Blog Post

Smaller Energy Suppliers continued to snap up market share in 2020 shows new report

Richard Simmonds • February 4, 2021

A new report published by Cornwall Insight has shown that smaller energy suppliers continued to increase their market share throughout 2020, taking 56.2% of the collective gas market share.

Growing market share

Smaller energy suppliers continue to snap up their share of the electricity and gas markets from the large suppliers.

The data released by Cornwall Insight shows that smaller energy suppliers' collective gas market share had soared from just 17% in 2005 to 56.2% in October 2020.

Smaller suppliers have also been growing rapidly in the electricity sector, with 28.2% of all installed meters being from smaller suppliers.

Meanwhile, the larger suppliers such as E.ON, British Gas, EDF Energy, npower, SSE, and Scottish Power have seen their combined market share fall from the 82.7% recorded in October 2015 to 71.8% in October 2020.

In the gas market, larger suppliers have also experienced a shrinking of their combined market share. In 2015 they enjoyed a rather dominant 55.8% but since the rise in the number of smaller energy suppliers this share has fallen to 43.8%.

Also read: Why is now a good time for smaller Energy Suppliers to get new customers?

Why are small suppliers taking market share?

Smaller energy suppliers have several advantages over their larger counterparts with the biggest being increased flexibility in providing better customer service and cheaper energy tariffs.

Not being so cumbersome as their larger rivals and the adoption and use of technology such as Dyball's Customer Relationship Management software, they can react to customer needs quickly and effectively and reduce energy billing issues. Often, smaller suppliers offer cheaper tariffs that undercut the larger suppliers and snap up customers searching for the best energy deals.

"Growth for non-large suppliers has been driven by several factors, including the acquisitions of customers from exiting suppliers such as Yu Group which acquired around 4,000 business meters off of Bristol Energy in August, competitively priced propositions or engagement with the TPI channels," said Molly Lloyd, Analyst at Cornwall Insight.

Also read: Acquisitions and mergers have been the biggest form of energy supplier growth

Will smaller Energy suppliers continue to take market share?

The growing success of the smaller energy suppliers led to Ofgem changing the way it classifies suppliers. Gone are the days of the 'Big Six' where just six companies dominated the energy supply market.

As such, Ofgem has relabelled energy suppliers in its industry data and have ditched the term 'Big Six' replacing it with the more encompassing 'Large'. New market entrants are now classed as small or medium.

2020 also showed that more consumers were switching from larger suppliers to smaller ones in record numbers.

Data released in October showed that the number of switches from the Big Six to challenger companies climbed 0.2% year-on-year to 209,000 and made up 34% of the total number of completed switches.

Also read: How to start an Energy Supply company