Lights out: 7 commercial energy providers that didn’t last
Here’s a look at seven commercial energy providers that failed, and why tem’s wholesale-free model means we’re built to last.
When energy suppliers rely on the wholesale market, they risk collapsing the moment prices surge. More importantly, it’s customers who are left picking up the pieces. Here’s a look at seven commercial providers that failed, and why tem’s wholesale-free model means we’re built to last.
In the UK, supplier collapses have become a grim ritual whenever wholesale prices surge. In 2021, for example, 26 energy companies went bust, putting a combined 4.27 million households at risk of losing energy. The same thing happened again in 2022.
In fact, in the first half of this year alone we’ve seen Rebel Energy bite the dust, putting 90,000 customers at risk, as well as Tomato Energy, who recently received a Provisional Order from Ofgem that banned them from taking on new customers over unpaid debt.
Energy can be risky business. But, it really doesn’t have to be. At tem, we’ve built a business designed to last. How? We bypass the wholesale marketplace entirely. This allows us to eliminate the huge volatility and high transaction costs typically faced by suppliers operating on a traditional utility model. And, it means we can manage risk much more effectively than your average energy provider.
To help us drive this point home, here’s a list of now-defunct energy suppliers who didn’t last, and what happened to their customers.
1. Bulb Energy
When did they go out of business?
Bulb entered Special Administration on 22nd November 2021.
How many customers were impacted?
Approximately 1.5 million customers. They were the largest energy company to go bankrupt in 2021 amid soaring gas prices.
Why did Bulb Energy go bust?
According to the BBC, there are four main reasons: bad regulation, bad luck, bad government policy and, to top it all off, some bad maths.
Where did customers transfer to?
Rival Octopus Energy sealed a deal to buy out Bulb almost a year later, but only after the government injected £1.7 billion to try and stabilise it which, according to The Guardian, was “the biggest government bailout since the nationalisation of the Royal Bank of Scotland during the financial crisis”.
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2. Green Supplier Limited
When did they go out of business?
22nd September 2021.
How many customers were impacted?
Approximately 255,000 domestic customers, and a small number of non-domestic customers.
Why did Green Supplier Limited go bust?
The company's failure was attributed to "unprecedented market conditions and regulatory failings" (read here).
Where did customers transfer to?
Ofgem appointed Shell Energy to take on customers of Green on 27th September 2021.
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3. Bluegreen Energy
When did they go out of business?
1st November 2021.
How many customers were impacted?
Approximately 5,900 domestic customers and a handful of businesses.
Why did Bluegreen Energy go bust?
Similar to almost everyone on this list, Bluegreen Energy faced soaring global wholesale energy prices, particularly gas, which made its business unsustainable.
Where did customers transfer to?
British Gas was appointed supplier of last resort (SoLR) for Bluegreen Energy.
Continue reading:
Bluegreen Energy Services collapses as energy supply market volatility continues into November
Bluegreen becomes latest energy supplier to cease trading amid 'unsustainable situation'
4. Neon Reef
When did they go out of business?
16th November 2022.
How many customers were impacted?
Approximately 30,000 customers.
Why did Neon Reef go bust?
Neon Reef collapsed under the pressure of rocketing energy prices, which would have increased by 80 percent had it not been for government intervention. Fortunately, in October 2022, The Energy Price Guarantee limited the increase to 27 percent.
Where did customers transfer to?
Ofgem appointed British Gas to take on customers from both energy providers.
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5. Orbit Energy
When did they go out of business?
25th November 2021.
How many customers were impacted?
65,000 households.
Why did Orbit Energy go bust?
According to The Guardian, Orbit blamed its collapse on the government’s energy price cap, which was designed to protect about 15 million customers on standard variable tariffs from unfair energy bills.
In truth, the company failed to meet their feed-in tariff (FiT) payments (this is a policy offering energy producers a guaranteed, above-market price for the electricity they supply to the grid) and owed £451,296 to consumers.
Where did customers transfer to?
Ofgem invoked the Supplier of Last Resort mechanism, transferring customers (alongside Entice Energy, its partner in collapse) to Scottish Power.
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6. Zog Energy
When did they go out of business?
1st December 2021.
How many customers were impacted?
Approximately 11,700 customers.
Why did Zog Energy go bust?
The collapse was primarily caused by high gas prices. According to Current News (see below), “day-ahead wholesale prices averaged at £126.14/MWh in Q3 2021, up 69 percent from the previous record of £74.85/MWh set in just the previous quarter.”
Where did customers transfer to?
Zog Energy customers were automatically transferred via Ofgem’s safety net process to EDF Energy.
Continue reading:
Zog Energy becomes 25th UK supplier to go bust in three months
Zog Energy becomes latest firm to collapse in gas price crisis
7. Whoop Energy
When did they go out of business?
18th February 2022.
How many customers were impacted?
50 households and 212 businesses across the country.
Why did Whoop Energy go bust?
The company folded under pressure from soaring wholesale gas prices, which outpaced their ability to pass costs on under regulatory limits.
Where did customers transfer to?
Ofgem’s safety net meant that Whoop Energy customers were well protected, and on 22nd February 2022, they appointed Yü Energy Retail Limited to take over.
Continue reading:
Whoop Energy and Xcel Power cease trading amid high gas prices
Two small energy firms go bust as energy prices set to jump by £700 a year
Why so many energy suppliers fail (and why tem won’t)
Let’s be honest, this list could be twice as long. But we’re not here to lead you down the garden path. We’re here to buck the trend, because in many ways, this is a systemic issue, and the system keeps breaking.
So, here’s the important part of the picture we’re trying to paint: When energy companies bet on a volatile market, it’s businesses and households who end up paying the price.
At tem, we’ve built something much more resilient. By sidestepping the wholesale market entirely, we cut out instability at the source. Our predictive pricing engine (learn about this here) forecasts, balances, and prices every transaction across thousands of generators and customers, keeping costs stable and fair, not to mention transparent.
If you want to understand why this new future of energy matters, and what it looks like, read our energy blueprint, here.