German energy giant E.ON agrees deal to buy Stephen Fitzpatrick’s Ovo Energy

The agreement is subject to regulatory approvals but would create one of the UK’s biggest household suppliers

Bristol-headquartered energy firm Ovo has agreed to sell its UK energy retail business to European giant E.ON, subject to regulatory approval. The German supplier said on Monday (May 11) the transaction represented “a significant investment” in the UK market and was about “accelerating consumer energy flexibility”.

Ovo and E.ON will continue to operate as separate companies until the approval process completes, which is expected to be in the second half of the year.

Chris Norbury, chief executive of E.ON UK, said: “For decades the UK energy system focused too much on those upstream. Now is our opportunity to change that. Solar, batteries, EVs and a retailer built to orchestrate. That is what this deal is about: customers in control and new energy that works for everyone.”

It is understood that for customers of E.ON Next and Ovo there will be no change during the regulatory review period and existing tariffs will be “honoured in full” while services will continue unchanged.

“Bringing Ovo together with E.ON is the right next step for customers, for colleagues, and for the long-term commitment that decarbonisation requires,” Stephen Fitzpatrick, founder of Ovo, said.

On completion of the deal, E.ON said it would continue the existing licence agreement with energy intelligence platform Kaluza in respect of OVO’s customer base. The parties will also evaluate the potential adoption of Kaluza across the wider E.ON group outside of the UK, the company said.

Mr Norbury added: “It is not about scale for its own sake. It is about building a retailer with the capability, the technology and the customer base to make new energy work for everyone. We chose Ovo because it’s a modern digitally native business with great people and a shared belief that innovation is what can make energy affordable and sustainable for everyone.”

Elsewhere Ovo has also agreed a deal to sell its boiler insurance and servicing arm – Home Services – to Hometree, subject to regulatory approval. It is understood Ovo will work closely with E.ON and Hometree through the regulatory process.

Ovo was established by Mr Fitzpatrick – also founder of Bristol ‘flying taxi’ company Vertical Aerospace – in 2009 as a disrupter to the legacy ‘big six’ companies.

Today, Ovo is one of the biggest energy firms in the UK, with some four million customers. In 2019, the business snapped up SSE’s household energy and related services business for £500m in a bid to accelerate its expansion plans. But by 2022, as the industry was hit by a gas price crisis, the business was forced to cut nearly a quarter of jobs from its workforce.

In December last year, Ovo confirmed it was consulting on another 200 roles as part of proposals submitted to industry watchdog Ofgem to prove it complies with new financial standards.

“We’re making changes that bring us closer to customers and sharpen our focus as an energy retailer,” Ovo said at the time.

“Our actions will help us build a stronger, more resilient business that better serves our customers and meets regulatory requirements. Where roles are affected, we will consult fully and support colleagues throughout.”

The news came just a month after the company’s chief executive, David Buttress – a former boss of Just Eat – announced he was stepping down from the business after just 18 months.