Ovo Energy will become the second biggest energy supplier in the UK after agreeing a deal to buy SSE’s retail business.
The £500 million deal will make Ovo a major player in the energy supply industry, second only to British Gas in terms of customer base. Ovo is currently the largest challenger energy supplier in the UK with around 1.5 million customers and 2,000 employees, even though it was only established in 2009. However, after this deal is completed either at the end of this year or at the beginning of 2020, it will take on SSE’s 3.5 million domestic customers, as well as its 8,000 staff members.
Energy suppliers in the UK have come under increasing pressure in recent years due to heightened competition in the market – over a dozen suppliers have gone bust within the past two years. The introduction of Ofgem’s energy price cap at the beginning of this year has only increased the strain on the gas and electricity suppliers.
It’s been expected for a while now that a deal to sell SSE’s retail business would be completed after a proposed merger with fellow Big Six firm npower collapsed last year. SSE lost 500,000 domestic customers in the year to April 2019, and in May it announced it was planning to sell its energy supply business. SSE has assured its customers that they will be in good hands with Ovo and said they will feel no immediate impact from the switch.
“We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen,” said Alistair Phillips-Davies, chief executive of SSE.
“Ovo shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry. I’m confident that this is the best outcome for the SSE Energy Services business. Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure to help the UK reach net zero emissions.”
Stephen Fitzpatrick, founder and chief executive of Ovo, said: “For the past three years Ovo has been investing heavily in scalable operating platforms, smart data capabilities and connected home services, ensuring we’re all positioned to grow and take advantage of new opportunities in a changing market.
“SSE and Ovo are a great fit. They share our values on sustainability and serving customers. They’ve built an excellent team that I’m really looking forward to working with.”