
100% renewables: Good Energy
Good Energy was founded in 1999, and has overseen a steady rise in its customer count over the couple of years. It has gone from serving 45,000 accounts in January 2012 to 132,000 last month – a sharp increase of 193%.
More than any other supplier – big or small – Good Energy has staked its reputation on its green credentials. Its energy share reads like a smorgasbord of renewable options: Wind (67.7%), solar (25.5%), hydro (6.2%) and just a smidge of biogen (0.6%).
And their customers are happy with the service, with an 82% satisfaction ratingon Which, a tied-for-first score.
For all that it does well, Good Energy is the smallest supplier of our lot, supplying just 42,500 households. After a booming 2012 in which the company’s customer base grew by 283% recent growth has been slow, with 28% last year and 4% this year so far.
Green innovator: Ecotricity
Ecotricity has long been a pioneer in the green energy game, from when it launched in 1996 to when it introduced biogas in 2010 – and last year it joined Good Energy in the 100% renewables club.
The firm is the number one investor in new renewable energy sources, spending twice as much per customer as next biggest investor SSE, according to a self-sponsored initiative called Which Green.
With 135,000 customers, up from 80,000 at the beginning of the year, Ecotricity has enjoyed a pretty remarkable 2014. Its customer count has increased by 68% in just 8 months, an definite improvement on previous years – at 40% over two years.
This uptick (see below graph) could be attributed to the introduction of a single, 100% renewable tariff last August or their year long price freeze announced in October 2013.
Rapid growth: Ovo Energy
Ovo, founded five years ago, is the second biggest small supplier in the country, and its recent skyrocketing growth is faster than leader First Utility. It went from a customer count of 138,000 in January to 348,000 in August – that’s 150% growth in eight months – plus Al Gore decided it worth a £8 million punt.
Its rapid growth could be explained by a high customer satisfaction rating of 73%and its reputation as affordable.
Renewables make up only 23.9% of its energy share (a significantly larger share than First Utility), according to Which. The rest of its generation mix reads: coal(43.4%), gas (25.5%), nuclear (3.9%) and other (3.3%).
But Ovo is taking steps to become greener, first by introducing a green tariff that hits the 100% renewable sweet spot. That new tariff has an encouraging customer count of 8,500. Ovo also this year set up an SSE-style subsidiaryWoodland Trust Energy that likewise offers a renewables-only option.
Steady on: Co-operative Energy
One of the many pies in which the organisation has its fingers, Co-operative Energy is the third biggest supplier outside of the Big Six. The Co-op has had a steady growth in its customer base, more than doubling its customer count year-on-year, and reaching 200,000 customers this year. If it keeps going at that rate and The Co-op could hit 1 million customers in 2016.
Co-operative’s generation mix doesn’t include any coal and renewable energymakes up an impressive 68%. The rest is natural gas.
Earlier this year, the Co-op introduced a new tariff called Fair and Square, which is essentially a self-serve offering wherein customer service is scrapped to keep prices as low as possible and people give their own meter readings.
The supplier had a 64% satisfaction rate, more than that of small supplier leader First Utility, but not reaching the heights of some of its competitors.
Up-and-coming: City Energy
Here’s where we’re going out on a limb, because the last supplier in our selected six is not a nationwide provider, but city-wide energy initiatives. There isn’t much raw data nor substantial projections as yet but major cities around the country are devoting time and resources to building local networks – many of which are coming into effect in the next year.
A report by think-tank IPPR, supported by Greenpeace UK, proposed locally-sourced energy supplied by cities could ‘tackle Britain’s energy crisis’ and bring bills down, as well as stimulating investment into low-carbon energy generation.
London and Bristol are examples of cities paving the way forwards.
London Mayor Boris Johnson will next year have the city purchase local providers’ excess electricity at cost and sell on to public services. The GLA expects local suppliers to provide 25% of the city’s electricity by 2025 – that’s around 2.5 million people signed up to city energy.
Bristol, the Green Capital of Europe in 2015, is already investing in renewables and energy efficiency and will be setting up as an energy supplier in the coming months.
Earlier this year Ovo Energy announced it would partner with community groups, local authorities and housing associations, allowing them to run their own energy companies whilst removing lots of the complexity and risk.
In this instance, Ovo would still be the licensed supplier but it would be the local group that would run the business and take home the profits – although they would pay Ovo 3% for its services.
The Cooperative also last month held its second annual community energy fortnight in which is help to develop community initiatives around the country.
See our interactive map, above, to find the UK’s major local energy initiatives, and tell us if you think anything should be added.