Home Breaking News Expert warns more than half of remaining UK Energy firms are ‘technically insolvent and at imminent risk of collapse’

Expert warns more than half of remaining UK Energy firms are ‘technically insolvent and at imminent risk of collapse’

by LLB staff reporter
27th Jan 22 1:35 pm

More than half of the UK’s remaining energy suppliers are on the verge of collapse and are “technically insolvent.” According to analysis by the accounting company Price Bailey the credit risk scores and balance sheet data, has found that the 22 remaining suppliers and two businesses which have suppressed scores and 12 have negative assets, this excludes the Big Six.

Price Bailey analysis means that 55% of the remaining energy firms who supply electricity and gas are insolvent and are at risk of going bust.

According to the Delphi Score, 12 firms are deemed “technically insolvent” with six being put in the “Maximum Risk” category, whilst only 10 of the remaining energy firms have a score “Above Average Risk” or higher.

Matt Howard, Partner at Price Bailey said, “The winter of discontent for the energy supply sector is unlikely to end soon.

“Around half of suppliers have already gone bust and at least another half are technically insolvent and at imminent risk of collapse.

“These businesses will find it almost impossible to access extra funding unless directors provide personal guarantees, and few are likely to do so in the current climate.

“We are seeing a domino effect.

“Every time a small energy retailer goes bust, that increases the financial strain on the rest of the ecosystem, making those businesses more vulnerable to collapse.

“It is possible that only one or two of the challenger brands will be left standing alongside the big six this time next year.”

Howard added, “The business models of many of the small suppliers are not sustainable in an era of rising wholesale prices.

“Aggressively undercutting to gain market share when prices are low is a risky strategy.

“Many of the smaller businesses which are going bust are failing precisely because they did not buy energy in advance, opting instead to buy wholesale energy on the ‘spot’ market.”

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