Renewable-focused challenger supplier Good Energy is to turn its focus towards the business energy market and its Feed-in Tariff (FIT) services, citing fierce competition in the retail market.
While Good Energy isn’t immediately abandoning household supply, its annual accounts outlined a plan to concentrate future efforts on the B2B market and to assist customers with renewable energy subsidies.
“While we will continue to consolidate our position within this market and deliver value for your retail supply customers, our core business focus has been shifting to Feed-in Tariff (FIT) services….and in the business supply market,” accounts filed with Companies House said.
Good Energy saw 4% growth in business energy customers over the previous half year and now serves 124,300 firms. Domestic accounts fell by 1%, to 137,500, over the same period.
Good Energy said new entrants are “driving aggressive pricing and creating a price war” in the retail supply market.
Their anxiety reflects wider fears that the domestic market is being overrun by upstart suppliers, which offer loss-making tariffs; scrimp on customer service, sometimes in violation of regulation; and, increasingly, go bust. More than a dozen energy suppliers have folded in the last year, leaving other suppliers, and thus consumers, holding multi-million pound bills for credit balances and unpaid industry bills.
Meanwhile, regulation, including the price cap introduced by Ofgem in January on standard and default tariffs, have tightened margins for suppliers.
Good Energy also cited a “volatile wholesale energy market.” Despite that, it posted 12.8% profits. That includes £5.7 million profit from supplying £113 million to its 250,000 business and domestic customers last year.
Good Energy has been one of a host of renewable suppliers threatening the Big Six—the UK’s traditional largest suppliers—in recent years. Its evolution away from the retail market comes as fellow green challengers are shaking up the ranks of the Big Six. OVO has reached a deal to buy Big Six supplier SSE’s retail arm. If approved by regulators, the acquisition will give them five million accounts and make OVO the second biggest UK supplier, after British Gas.
Meanwhile, Octopus Energy will gain 300,000 customers through a partnership with Co-Op Energy and become one of the largest suppliers outside of the Big Six, with more than one million customers.
Good Energy sources all of its electricity from solar, wind, hydro and biofuel installations—all of them in the UK and most small, independent and local. It also owns its own renewable installations, including the 8.4MW Hample Wind Farm, near Doncaster.