Today’s collapse of renewables-only energy supplier Bulb with 1.7 million customers – praised by prime minister Johnson as recently as July as “ leading the renewables revolution ” – pushes the numbers of energy accounts transferred during 2021’s crisis of wholesale gas prices to over 3.5 million.
Bulb confirmed at lunchtime that it is has decided to enter ‘special administration’. Under Ofgem regulations, supplies to its customers and their credit will be safeguarded.
Claiming a 6% share of UK energy supply, Bulb was describing itself as recently as July as the ‘fastest growing company in Europe’.
As Britain’s biggest collapse yet among the 21 energy companies to fail this year, Bulb is believed too big to be taken over by rivals. It may have to be run as a zombie company with Ofgem’s assistance, with either taxpayers or creditors picking up costs.
With 11,000 businesses claimed today on its website as customers, Bulb was founded by entrepreneurs Hayden Wood, a former management consultant, and Amit Gudka.
The privately held company began trading in August 2015, buying and selling electricity and gas to supply domestic properties and businesses.
Early investors included JamJar Investments, as well as the founders and personal contacts. In August 2018, Russian billionaire Yuri Milner’s DST Global fund and US-domiciled Magnetar Capital pumped in a further £ 60 million.
Expansion into Texas, Spain, and France followed from 2019.
In February this year, Gudka stood down from operational involvement, to concentrate on a battery start up company.
Growing organically rather than by takeover of competitors, Bulb employs in excess of 500 staff from bases in the City of London and in Brighton.
Only four months ago when officially opening Bulb’s new offices in Bishopsgate, London, prime minister Johnson had hailed the company as “leading the way in the renewables revolution. Not only are they creating hundreds of green highly skilled jobs, they’re also spearheading the industry-wide Tech Zero Taskforce and championing the next generation of green tech experts through their new internship programme”.
Last month Britain’s Conservative premier described the global procurement crisis which has sent over twenty UK energy suppliers into bankruptcy this year as a ‘temporary problem’.
Consumer protection body Citizens Advice was quick to react to the supplier’s collapse. Its head of energy policy Gillian Cooper said:
“When the country’s seventh largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated.
“It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”
For analysts Cornwall Insight, head of relationship development Robert Buckley commented:
“The failure of Bulb today marks dark times for the energy sector, with this being the biggest failure of a supplier since TXU Energy nearly 20 years ago.
“Bulb was challenging the industry’s status quo, building up its customer base from a small supplier into a larger one. It will be undoubtedly a sad and worrying time for anyone who works at the supplier.
“Bulb’s customers will not only be worried about the continuity of their energy supply but the costs of the energy they will have to pay.
“The supplier was too big to be resolved through the Supplier of Last Resort (SoLR) process, and Ofgem has appointed a special administrator. The administrator will have a duty to maintain domestic customers at a price no higher than the default tariff price cap. It also has a responsibility to keep the cost to a minimum and minimise the costs of Bulb’s exit for both customers and the industry.
“The failure of Bulb highlights the stress suppliers have been under this autumn. Suppliers have been squeezed with the default tariff price cap limiting the amount they can charge and a wholesale market price that has far exceeded this, ” Buckley concluded.