Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Energy Industry - UK - August 2018

"As competition in the energy retail market continues to heat up, suppliers are branching out into other utility services, such as broadband and mobile phone contracts, and bundling their multi-utility offering to gain a competitive edge. This trend is set to continue, with more suppliers offering diversified services to broaden appeal to customers.
A number of energy suppliers are also moving into the emerging ‘home services’ market, responding to the expanding on-demand economy and consumers’ growing demand for digital services that make their lives easier. ‘Home services’ stretches from boiler repair to smart thermostats, and the connected homes market."
- Claudia Preedy, B2B Analyst

This Report looks at the following areas:

  • Government policy changes dampen UK clean energy investment
  • Energy suppliers diversify in intensely competitive market
  • Electrification of transport creates new opportunities

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Shift from coal-fired electricity generation to gas-fired and renewables
              • Figure 1: Proportional importance of fuel source in UK electricity generation, 2013 and 2017
            • Onshore wind and solar generation capacity growth slows due to government policy cuts
              • UK clean energy investment has slowed considerably since 2015
                • Energy supplier switching rates at record high
                  • Figure 2: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2012-18
                • Companies and brands
                  • UK energy supply market continues to be dominated by ‘big six’
                    • Figure 3: Domestic electricity supply market shares in Great Britain, by company 2013-17
                  • Proposed merger of Npower and SSE would create second largest supplier
                    • Energy suppliers are branching out into multi-utility market
                      • Suppliers moving into home services and emerging connected homes market
                        • The consumer
                          • 40% of respondents plan to switch tariff and/or supplier
                            • Just under half of consumers regularly check price comparison sites for energy tariffs
                              • Figure 4: Customer engagement in energy market, May 2018
                            • Most people satisfied with customer service received from energy supplier
                              • Two out of five people also find the option to buy bundles of services from an energy supplier appealing
                                • What we think
                                • Issues and Insights

                                  • Government policy changes dampen UK clean energy investment
                                    • The facts
                                      • The implications
                                        • Energy suppliers diversify in intensely competitive market
                                          • The facts
                                            • The implications
                                              • Electrification of transport creates new opportunities
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Shift from coal-fired electricity generation to gas-fired and renewables
                                                      • 20% of UK electricity is sourced from nuclear plants
                                                        • Wind accounts for around half of electricity generation from renewable sources
                                                          • Onshore wind and solar generation capacity growth slows due to government policy cuts
                                                            • Energy supplier switching rates at record high
                                                              • Over one in five energy customers now use small or medium suppliers
                                                                • More than half of households remain on more expensive variable tariffs
                                                                • Electricity Demand and Generation

                                                                  • Trends in electricity supply
                                                                    • Total electricity supply
                                                                      • Figure 5: Analysis of electricity supply in the UK, 2013-17
                                                                      • Figure 6: Analysis of electricity supply in the UK, 2013-17
                                                                    • Electricity generation by type of fuel
                                                                        • Figure 7: Analysis of electricity generation the UK, by type of fuel used, 2013-17
                                                                        • Figure 8: Proportional importance of fuel source in UK electricity generation, 2013 and 2017
                                                                      • Coal generation
                                                                        • Remaining coal fired power stations set to close by 2025
                                                                          • Conversion of coal-fired stations to biomass plants
                                                                            • Figure 9: Analysis of electricity generated in coal-fired power stations in the UK, 2009-16
                                                                          • Gas/CCGT generation
                                                                            • Government scales back forecasts for new gas-fired power stations
                                                                              • Few new gas-fired station being built due to poor financial incentives and success of renewables
                                                                                • 40% of UK electricity generation is sourced from gas-fired plants
                                                                                  • Figure 10: Analysis of electricity generated in gas-fired power stations in the UK, 2010-17
                                                                                  • Figure 11: Analysis of electricity supplied from gas-fired power stations in the UK
                                                                                • Nuclear power generation
                                                                                  • Figure 12: UK nuclear sites planned closure dates, as of July 2018
                                                                                • Nuclear new build policy
                                                                                  • Nuclear new build projects
                                                                                    • Around 20% of electricity is sourced from nuclear power plant
                                                                                      • Figure 13: Analysis of electricity generated in nuclear power stations in the UK, 2010-17
                                                                                    • Renewables generation
                                                                                      • The government remains committed to renewables target despite Brexit vote
                                                                                        • UK clean energy investment has slowed considerably since 2015
                                                                                          • Trends in renewable electricity generation by source
                                                                                            • Figure 14: Renewable electricity generation in the UK, 2013-17
                                                                                            • Figure 15: Electricity generation from on- and offshore wind, 2013-17
                                                                                          • Onshore Wind
                                                                                            • Offshore Wind
                                                                                              • Solar power
                                                                                                • Hydro electricity
                                                                                                  • Bioenergy
                                                                                                      • Figure 16: Bioenergy electricity generation capacity, by type of plant, 2012-16
                                                                                                    • Renewable electricity capacity development pipeline
                                                                                                      • Figure 17: Renewable energy projects in pipeline, by technology, as of April 2018
                                                                                                  • Gas Demand and Supply

                                                                                                    • UK increasingly dependent on gas imports
                                                                                                        • Figure 18: Total UK gas supply, 2013-17
                                                                                                        • Figure 19: Total UK gas supply, 2013-17
                                                                                                        • Figure 20: Average wholesale gas prices, 2006-17
                                                                                                    • Future Energy Mix and Demand

                                                                                                      • Future energy demand under National Grid’s Future Energy Scenarios
                                                                                                          • Figure 21: Annual power demand in Great Britain, 2017-50
                                                                                                          • Figure 22: Annual power demand in Great Britain, 2017-50
                                                                                                        • Future potential energy mix
                                                                                                            • Figure 23: Forecast power generation installed capacity under “Community Renewables” scenario, by source, 2017-50
                                                                                                            • Figure 24: Future potential energy mix in Community Renewables Scenario in 2040
                                                                                                            • Figure 25: Forecast power generation installed capacity under “two degrees” scenario, by source, 2017-50
                                                                                                            • Figure 26: Future potential energy mix in Two Degrees Scenario in 2040
                                                                                                            • Figure 27: Forecast power generation installed capacity under “steady Progression” scenario, by source, 2017-50
                                                                                                            • Figure 28: future potential energy mix in Steady Progression Scenario in 2040
                                                                                                            • Figure 29: Forecast power generation installed capacity under “Consumer Evolution” scenario, by source, 2017-50
                                                                                                            • Figure 30: Future potential energy mix in Consumer Evolution Scenario in 2040
                                                                                                          • Gas demand forecast
                                                                                                              • Figure 31: Forecast UK gas demand, 2017-50
                                                                                                          • Retail Energy Market

                                                                                                            • Market development
                                                                                                                • Figure 32: Proportion of domestic electricity customers by supplier type, by region, 2000 and 2017
                                                                                                                • Figure 33: Proportion of domestic gas customers of British Gas Trading and other suppliers, by region, March 2018
                                                                                                              • Competition in retail market focused on fixed tariffs
                                                                                                                • But more than half of households remain on more expensive variable tariffs
                                                                                                                  • Figure 34: Number of non-prepayment domestic customer accounts by type of tariff, by supplier, October 2017
                                                                                                                • Ofgem introduces measures to help those on poor value tariffs
                                                                                                                  • Price differential between fixed and variable tariffs shows switching can offer considerable savings
                                                                                                                      • Figure 35: Average annual bill on SVT versus supplier’s cheapest fixed tariff, by major supplier, January-March 2018
                                                                                                                    • Some suppliers are scrapping standard variable tariffs
                                                                                                                      • Energy supplier switching rates at record high
                                                                                                                        • Figure 36: Number of supplier switches in the domestic gas and electricity markets and share of small suppliers, Great Britain, Q1 2012-Q1 2018
                                                                                                                        • Figure 37: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2013-17
                                                                                                                      • Over one in five energy customers now use small or medium suppliers
                                                                                                                          • Figure 38: Domestic gas supply market shares in Great Britain, by company 2013-17
                                                                                                                          • Figure 39: Domestic electricity supply market shares in Great Britain, by company 2013-17
                                                                                                                      • Energy Policy and Legislative Environment

                                                                                                                        • UK committed to reducing carbon emissions by 80% below 1990 levels by 2050
                                                                                                                          • UK currently on track to miss emission reduction targets between 2023 and 2032
                                                                                                                            • Policies to decarbonise electricity
                                                                                                                              • Renewables Obligation
                                                                                                                                • Feed-in Tariffs
                                                                                                                                  • Carbon Price Floor
                                                                                                                                    • Contracts for Difference
                                                                                                                                      • Capacity Market
                                                                                                                                        • The Renewable Heat Incentive
                                                                                                                                          • Energy supplier obligation to improve energy efficiency of homes
                                                                                                                                          • Regulatory Environment and Changes

                                                                                                                                            • Industry Regulation
                                                                                                                                              • Market reforms introduced in 2014 to encourage competition and supplier switching
                                                                                                                                                • Ofgem introduces further market reforms following CMA Energy Market investigation
                                                                                                                                                  • Ofgem set to introduce temporary price cap on SVTs by end of 2018
                                                                                                                                                  • Market Drivers

                                                                                                                                                    • Drivers for investment in energy system and infrastructure
                                                                                                                                                      • Decarbonisation of UK energy system
                                                                                                                                                        • Smart grid development to support low-carbon economy
                                                                                                                                                          • Rapid increase in distributed generation
                                                                                                                                                            • Growth in decentralised and renewable electricity generation will increase the complexity of operating a secure and cost-effective energy system
                                                                                                                                                              • Energy storage to play key role in transition to clean electricity supply system
                                                                                                                                                                • Electrification of transport creates new opportunities
                                                                                                                                                                  • Market drivers in retail energy market
                                                                                                                                                                    • Costs making up an average gas and electricity bill
                                                                                                                                                                        • Figure 40: Breakdown of average large supplier dual fuel household bill, 2016
                                                                                                                                                                        • Figure 41: Breakdown of average domestic electricity bill, 2016
                                                                                                                                                                        • Figure 42: Breakdown of average gas bill, 2016
                                                                                                                                                                      • Customer service is a key driver of loyalty
                                                                                                                                                                        • Smart Meter roll-out programme
                                                                                                                                                                          • First-generation (SMETS1) smart meters need to be upgraded or replaced, as they can revert to being ‘dumb’ if consumers switch supplier
                                                                                                                                                                            • Potential benefits and opportunities offered by smart meters
                                                                                                                                                                              • Widespread adoption of smart meters could attract new market entrants, including tech firms
                                                                                                                                                                                • Peer-to-peer trading could allow consumers to bypass energy suppliers
                                                                                                                                                                                • Companies and Brands – What You Need to Know

                                                                                                                                                                                  • UK energy supply market continues to be dominated by ‘big six’
                                                                                                                                                                                    • Shell enters energy retail market through acquisition of First Utility
                                                                                                                                                                                      • Proposed merger of Npower and SSE would create second largest supplier
                                                                                                                                                                                        • Energy suppliers are branching out into multi-utility market
                                                                                                                                                                                          • Suppliers moving into home services and emerging connect homes market
                                                                                                                                                                                          • Competitive Strategies

                                                                                                                                                                                            • Consolidation/Acquisition
                                                                                                                                                                                              • Shell acquires First Utility
                                                                                                                                                                                                • Proposed merger of Npower and SSE
                                                                                                                                                                                                  • Centrica acquires technology firms to support Connected Homes
                                                                                                                                                                                                    • OVO Energy acquires CORGI Home Plan in transition to truly integrated energy services company
                                                                                                                                                                                                      • Innovation in tariffs offerings
                                                                                                                                                                                                        • Bundled tariffs to add customer value
                                                                                                                                                                                                          • Focus on green tariffs
                                                                                                                                                                                                            • Emergence of electric vehicle tariffs
                                                                                                                                                                                                              • Some major suppliers scrap SVTs in 2018
                                                                                                                                                                                                                • Suppliers offer reward schemes to build customer loyalty
                                                                                                                                                                                                                  • Energy suppliers branch out into multi-utility market to add value and differentiate offerings
                                                                                                                                                                                                                    • Some suppliers are moving into home services and the emerging connected homes market
                                                                                                                                                                                                                      • E.ON enters UK solar and storage market
                                                                                                                                                                                                                      • Company Profiles

                                                                                                                                                                                                                        • Centrica
                                                                                                                                                                                                                          • Recent acquisitions and disposals
                                                                                                                                                                                                                            • Centrica adopts new strategy to focus on energy supply and the customer-facing side of business
                                                                                                                                                                                                                              • Financial performance
                                                                                                                                                                                                                                • Figure 43: Financial analysis of Centrica, 2013-17
                                                                                                                                                                                                                                • Figure 44: Centrica revenue segmental analysis, 2017
                                                                                                                                                                                                                              • British Gas Trading
                                                                                                                                                                                                                                • British Gas scraps standard variable tariffs to new customers
                                                                                                                                                                                                                                  • Focus on innovative Connected Homes products
                                                                                                                                                                                                                                    • Recent acquisition will support Connected Homes
                                                                                                                                                                                                                                      • Company review and outlook
                                                                                                                                                                                                                                        • Figure 45: Financial analysis of British Gas Trading, 2012-16
                                                                                                                                                                                                                                      • EDF Energy
                                                                                                                                                                                                                                        • Planned new nuclear power stations
                                                                                                                                                                                                                                          • Development of renewable assets
                                                                                                                                                                                                                                            • Intense competition sees EDF Energy lose more customers in 2017
                                                                                                                                                                                                                                              • But innovative tariffs secure sales
                                                                                                                                                                                                                                                • EDF Energy eyes move into home services market
                                                                                                                                                                                                                                                  • Company strategy
                                                                                                                                                                                                                                                    • Financial performance
                                                                                                                                                                                                                                                      • Figure 46: Financial analysis of EDF Energy, 2013-17
                                                                                                                                                                                                                                                      • Figure 47: EDF Energy revenue segmental analysis, 2017
                                                                                                                                                                                                                                                    • E.ON Energy Solutions
                                                                                                                                                                                                                                                      • E.ON enters UK solar and storage market
                                                                                                                                                                                                                                                        • E.ON to scrap SVTs for customers on fixed deal
                                                                                                                                                                                                                                                          • Company strategy
                                                                                                                                                                                                                                                            • Financial performance
                                                                                                                                                                                                                                                              • Figure 48: Financial analysis of E.ON Energy Solutions, 2013-17
                                                                                                                                                                                                                                                              • Figure 49: E.ON revenue segmental analysis, 2017
                                                                                                                                                                                                                                                            • Npower
                                                                                                                                                                                                                                                              • Npower rolls out two-year recovery plan
                                                                                                                                                                                                                                                                • Npower continued to lose customer accounts in 2017
                                                                                                                                                                                                                                                                  • Meridian Energy and Npower launch online energy supplier Powershop
                                                                                                                                                                                                                                                                    • SSE and Npower in merger talks
                                                                                                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                                                                                                        • Figure 50: Financial analysis of Npower, 2012-16
                                                                                                                                                                                                                                                                        • Figure 51: RWE – UK revenue segmental analysis, 2017
                                                                                                                                                                                                                                                                      • ScottishPower Energy Retail
                                                                                                                                                                                                                                                                        • Scottish Power to ditch standard tariffs
                                                                                                                                                                                                                                                                          • Customer numbers down in 2017
                                                                                                                                                                                                                                                                            • Company Performance & Strategy
                                                                                                                                                                                                                                                                                • Figure 52: Financial analysis of ScottishPower Energy Retail, 2012-16
                                                                                                                                                                                                                                                                                • Figure 53: ScottishPower revenue segmental analysis, 2017
                                                                                                                                                                                                                                                                              • SSE
                                                                                                                                                                                                                                                                                • SSE and Npower in talks to merge retail businesses
                                                                                                                                                                                                                                                                                  • Renewable generation accounts for 28% of electricity output in 2017/18
                                                                                                                                                                                                                                                                                    • SSE loses more customers in 2017/18
                                                                                                                                                                                                                                                                                      • Company strategy
                                                                                                                                                                                                                                                                                        • Financial performance
                                                                                                                                                                                                                                                                                          • Figure 54: Financial analysis of SSE, 2014-18
                                                                                                                                                                                                                                                                                          • Figure 55: SSE revenue segmental analysis, 2018
                                                                                                                                                                                                                                                                                        • First Utility
                                                                                                                                                                                                                                                                                          • First Utility acquired by Shell
                                                                                                                                                                                                                                                                                            • First Utility diversifies to become multi-utility brand
                                                                                                                                                                                                                                                                                              • Financial performance
                                                                                                                                                                                                                                                                                                • Figure 56: Financial analysis of First Utility, 2012-16
                                                                                                                                                                                                                                                                                              • OVO Energy
                                                                                                                                                                                                                                                                                                • OVO launches BOOST –A standalone brand for the prepayment sector
                                                                                                                                                                                                                                                                                                  • Recent acquisitions
                                                                                                                                                                                                                                                                                                    • OVO launches the world’s first widely available domestic vehicle-to-grid charger
                                                                                                                                                                                                                                                                                                      • Company strategy
                                                                                                                                                                                                                                                                                                        • Financial performance
                                                                                                                                                                                                                                                                                                          • Figure 57: Financial analysis of OVO Energy, 2012-16
                                                                                                                                                                                                                                                                                                      • The Consumer – What You Need to Know

                                                                                                                                                                                                                                                                                                        • ‘Big six’ continue to dominate gas and electricity supply market
                                                                                                                                                                                                                                                                                                          • Two in five people have switched supplier in the last two years
                                                                                                                                                                                                                                                                                                            • 40% of respondents plan to switch tariff and/or supplier
                                                                                                                                                                                                                                                                                                              • Just under half of consumers regularly check price comparison sites for energy tariffs
                                                                                                                                                                                                                                                                                                                • Most people satisfied with customer service from energy supplier
                                                                                                                                                                                                                                                                                                                  • Most people would like to see energy suppliers provide “greener energy”
                                                                                                                                                                                                                                                                                                                  • Current Supplier

                                                                                                                                                                                                                                                                                                                    • British Gas remains largest supplier in gas and electricity supply market
                                                                                                                                                                                                                                                                                                                        • Figure 58: Current gas supplier, May 2018
                                                                                                                                                                                                                                                                                                                        • Figure 59: Current electricity supplier, May 2018
                                                                                                                                                                                                                                                                                                                      • British Gas boasts a particularly high gas market share in Inner & Greater London
                                                                                                                                                                                                                                                                                                                      • Energy Consumer Engagement and Behaviour

                                                                                                                                                                                                                                                                                                                        • 41% have switched supplier in last two years
                                                                                                                                                                                                                                                                                                                          • Older people and households on lower income are less likely to switch
                                                                                                                                                                                                                                                                                                                            • Renters are considerably less engaged in market than home owners
                                                                                                                                                                                                                                                                                                                                • Figure 60: Customer engagement in energy market, May 2018
                                                                                                                                                                                                                                                                                                                              • Two-thirds are on a fixed-rate tariff
                                                                                                                                                                                                                                                                                                                                • 40% of respondents plan to switch tariff and/or supplier
                                                                                                                                                                                                                                                                                                                                  • Just under half of consumers regularly check price comparison sites for energy tariffs
                                                                                                                                                                                                                                                                                                                                    • Over a third of respondents have directly contacted suppliers to ask to be moved onto cheaper tariff
                                                                                                                                                                                                                                                                                                                                      • Majority of consumers do not have smart meter installed
                                                                                                                                                                                                                                                                                                                                      • Reasons for not Switching Supplier

                                                                                                                                                                                                                                                                                                                                        • Over half of energy consumers have not switched supplier because they are happy with current supplier
                                                                                                                                                                                                                                                                                                                                          • Figure 61: Reasons for not switching gas and/or electricity supplier in the last two years, May 2018
                                                                                                                                                                                                                                                                                                                                        • 20% believe potential savings are not worth the hassle of switching
                                                                                                                                                                                                                                                                                                                                          • 11% are put off switching because cheapest deals are offered by firms they’ve never heard off
                                                                                                                                                                                                                                                                                                                                            • 1 in 10 stick with their current supplier because of good reward scheme
                                                                                                                                                                                                                                                                                                                                            • Customer Satisfaction and Attitudes towards Supplier Selection

                                                                                                                                                                                                                                                                                                                                              • 85% are satisfied with customer service they receive from energy supplier
                                                                                                                                                                                                                                                                                                                                                • Figure 62: satisfaction with current supplier and attitudes towards supplier selection, May 2018
                                                                                                                                                                                                                                                                                                                                              • Most people are happy to switch supplier frequently to get cheapest deal
                                                                                                                                                                                                                                                                                                                                                • The government’s proposed price cap may deter people from switching
                                                                                                                                                                                                                                                                                                                                                • Attitudes towards Energy Suppliers

                                                                                                                                                                                                                                                                                                                                                  • Most people would like to see energy suppliers provide “greener energy”
                                                                                                                                                                                                                                                                                                                                                    • Figure 63: Attitudes towards energy suppliers, May 2018
                                                                                                                                                                                                                                                                                                                                                  • Only a third agree that a firm’s reputation is more important than price
                                                                                                                                                                                                                                                                                                                                                    • 41% of people find the option to buy energy-saving devices from energy suppliers appealing
                                                                                                                                                                                                                                                                                                                                                      • Two out of five people find the option to buy bundles of services from energy suppliers appealing
                                                                                                                                                                                                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                                                                                                                                          • Abbreviations
                                                                                                                                                                                                                                                                                                                                                            • Methodology
                                                                                                                                                                                                                                                                                                                                                            • Further Sources and Contacts

                                                                                                                                                                                                                                                                                                                                                              • Trade associations & regulatory bodies
                                                                                                                                                                                                                                                                                                                                                                • Energy Networks Association
                                                                                                                                                                                                                                                                                                                                                                  • Energy Industries Council
                                                                                                                                                                                                                                                                                                                                                                    • Energy UK
                                                                                                                                                                                                                                                                                                                                                                      • Office of Gas and Electricity Markets (Ofgem)
                                                                                                                                                                                                                                                                                                                                                                        • Office of Gas and Electricity Markets - Scotland (Ofgem Scotland)
                                                                                                                                                                                                                                                                                                                                                                          • Office of Gas and Electricity Markets - Wales (Ofgem Wales)
                                                                                                                                                                                                                                                                                                                                                                            • Renewable Energy Association
                                                                                                                                                                                                                                                                                                                                                                              • Solar Trade Association
                                                                                                                                                                                                                                                                                                                                                                                • Trade magazines
                                                                                                                                                                                                                                                                                                                                                                                  • Modern Power Systems
                                                                                                                                                                                                                                                                                                                                                                                    • Utility Week
                                                                                                                                                                                                                                                                                                                                                                                      • Energy Now
                                                                                                                                                                                                                                                                                                                                                                                        • Renewable Energy Focus
                                                                                                                                                                                                                                                                                                                                                                                          • Resource
                                                                                                                                                                                                                                                                                                                                                                                            • Solar UK
                                                                                                                                                                                                                                                                                                                                                                                              • Smart Solar
                                                                                                                                                                                                                                                                                                                                                                                                • Wind Energy Network
                                                                                                                                                                                                                                                                                                                                                                                                  • Wind Power Monthly
                                                                                                                                                                                                                                                                                                                                                                                                    • Trade events
                                                                                                                                                                                                                                                                                                                                                                                                      • Offshore Europe
                                                                                                                                                                                                                                                                                                                                                                                                        • RWM 2018
                                                                                                                                                                                                                                                                                                                                                                                                          • edie live 2018

                                                                                                                                                                                                                                                                                                                                                                                                          Energy Industry - UK - August 2018

                                                                                                                                                                                                                                                                                                                                                                                                          US $1,912.55 (Excl.Tax)