Solarplicity runs out of gas with a growing trail of broken promises
The renewable energy company is the latest small supplier to go bust, reports
It has been a summer like no other for David Elbourne, the Solarplicity boss. When the green energy executive jetted off to Portugal for a golfing getaway, he left behind a trail of missed payments, furious customers and a business on the brink of collapse. In the space of several extraordinary months, El bourne’ s Hertfordshire based company has gone from supplying renewable energy to thousands of households, to being banned from taking on new customers by the industry regulator, Ofgem. A fortnight ago the company’s energy supply division crashed out of the market just days before losing its licence to operate.
US private equity giant Apollo has branded its 28pc stake in some of Solarplicity’s assets as “worthless.” The company had also received funding from ABN AMRO’S investment arm.
The latest events mark a fall from grace for the renewable energy company – which until recently supplied energy to around 7,500 household customers and just under 500 businesses. Ofgem says that debt owed to Smart DCC, the company which runs the UK’S smart meter infrastructure, and National Grid Gas had spiralled to nearly £500,000.
Who or what is to blame for the demise of Solarplicity, which has become the latest in a line of small energy suppliers going bust? Was it the chaotic culture of a company whose long list of disgruntled customers earned it 3,324 formal complaints this year, including 583 in July alone?
Or was Solarplicity’s failure the result of Ofgem intervention, as Elbourne recently suggested.
That would be ironic. Solarplicity is one of many companies that has benefited in the past decade, as regulators have swept aside the barriers to entry in the energy market to boost competition. Once dominated by the big six providers – E. ON, British Gas, Scottish Power, npower, EDF and SSE – the number of players has grown to as many as 70.
More recently, however, the string of supplier collapses have prompted questions about the state of the industry for small providers. “It has
Vinjeru Mkandawire
become a very competitive and price-driven space,” says Oliver Archer, analyst at Cornwall Insight. “Customers are increasingly shopping around for cheaper deals. As a result, there is pressure to price cheaply.
“A number of small providers have grown fast but they are not collecting anywhere near enough direct debits to cover their costs,” Archer says.
Recent weeks have seen mass exits from Solarplicity’s offices. Last month staff were dismissed without the final month’s pay and given scant detail on future redundancy packages, several former employees say. Further rounds of redundancies have followed.
It follows a backlog of missed or late payments by Solarplicity to feed-in tariff generators, or FITS, who are paid fixed tariffs for electricity generated and exported to the National Grid.
“We were getting a lot of grief from customers and generators but whenever we asked the directors for help or direction, our requests were ignored and calls were left unanswered,” says one ex-employee.
Ofgem issued the utility firm with a provisional order in May, ordering it to pay up the money it owed. At the time, it also upheld an earlier provisional order on Solarplicity for customer service failures.
Meanwhile, customer complaints against the business including issues with billing, switching to other providers and people being signed up without their consent, continued to roll in. There were also long-standing concerns – raised by the industry regulator – about the company’s treatment of vulnerable customers.
Matthew Vickers, the chief executive of Ombudsman Services, highlighted Solarplicity’s failure to refund customers as another major concern. “Its collapse doesn’t come as a huge surprise, but it will be another source of stress for the company’s customers – many of whom have already experienced problems,” according to a statement.
Solarplicity’s grip on its internal finances had also come under pressure. A “disorganised” environment within the company meant that its engineers were routinely left without meters and other equipment required for their day-to-day work. This went on “for months,” a person familiar with the company says.
“The directors oversaw a complicated group structure and mastered a sequence of setting up lots of small businesses before running them into the ground,” says another person who worked for Solarplicity.
Companies House records list Elbourne as a director of 70 companies, nearly a third of which have either been dissolved, liquidated or are in administration.
Solarplicity blames Ofgem’s provisional order for its demise. “We informed Ofgem in February this year of the ultimate effect that this would have on the business... the events now taking place are exactly what was predicted,” according to a Solarplicity spokesman. The company says that it had secured investment for the business which would have helped it to “flourish” but that Ofgem’s decision cut the power.