Future energy retail markets: stakeholder views on multiple electricity supplier models in the UK

Panel: 2. Efficiency and beyond: innovative energy demand policies

This is a peer-reviewed paper.

Authors:
Nicole Watson, University College London, United Kingdom
Gesche Huebner, University College London, United Kingdom
Michael Fell, University College London, United Kingdom
David Shipworth, University College London, United Kingdom

Abstract

In the transition to smart, low-carbon energy systems, the energy retail market is evolving. Many non-traditional actors are beginning to offer services that can help accommodate distributed supply intermittency. At the same time, they provide greater choice for consumers through new electricity products, such as specialised supply for assets such as EVs and smart appliances, or democratising energy supply, e.g. through peer-to-peer energy trading and community energy schemes. This represents a shift from a supplier-centric energy system to one placing greater emphasis on the role of energy end-users. However, under the current ‘supplier hub principle’ governing the UK market, domestic consumers’ interaction with the energy system is mediated by a single licensed supplier, creating barriers for non-traditional business models.

This paper shares findings from eight semi-structured interviews conducted in summer 2020 with regulators, innovators, energy suppliers, and consumer advocacy groups on the future of the UK’s energy retail market and consumers’ relationship with it. The research focuses on one alternative to the supplier hub principle; a ‘multiple supplier model’, which would enable consumers to have multiple electricity suppliers at the same time, engaging with non-traditional models whilst keeping their national-level supplier. Interviewees highlighted peer-to-peer energy trading, and community energy, as well as the ability to bundle supply with technologies such as electric vehicles or smart appliances, as the most transformational use cases that multiple supplier models could facilitate. Although most interviewees felt that the current supplier hub model is not fit to support the energy transition, contention remains around how best to replace it. Findings offer insight into the challenges posed by the supplier hub principle; the advantages and disadvantages of permitting multiple suppliers; and the key aspects of interactions with multiple energy suppliers from the consumer’s perspective. This work contributes towards understanding the landscape of future supplier models and the challenges faced in transforming the energy retail market.