Breaking the Power of the Big Six

Stephen Fitzpatrick

Stephen Fitzpatrick, founder of Ovo Energy

The UK electricity market is currently dominated by six very large companies, who in general are very little trusted by energy consumers and who have been slow to embrace the challenges and opportunities that climate change and fears over energy security present them with. In Germany there were just four big incumbents. Things are changing. First in Germany, and now in the UK, we are seeing the emergence of a great abundance of innovative new players, most of whom have a very different ethos and business model from the old monolithic companies. In the UK the big six still control 95% of the market. I would expect their market share to plummet over the next few years.

Jeremy Williams, who writes the excellent Make Wealth History blog, wrote a good piece about this recently, titled ‘The four ages of electricity supply’, showing how from the 1880’s to the 1920’s we had up to 600 decentralized companies, which in 1948 were nationalized, reducing the figure to one, then following privatization in 1989 the current big six emerged. Jeremy predicts that by 2030 the UK might be back at 600. I think it may well be many more and much sooner, but it all depends on what you call an energy supplier. Thousands of households now supply rooftop solar to the grid, hundreds of renewable energy coops are being established and a few really innovative companies are challenging the power of the big six.

Ovo energy is one of the most extraordinary new kids on the block. Stephen Fitzpatrick started the company in 2009 and it has grown exponentially over these five years. They aim to be cheaper, greener, more efficient and helpful than the big six. Key differences are that they welcome more competition and are keen to work with a plethora of micro suppliers. They’ve recently published a 31 page Community Energy White Paper which is well worth a read.

Boris Johnson declaring that London should generate 25% of its own electricity by 2025 is welcome news. Creating Energy for London to buy energy from municipally controlled generators and sell it to Transport for London and the Metropolitan Police is similar to the situation in Germany, where many municipal authorities generate and sell energy, often with a wider range of social and environmental aims, rather than just profit maximization.

We buy our electricity and gas from Good Energy, who buy 100% renewable electricity from over 500 suppliers and have just opened the four turbine, 8.2 MW, Hampole Wind Farm near Doncaster. Good Energy, like Energy for London and Ovo Energy are all expanding and biting into the market share of the big six. Good luck to them!

Jeremy Williams’ blog

Ovo’s Community Energy White Paper

BBC on Ovo

Boris’s plan

Energy for London

Good Energy