2021
9
UK Energy Industry Market Report 2021
2021-08-24T04:07:11+01:00
OX1049179
1495
141838
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Report
en_GB
“With green tariffs becoming more ubiquitous, energy suppliers must do more to differentiate their green credentials. Suppliers should consider offering services and products to help consumers live more sustainably in…

UK Energy Industry Market Report 2021

£ 1,495 (Excl.Tax)

Description

The UK Energy Industry market report identifies consumer attitudes towards future energy mix and demand, retail energy market, in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Energy Industry market in the UK. 

Current Landscape: UK Energy Market

The COVID-19 outbreak and the ‘work from home if you can’ mandate resulted in a sharp shift in where and how people ate breakfast.

  • In 2020, coal-fired generation accounted for just 2% of UK electricity supply, down from 30% in 2014.
  • In contrast, renewables’ share of total generation grew from 19% in 2014 to 43% in 2020.
  • In 2020, UK supply of electricity decreased by 4%, reflecting the impact of COVID-19.

Reduced demand in the commercial and industrial sectors was the main reason for the drop, slightly offset by increased domestic demand as people spent more time at home.

Future Market Trends in the UK Energy Industry

In the retail energy market, COVID-19 has resulted in a rise in customer payments deferrals, which has put some suppliers under financial pressure. Some industry observers are predicting a new wave of small supplier failures due to a steep rise in wholesale prices and the impact of the COVID-19 crisis on company debt levels.

Increased consumer awareness of climate change and concerns over the environmental impacts of their energy consumption offers opportunities for suppliers to engage more with customers to help them live more sustainably in their homes and reduce their energy bills. This includes the rollout of smart meters, installing energy efficiency measures, engaging consumers on their energy use through apps, and offering other smart products, such as smart thermostats and time of use tariffs. Suppliers can also offer new services which help consumers access green technologies like heat pumps, EVs, solar PV, or batteries in their homes.

Read on to discover more details or take a look at all of our UK Industry market research.

Quickly understand

  • The impact of COVID-19 on the UK Energy Industry in the short-, medium- and long-term.
  • Future energy mix and demand.
  • The UK’s progress to move to a cleaner energy mix.
  • Key developments in the renewables sector.
  • Key developments in the retail energy market.
  • Competitive strategies in the retail energy market.

Covered in this report

Energy Types: Interconnectors, Biomass, BECCS, Nuclear, Hydrogen, Fossil Fuel, Gas CCUS, Solar, Anaerobic Digestion, Battery, Biomass (dedicated), Biomass (co-firing), Landfill Gas, Large Hydro, EfW Incineration, Advanced Conversion Technologies, Sewage Sludge Digestion, Shoreline Wave, Small Hydro, Solar Photovoltaics, Tidal Barrage and Tidal Stream, Wind Offshore, Wind Onshore.

Brands: British Gas, OVO Energy, E.ON, EDF Energy, ScottishPower, Octobus Energy, Blub, Shell Energy, Avro Energy, Utility Warehouse, npower, Green Network Energy, Centrica.

Expert analysis from a specialist in the field

This report, written by Claudia Preedy, a leading analyst in the B2B sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

With green tariffs becoming more ubiquitous, energy suppliers must do more to differentiate their green credentials. Suppliers should consider offering services and products to help consumers live more sustainably in their homes. This can unlock new opportunities for growth and create competitive advantage.
Suppliers can more actively engage with customers to help them lower their energy bills and carbon emissions. This includes the rollout of smart meters, installing energy efficiency measures, engaging consumers on their energy use through apps, and offering other smart products, such as smart thermostats and time of use tariffs. Suppliers can also offer new services which help consumers access green technologies like heat pumps, EVs, solar PV, or batteries in their homes.
Claudia Preedy
Senior B2B Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on the UK Energy Industry
      • Figure 1: Short, medium and long term impact of COVID-19 on UK energy industry, 2021
    • The market
    • Renewable technologies generated more electricity than fossil fuels for the first time last year
      • Figure 2: Proportional importance of fuel source in UK electricity generation, 2016 and 2020
    • Ambition to achieve net zero emissions by 2050 will push up electricity demand
    • Around 6 million households switch energy supplier per year
      • Figure 3: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2015-21
    • Companies and brands
    • End of ‘Big Six’ energy supplier category as rise of challengers and mergers forces reclassification
    • Three in 10 energy customers are now with a challenger energy supplier
      • Figure 4: Domestic electricity supply market shares in Great Britain, by company, 2016-20
    • Surge in small supplier collapses
  3. Issues and Insights

    • Energy storage will play a key role in the transition to a clean electricity supply system
    • Energy suppliers need to do more to differentiate their green credentials
    • Automatic switching services are starting to disrupt the market
  4. The Market – Key Takeaways

    • COVID-19 impacts electricity demand
    • Renewable sources now account for 43% of UK’s electricity generation
    • Ambition to achieve net zero emissions by 2050 will push up electricity demand
    • Government’s 40GW offshore wind target will be difficult to achieve
  5. Impact of COVID-19 on the Energy Industry

      • Figure 5: Short, medium and long term impact of COVID-19 on UK Energy Industry, 2021
  6. Electricity Demand and Generation

    • Trends in electricity supply
    • Total electricity supply
      • Figure 6: Analysis of electricity supply in the UK, 2016-20
      • Figure 7: Analysis of electricity supply in the UK, 2016-20
    • Electricity generation by type of fuel
      • Figure 8: Analysis of electricity generation the UK, by type of fuel used, 2016-20
      • Figure 9: Proportional importance of fuel source in UK electricity generation, 2016 and 2020
    • Coal generation
    • Coal power generation to end by 2024
    • Drax aims to use BECCS technology to become carbon negative by 2030
      • Figure 10: Analysis of electricity generated in coal-fired power stations in the UK, 2014-20
    • Gas/CCGT generation
    • Gas generation capacity to continue to support security of supply, but unabated gas will need to be phased out in the 2030s
    • Over a third of UK electricity generation is sourced from gas-fired plants
      • Figure 11: Analysis of electricity generated in gas-fired power stations in the UK, 2014-20
      • Figure 12: Analysis of electricity supplied from gas-fired power stations in the UK, 2014-20
    • Nuclear power generation
      • Figure 13: UK nuclear sites’ planned closure dates, as of July 2021
    • Nuclear new build plans
    • Hinkley Point C only new nuclear plant under construction
    • 2020 sees nuclear power generation fall to lowest level in more than 20 years
      • Figure 14: Analysis of electricity generated in nuclear power stations in the UK, 2014-20
    • Renewables generation
    • UK clean energy investment hampered by lack of policy clarity
    • Renewables sector offers strong investment and deployment opportunities
    • 43% of UK’s electricity generation in 2020 came from renewable sources
      • Figure 15: Renewable electricity generation in the UK, 2016-20
      • Figure 16: Electricity generation from on- and offshore wind, 2016-20
    • Onshore Wind
    • Offshore Wind
    • Offshore wind prices are plunging ahead of expectations
    • Solar power
    • Hydro electricity
    • Bioenergy
      • Figure 17: Bioenergy electricity generation capacity, by type of plant, 2016-20
    • Renewable electricity capacity development pipeline
      • Figure 18: Renewable energy projects in pipeline, by technology, as of June 2021
  7. Gas Demand and Supply

    • UK’s increased dependence on gas imports
      • Figure 19: Total UK gas supply, 2016-20
      • Figure 20: Total UK gas supply, 2016-20
    • Government halts support for shale gas fracking
    • Wholesale gas prices
      • Figure 21: Average wholesale gas prices, 2008-20
  8. Future Energy Mix and Demand

    • Future energy demand under National Grid’s Future Energy Scenarios
      • Figure 22: Annual electricity demand in Great Britain, 2020-50
      • Figure 23: Annual electricity demand in Great Britain, 2020-50
    • Achieving net zero requires detailed policies and clear accountabilities
    • Future potential energy mix
      • Figure 24: Projected installed electricity generation capacity (incl. storage and interconnectors), by scenario, 2020, 2030 and 2050
    • Significant investment in whole system infrastructure required
    • Gas demand forecast
      • Figure 25: Forecast UK gas demand, 2020-50
  9. Retail Energy Market

    • Market development
      • Figure 26: Proportion of domestic electricity customers, by supplier type, by region, 2021
      • Figure 27: Proportion of domestic gas customers of British Gas Trading and other suppliers, by region, 2021
    • Half of households are on default tariffs
      • Figure 28: Number of non-prepayment domestic gas customer accounts, by type of tariff, by supplier, 2021
      • Figure 29: Number of non-prepayment domestic electricity customer accounts, by type of tariff, by supplier, 2021
    • Price differential between default tariffs and cheapest deals narrows and steep price hikes expected
      • Figure 30: Average annual bill on SVT versus supplier’s cheapest fixed tariff, by major supplier, 2021
    • 6 million customers switched electricity supplier in 2020
      • Figure 31: Number of supplier switches in the domestic gas and electricity markets and share of small suppliers, Great Britain, 2016 -21
      • Figure 32: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2015 – 21
    • Government plans to trial automatic switching for consumers on default tariffs
    • End of ‘Big Six’ energy supplier category as rise of challengers forces reclassification
    • Three in 10 energy customers are now with a challenger energy supplier
      • Figure 33: Domestic gas supply market shares in Great Britain, by company, 2016-20
      • Figure 34: Domestic electricity supply market shares in Great Britain, by company, 2016-20
    • Surge in small supplier collapses
  10. Energy Policy and Legislative Environment

    • Government commits to reach net zero by 2050 and slash carbon emissions by 78% by 2035 compared to 1990 levels
    • UK makes good progress in decarbonising power sector, but current government policies fall short of the level of ambition required to meet net zero
    • Government sets out commitments to ensure offshore wind will power every home by 2030
    • Support mechanisms and 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
  11. 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 introduces temporary price cap on default tariffs
  12. Market Drivers

    • Drivers for investment in energy system and infrastructure
    • UK government’s energy infrastructure delivery strategy
    • Decarbonisation of UK energy system
    • Ambition to achieve net zero emissions by 2050 will push up electricity demand
    • Smart grid development to support low-carbon economy
    • Rise in distributed generation requires more active management of distribution network
    • 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
    • Smart charging and vehicle-to-grid technology will play an important role in the future energy system
    • Market drivers in retail energy market
    • Wholesale costs are largest component of household energy bills
      • Figure 35: Breakdown of average large supplier dual-fuel household bill, 2019
      • Figure 36: Breakdown of average domestic electricity bill, 2019
      • Figure 37: Breakdown of average domestic gas bill, 2019
    • High quality customer service remains key driver for customer loyalty
    • Smart meter rollout programme
  13. Companies and Brands – Key Takeaways

    • End of ‘Big Six’ energy supplier category as rise of challengers and mergers forces reclassification
    • Three in 10 energy customers are now with a challenger energy supplier
    • Surge in small supplier collapses
  14. Competitive Strategies in Retail Energy Market

    • Acquisitional activity and strategic partnerships
    • OVO Energy leaps into the big league following the acquisition of SSE’s retail business
    • E.ON takes over Npower
    • E.ON’s customers migrate to Octopus Energy’s Kraken customer service platform as Kraken Technologies is set to explore similar partnerships
    • Centrica launches digital-only energy supplier British Gas Evolve, in response to increased competition
    • Suppliers need to do more to differentiate their green credentials
    • Suppliers develop innovative solutions for growing EV market
    • Home services and connected homes market offer growth opportunities
    • Energy suppliers tap into residential solar and energy storage market
    • Automatic switching services starting to disrupt market
  15. Company Profiles

    • Centrica
    • Centrica deepens its restructuring efforts to create, simpler, leaner group
    • Group strategy
    • Centrica commits to be a net zero business by 2045
    • British Gas customer numbers fall by 2% in 2020
    • Centrica launches British Gas Evolve, a digital-only residential energy supplier
    • Financial performance
      • Figure 38: Financial analysis of Centrica, 2016-20
      • Figure 39: Centrica revenue segmental analysis, 2020, £ million
    • British Gas Trading
    • UK Home business is undergoing digital transformation
    • UK Business division remains largest supplier to SMEs
    • Focus on innovative Connected Homes products
    • Financial performance
      • Figure 40: Financial analysis of British Gas Trading, 2015-19, £million
    • EDF Energy
    • Domestic customers
    • Planned new nuclear power stations
    • Development of renewable assets
    • EDF moves into EV charging market
    • Company strategy
    • Financial performance
      • Figure 41: Financial analysis of EDF Energy, 2015-19
      • Figure 42: EDF Energy revenue segmental analysis, 2020
    • E.ON Energy Solutions
    • Takeover of npower
    • E.ON and Kraken Technologies form strategic partnership to revamp E.ON’s UK energy retail business
    • Company strategy
    • Financial performance
      • Figure 43: Financial analysis of E.ON Energy Solutions, 2015-19, £million
      • Figure 44: E.ON SE Group UK revenue segmental analysis, 2019
    • ScottishPower Energy Retail
    • Focus on improving customer service processes and digitisation of customer proposition
    • ScottishPower Energy Retail continues to progress its Smart Solutions business
    • Financial performance
      • Figure 45: Financial analysis of ScottishPower Energy Retail, 2016-20
      • Figure 46: ScottishPower revenue segmental analysis, 2020
    • SSE
    • SSE sells retail unit to OVO Energy …
    • … and continues with the disposal of other non-core business areas
    • Renewables at core of SSE Group’s business strategy
    • Financial performance
      • Figure 47: Financial analysis of SSE, 2017-21
      • Figure 48: SSE revenue segmental analysis, 2020
    • Shell Energy Retail
    • First Utility acquired by Shell
    • Shell acquires Hudson Energy
    • Shell Energy Retail to focus on renewable electricity, alongside gas, broadband and smart home technology
    • Financial performance
      • Figure 49: Financial analysis of Shell Energy Retail, 2015-19
    • OVO Energy
    • Acquisition of SSE’s retail business puts OVO in the top three largest suppliers in Britain
    • OVO Energy cuts 2,600 jobs
    • OVO invests heavily in energy storage and EV charging technologies
    • OVO launches dedicated EV division
    • OVO launches new EV tariff and EV leasing deal
    • Company Strategy
    • Financial performance
      • Figure 50: Financial analysis of OVO Energy, 2015-19
  16. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Methodology
  17. 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
    • Smart Solar
    • Wind Energy Network
    • Wind Power Monthly
    • Trade events
    • Offshore Europe
    • RWM Expo
    • The Renewables Event 2021
    • net zero live

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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