Market Research Logo

Energy Industry - UK - October 2015

Energy Industry - UK - October 2015

"Widespread smart meter deployment should offer significant opportunities for energy suppliers - allowing them to offer more innovative and tailored tariffs and products. For example, the technology will make it possible for suppliers to offer "time of use tariffs" to customers, charging a lower price for power at off peak times, such as the weekend, and higher prices on high demand weekdays. Thus, smart meters have the potential to increase competition between suppliers, enabling them to provide better service quality and new products and services."

– Claudia Preedy - B2B analyst

This report covers the following areas:

Why is the outlook for the renewables sector becoming more uncertain?
How have smaller energy suppliers managed to gain market share from the 'big six' in recent years?
Why does poor customer service and complaints handling remain an issues across the energy supply industry?
What opportunities do smart meters offer for energy suppliers?


EXECUTIVE SUMMARY
The market
Coal-fired power generation drops in 2014 due to plant closures
Power generation from renewable sources accounts for almost a fifth of total electricity supply
Figure 1: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2014
Government push for shale gas exploration in bid to reduce reliance on imports
Figure 2: UK Gas Supply, 2010-14
Energy suppliers cut prices in 2014 and early 2015, reflecting falling wholesale costs, cuts to green levies and
increased competition
Fixed tariffs increasingly popular
Figure 3: Breakdown of average domestic dual fuel bill, 2013
Market share of small suppliers reaches 11% in mid-2015
Market factors
Electricity Market Reform (EMR) to ensure investment in UK=s low-carbon electricity infrastructure
Large Combustion Plant Directive drives increased closure rate of coal-fired power stations
UK facing power capacity crunch
Investor confidence in renewables sector falls due to government subsidies cuts
The Industry
What we think
KEY INSIGHTS
Why is the outlook for the renewables sector becoming more uncertain?
How have smaller energy suppliers managed to gain market share from the >big six= in recent
years?
Why does poor customer service and complaints handling remain an issues across the energy
supply industry?
What opportunities do smart meters offer for energy suppliers?
INTRODUCTION
Definitions
Methodology
Abbreviations
Market Positioning
UK ECONOMY
Overview
Figure 4: UK GDP quarterly development, 2003-15
Figure 5: UK GDP in economic downturns and recoveries since 1979
Inflation
Interest Rates
House prices
Consumer spending
Manufacturing
Business Investment
Figure 6: UK GFCF 2003-15
Imports
Exports
MARKET FACTORS
Key points
Industry Regulation
Legislative Environment
Large Combustion Plant Directive (LCPD)
EU Renewables Directives
UK renewables policy
Renewables Obligation (RO)
Feed-In Tariffs (FITs)
The Renewable Heat Incentive
There are two parts to the RHI:
Electricity Market Reform
Contracts for Difference (CfDs)
Capacity Market (CM)
Carbon Emission Reduction Target (CERT) and Community Energy Saving Programme (CESP)
Energy Company Obligation (ECO)
ELECTRICITY DEMAND & GENERATION
Key points
Overview
UK facing power capacity crunch
Electricity supply
Figure 7: Analysis of electricity supply in the UK, 2010-14
Figure 8: Analysis of electricity supply in the UK, 2010-14
Figure 9: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2010-14
Electricity consumption by end-use sector
Figure 10: Analysis of electricity usage, by type of industry, UK, 2009-14
Figure 11: Analysis of electricity usage, by the commercial sector, 2009-14
Figure 12: Analysis of electricity usage by the commercial sector, 2014
Coal generation
Increased closure rate of coal-fired plants
New coal-fired plants must be fitted with CCS technology
Conversion of coal-fired stations to biomass plants
Figure 13: Analysis of electricity supplied from coal-fired power stations in the UK, 2007-14
Nuclear Power generation
Figure 14: UK Nuclear Sites Planned Closure Dates, as of September 2015
Figure 15: Analysis of electricity supplied from nuclear power stations in the UK, 2007-14
Gas/CCGT generation
Figure 16: Analysis of electricity supplied from gas-fired power stations in the UK, 2007-14
Figure 17: Analysis of electricity supplied from gas-fired power stations in the UK, 2010-14
Renewables generation
Contracts for Difference to replace Renewable Obligation Certificates from March 2017
Government subsidy cuts are raising uncertainties for renewables industry
Green Investment Bank drive to boost investment in offshore wind
Solar Power
Proposed cuts to solar power subsides to prove hugely damaging to industry, according to trade
association
Hydro Electricity
Bioenergy
Figure 18: Bioenergy electricity generation capacity, by type of plant, 2010-14
Figure 19: Renewable electricity generation in the UK, 2010-14
Figure 20: Electricity generation from on- and offshore wind, 2010-14
Figure 21: Renewable Energy Projects in Pipeline, by Technology, as of July 2015
GAS DEMAND & SUPPLY
Key points
Overview
Figure 22: Total gas supply, UK, 2010-14
Potential for shale gas extraction
Wholesale gas prices
Figure 23: Average wholesales gas prices, 2002-14
Figure 24: Average wholesale gas prices, 2010-14
Gas demand by end-user
Figure 25: Segmentation of industrial gas consumption, by end use industries, UK, 2010-14
Figure 26: Segmentation of gas consumption, by non-industrial sectors, UK, 2010-14
Figure 27: Segmentation of gas consumption, by non-industrial sectors, 2014
Power Generation
Figure 28: Gas supplied for electricity generation, UK, 2010-14
Interruptible
Industrial
Figure 29: Gas supplied to the industrial sector, UK, 2010-14
Commercial
Figure 30: Gas supplied to the UK commercial sector, 2010-14
Domestic
Figure 31: Analysis of the development of gas supplied to the UK domestic sector, 2010-14
RETAIL ENERGY MARKET
Key points
Market Background
Figure 32: Proportion of domestic electricity customers by supplier type, by region, 2000 and 2015
Figure 33: Proportion of domestic gas customers of British Gas Trading and other suppliers, by region, 2015 .. 75
Figure 34: Number of supplier switches in the domestic gas and electricity markets and share of small
suppliers, Great Britain, Q1 2010 - Q2 2015
Figure 35: Number of supplier switches in the domestic gas and electricity markets, Great Britain, January
2010 - June 2015
Regional Demand
Figure 36: Gas sales and customers by region, Great Britain, 2013
Figure 37: Electricity sales and customers by region, Great Britain, 2013
Market Issues and Recent Developments
Reforms promoting increased competition and supplier switching in retail energy market
>Big six= suppliers come under fire for charging high prices in 2013
Energy suppliers announce price cuts in 2014 and early 2015, reflecting falling wholesale costs, cuts to green
levies and increased competition
Breakdown of average gas and electricity bill
Figure 38: Breakdown of average domestic electricity& gas household bill, 2014
Figure 39: Breakdown of average domestic dual fuel bill, 2014
Smaller suppliers gaining market share
Figure 40: Domestic gas supply market shares in Great Britain, by company 2010-2015
Figure 41: Domestic electricity supply market shares in Great Britain, by company 2010-2015
Lower prices, customer dissatisfaction with the >big six=, and differentiation strategies are driving the growth of
small suppliers
Poor customer service and complaints handling remains an industry-wide issue
CMA Energy Market Investigation
Smart Meter Roll-out programme
Switching rates in the SME sector also set to increase
THE CONSUMER - CURRENT SUPPLIER AND RECENT SWITCHES
Key points
British Gas continues to be the top supplier of gas and electricity
Figure 42: Current gas and electricity supplier(s), June 2015
Three-quarters of people have not changed energy supplier in past 12 months
Figure 43: Change of gas/electricity supplier in the last 12 months, July 2015
THE CONSUMER - REASONS FOR SWITCHING & FUTURE INTENTIONS
Key points
Figure 44: Reasons for changing gas/electricity supplier in the last 12 months, June 2015
More than half of respondents (54%) not planning to switch supplier in the next 12 months
Figure 45: Plans to change gas/electricity supplier in the next 12 months, July 2015
Figure 46: Possible reasons for wanting to change gas/electricity supplier, July 2015
Figure 47: People planning/considering switching supplier if they saw a cheaper tariff on a price comparison
site, by current supplier, July 2015
Figure 48: People planning/considering switching supplier if they are not happy with the customer service
provided by their current supplier, by current supplier, July 2015
Figure 49: People planning/considering switching supplier because their current supplier is too expensive, by
current supplier, July 2015
COMPANY PROFILES
Key points
Company Profiles
CENTRICA/BRITISH GAS TRADING
British Gas
Direct Energy
Centrica Energy
Centrica Storage
Company Strategy and Outlook
Figure 50: Financial analysis of Centrica, 2010-14
Figure 51: Centrica revenue segmental analysis, 2014
Figure 52: Financial analysis of British Gas Trading, 2010-14
EDF ENERGY
Figure 53: Financial analysis of EDF Energy, 2010-14
Figure 54: EDF Energy revenue segmental analysis, 2014
RWE NPOWER
Company Strategy and Outlook
Figure 55: Financial analysis of Npower, 2010-14
Figure 56: RWE - UK revenue segmental analysis, 2014
E.ON ENERGY
Company Strategy
Figure 57: Financial analysis of E.ON Energy Solutions, 2010-14
Figure 58: E.ON revenue segmental analysis, 2014
SCOTTISHPOWER ENERGY RETAIL
Company Strategy & Outlook
Figure 59: Financial analysis of ScottishPower Energy Retail, 2010-14
Figure 60: ScottishPower revenue segmental analysis, 2014
SSE
Company Strategy and Outlook
Figure 611: Financial analysis of SSE, 2011-15
Figure 62: SSE revenue segmental analysis, 2015
ECOTRICITY GROUP
Company Strategy
Figure 63: Financial analysis of Ecotricity Group, 2010-14
FIRST UTILITY
Company Strategy and Outlook
Figure 64: Financial analysis of First Utility, 2010-14
GOOD ENERGY GROUP
Company Strategy
Figure 65: Financial analysis of Good Energy Group, 2010-14
Figure 66: Turnover analysis of Good Energy Group, by segment, 2012-14
FUTURE ENERGY DEMAND
Key points
Electricity Generation Forecast
National Grid=s Future Energy Scenarios
Figure 67: Annual power demand in Great Britain, 2016-36
Figure 68: Annual power demand in Great Britain, 2016-36
Figure 69: Major current and planned transmission network development projects, as of November 2014
Future Potential Energy Mix
Figure 70: Forecast power generation installed capacity under Aslow progression@ scenario, by source, 2015-
36
Figure 71: Forecast power generation installed capacity under Agone green@ scenario, by source, 2015-36
Figure 72: Forecast power generation installed capacity under Ano progression@ scenario, by source, 2015-36134
Figure 73: Forecast power generation installed capacity under Aconsumer power@ scenario, by source, 2015-
36
Figure 74: Future potential energy mix in 2035, by scenario
Interconnectivity between European countries to increase
Figure 75: Existing and planned interconnectors, as of November 2014
Gas Demand Forecast
Figure 76: Forecast UK gas demand, 2015-35
FURTHER SOURCES & CONTACTS
Trade Associations & Regulatory Bodies
Trade Magazines
Trade Exhibitions
UK B2B
Trade research
Informal
Formal
Desk research
Consumer research
Sampling and weighting
Definitions
Qualitative Research
Further Analysis
Statistical forecasting

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report