Stories from across the energy transition

The big six

Since this was published the retail energy market in the UK has changed dramatically. Several small suppliers have gone bust through numerous crises, the price cap and government intervention through 2022/23 has changed the competitive dynamic and EON and npower combined with SSE being bought by OVO. This merits a blog in itself which I will get round to once the dust settles.

Who are the Big Six?

The “Big Six” refers to the companies that dominated the electricity and gas power market over the last decade and more. They formed out of the legacy of the privatisation of the Central Electricity Generation Board that split up the industry in 1989. See more in Regulation. Out of this, through a number of mergers and acquisitions, developed six large vertically integrated electricity and gas companies.

These companies owned and operated generation assets, retail companies selling to you and I and some had distribution grids too. In this story we look at the current state of the retail market for the Big Six and ask if the Big Six are still relevant.

Who owns the big six?

EDF is part of the French state owned energy company of the same name. EON and npower are currently owned by German companies EON and Innogy respectively however these two companies are in merger talks. Scottish Power is owned by the Spanish firm Iberdrola. Only SSE and British Gas owned by Centrica are listed in London.

What is the future of the Big Six?

As the graph (based on Ofgem data) shows, the energy retail market now has a significant penetration from companies that are not the big six at 22%. This is a remarkable shift from 2012 when only 1% of customers were not with a Big Six supplier. With these movements, the Big Six may become the Big Five shortly as npower and SSE are in advanced merger talks.

Note that the above relates to the Domestic energy market to customers like you or I. For business retail market which is sometimes more complex I’ll need another story.

Furthermore, the classic link between owning generating assets as well as a retail customer base is being seen as less and less relevant as old business models are challenged. I discuss my top 3 retail business model disruptions in another story.

It is clear that while, most people will recognise the term “Big Six” these companies have never been less relevant in the energy market as new suppliers challenge for a stake in the your energy story of the future. Furthermore, these are targets of acquisition from other companies and Shell recently bought First Utility. Ofgem now recognise the following as the next set of challengers who all have over 1% market share (as of July 2018).

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