£22m energy firm collapsed after sales plunged and funding dried up
A renewable energy company which turned over almost £23m in its last reported financial year collapsed after sales fell well below forecasts and its parent group could no longer provide financial support.
Effective Home, which had relocated operations to Leicester as part of attempts to cut costs, entered administration on June 26 with Simon Knight and Syed Aziz of Jeremy Knight & Co appointed joint administrators.
A newly-filed report reveals the company had expanded its workforce and operations in anticipation of significant growth that ultimately failed to materialise.
Effective Home, formerly known as Effective Heating, was established in 2016 as part of a diversification strategy by its parent, Effective Energy Group.
The company initially focused heavily on boiler replacements under the Government’s Energy Company Obligation schemes, at its peak completing more than 70 boiler installations a week. It later moved into air source heat pumps, solar panels and battery storage.
By 2022, the company was installing around 300 solar systems a month and had grown to 118 employees, alongside a network of 27 installation subcontractors.
However, administrators said an “extensive sales plan” forecasting significant growth in retail, ECO and local authority work failed to deliver the expected volumes.
The report said: “It became clear to the directors that Premier Connections had not been able to deliver the budgeted sales volumes and other sales avenues were explored.”
By 2025, monthly installations had fallen below 200 despite Effective Home retaining a team capable of delivering 400.
The company began cutting costs and consolidating its operations into Leicester, closing its Portsmouth office. None of the Portsmouth sales team relocated, meaning a new team effectively had to be established in Leicester.
Administrators said the cost of acquiring and servicing some customer leads had also become “unsustainable”, while inconsistent installation volumes contributed to an inefficient delivery model which regularly required multiple return visits.
Effective Home was also operating in a highly competitive market where smaller rivals with lower overheads could offer similar installations at cheaper prices.
Further cost reductions were pursued during 2026, including reducing staff costs and moving towards online sales rather than sending representatives to customers’ homes.
But the business had historically depended on loans from other companies within Effective Energy Group rather than external bank funding.
The crunch came in June when Effective Energy Group and its subsidiaries indicated they were unlikely to be able to continue supporting Effective Home financially.
Administrators were contacted on June 16 and appointed ten days later.
Attempts to rescue the company as a going concern failed.
Administrators said no suitable purchaser could be found for its shares, while the company’s FCA-regulated status, trading position and financial circumstances meant a Company Voluntary Arrangement was not viable.
The collapse resulted in claims being processed for 34 employees made redundant, with the Redundancy Payments Service handling payments due to them.
Effective Home’s statement of affairs shows unsecured non-preferential claims totalling more than £2.5m.
These include £1.81m of trade and expense claims, £618,581 owed to consumer creditors and more than £100,000 of unsecured employee claims.
Against that, administrators estimate £217,313 will ultimately be available to unsecured creditors after preferential claims, leaving an estimated deficiency of approximately £2.31m.
The failure has also left more than 100 customers with outstanding installations, remedial work or paperwork issues.
A separate company, Energy Shield, has been established with assistance from Effective Energy Group to help affected customers complete outstanding work.
Administrators said 18 customers awaiting solar PV installations had so far agreed to continue with Energy Shield, while other customers require remedial work or certification for systems already installed.
The latter has created difficulties because customers without the necessary certificates can be unable to sell surplus electricity back to energy providers.
Administrators said a “vast number” of customers who owe money to Effective Home are refusing to pay until outstanding installation or certification issues are resolved.
The company’s remaining physical assets have little value. Stock identified by administrators was valued at around £3,000, while furniture and equipment is expected to realise approximately £1,950.
Effective Home’s latest filed accounts showed turnover of £22.7m for the year to March 2025, down from £27.8m a year earlier.
Administrators expect the company eventually to move from administration into a creditors’ voluntary liquidation, while efforts continue to resolve outstanding customer cases and recover money owed to the business.
