Independent suppliers must grow fast and hit a critical mass of customers to survive the current market or risk going bust.

GB Energy Supply managing director Luke Watson

Small suppliers’ face difficult challenges amid current volatile wholesale prices and political uncertainty, says GB Energy Supply managing director Luke Watson.

“Challengers just coming out of control market entry have got a lot to learn and they’ve got to hit that critical mass quickly.

“What you may well find is that some will succeed and hit critical numbers and grow the brand, I think others will be merged with some of the larger players, bought out, or even just fall away,” he said.

Watson told Utility Week that new supplier’s success could rely on whether they have a hedging strategy for buying energy in place. He also highlighted the difficulty for small independents to “get to grips” with all the “moving parts in the industry”.

“One of the figures banded around is 20,000. That’s the number of customers you have to hit in two years to break even. That is anecdotal but it gives you an indication of the numbers.

“Bearing in mind we can’t all be the cheapest, I think there is a bit of uncertainty ahead. I think we are going to see more and more new entrants into the market place, and we might end up with regional companies that look to be the cheapest in their particular area.

“Will there be the same number of suppliers in the market in five years’ time? I don’t know is the honest answer.”

Earlier this year Watson said that it was “too late” for new entrants to the market due to challenges such as the expense of the smart meter rollout and a spike in wholesale prices.