London based Octopus Energy are looking to get their tentacles on Co-op Energy, with reported merger talks taking place. Octopus Energy is rapidly growing with more than 800,000 domestic and business energy customers.
According to The Sunday Times, these talks could result in Octopus Energy acquiring “some or all” of Co-op Energy’s customers. Should the merger go ahead, Octopus Energy will take their customer base over the 1 million mark.
In May 2019, Midcounties Co-op reported that their operating profit fell to £8.2m in 2018, down from £11m in 2017, after reporting losses in both it’s energy and healthcare businesses. Whilst the remainder of society’s businesses performed strongly with increased operating profits reaching £16.5m before recording the loss within energy and healthcare. Could this have been the catalyst?
UK energy companies continue to look at opportunities to consolidate businesses in a bid to grow stronger, as trading conditions have toughened.
The ‘Big Six’ energy suppliers, British Gas, Npower, Eon, SSE, EDF and Scottish Power have seen a decline over time in their market share. In 2011, the ‘Big Six’ had a 99% market share, however, this has to declines to them holding a 73% share of the entire energy market. Whilst the market share is still significant, it demonstrates that more consumers and business owners are turning to alternative energy providers in a bid to save money and search for improved customer service.
In the last 18 months, the market has seen a number of independent energy providers struggle with providing sustainable pricing and as a result, have had no choice but to close their doors.
However, it’s not all doom and gloom for an independent energy supplier. Only last week, challenger firm Ovo Energy was in talks with SSE to acquire it’s 5.7m domestic customers. Should such a deal take place, Ovo Energy would see a rise and sit firmly within the ‘Big Six’.