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Octopus Energy has overtaken British Gas to become Britain’s largest residential energy supplier by meters on supply, capping a big market shift over the past 10 years as challengers have ousted the so-called Big Six.
Launched in London in 2016, Octopus now has 12.9mn British domestic electricity and gas accounts, as measured by energy meters, according to a market share survey by Cornwall Insight.
The figure is 320,000 more than British Gas, which has been the largest supplier since the British market opened to competition at the end of the 1990s, and gives Octopus a market share of about 24 per cent.
Dan Morris, chief executive of Cornwall Insight, which published the figures on Friday, said it marked the “biggest development in the domestic retail energy market since it opened”.
The rapid rise of Octopus was a “notable achievement in the highly competitive and tightly regulated UK supplier market”, he added.
Most households have two energy meters, one for electricity and one for gas, which can be served by different suppliers. Octopus said that on a household basis, it served 7.3mn customers, while British Gas says it serves nearly 7.5mn.
Octopus is one of a new band of challenger suppliers set up over the past decade to challenge the dominant Big Six suppliers including British Gas, EDF and E.On.
After years at the top, the dominant groups were accused of taking customers for granted in a report by the UK’s competition watchdog in 2016. which paved the way for the introduction of an energy price cap in 2019.
But many of the challengers were poorly run or had insufficient financial backing. Several of the newer operators collapsed in 2021 and 2022 as they were unable to withstand sudden surges in wholesale gas prices.
Octopus emerged as a winner from the crisis, scooping up customers from collapsed rivals including 1.5mn from challenger competitor Bulb, via a government-run process that other rivals claimed was unfair.
In 2023, Octopus bought Shell’s household energy supply business in the UK and Germany, as the FTSE 100 oil and gas giant retreated from its foray into the market.
It has also grown organically, saying in an announcement on Friday that almost 1mn customers had joined from other suppliers last year.
Of the other challengers, Ovo Energy has also been a big success, buying SSE’s household retail supplier in 2019 and adding about 3.5mn customers in a stroke.
Cornwall Insight said that, following the market collapses, six energy companies now supplied more than 90 per cent of the market, albeit a different six than 10 years ago.
As well as Ovo’s purchase of SSE’s retail business, Npower’s UK household business was bought by E.on in 2019.
Morris, at Cornwall Insight, added: “Of course we must maintain an element of caution. Consumer choice remains a critical factor for both households and businesses when selecting their energy supplier.
“Some may argue that consumers aren’t benefiting from the same level of competition or deals seen in the years leading up to the crisis.”
Octopus also has a software platform, Kraken, which it uses and licenses to rivals, and manages a growing portfolio of wind farms and other assets.
Greg Jackson, chief executive and founder, said the company had faced questions when it started about how it would take on the Big Six, but that the team had worked “incredibly hard” to build the business.
“In a world where the government is rightly trying to work out how you attract investment, [the answer is] avoid short-termism, invest in the long-run fundamentals.”
British Gas declined to comment.
