UK Energy Industry Market Report 2022
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Description
The UK Energy Industry Market Report identifies consumers’ attitudes towards energy suppliers, the UK’s progression towards cleaner energy and the impact of rising inflation on the UK energy market. This report covers the UK energy market size, market forecast, market segmentation and trends in the UK energy market.
Current Landscape of the UK Energy Market
Recent energy price increases, driven by global gas prices, are strongly impacting the operation of the UK energy market. The cost of living crisis has created affordability challenges for consumers, placed significant financial pressures on energy suppliers and has also triggered an unprecedented level of suppliers to exit the UK energy market.
Wholesale costs are expected to remain elevated in 2023 and 2024, which will pose continued financial challenges for suppliers and could put more firms at risk of collapse.
UK Energy Market Share and Key Industry Trends
Soaring bills and a rise in supplier failures have reduced customer trust in suppliers across the UK energy market. Mintel’s energy market report outlines the challenges faced by suppliers, the most pressing is building trust and long-term relationships with customers.
Investment in renewable energy generation capacity is set to continue, with offshore wind being the strongest growth sector. Solar PV capacity is also expected to experience a period of substantial expansion, with all market segments -roof-top and ground-mount- in growth mode.
UK energy market share:
- 40% of the UK’s electricity was generated by gas in 2021.
- 39% of the UK’s electricity was generated by renewable energy.
- 67% of UK adults agree that there should be more solar farms in the UK.
UK Energy Market: Future Trends
Mintel’s energy market report indicates that increased consumer awareness of their energy usage and climate change offers opportunities for suppliers to engage more with customers to help them live more sustainably in their homes and reduce their bills. This includes the rollout of smart home products and meters and installing energy efficiency measures.
Suppliers in the UK energy market can also offer green technology solutions like heat pumps, EV charging, solar PV, or batteries in their homes. However, upfront costs remain a key barrier to homeowners.
To discover more about the UK Energy Industry Market Report 2022, read our UK Solar Panels Market Report 2022, or take a look at our extensive Industrial Market Research.
Quickly Understand
- Recent UK energy market developments.
- The impact of surging wholesale costs on UK energy market generators and suppliers.
- Future energy mix and demand.
- The UK’s progress in transitioning to cleaner energy and renewable energy market mix.
- Key developments in the UK retail energy market.
- Consumer attitudes and behaviours towards suppliers and wider energy issues.
- Explores the UK energy market share and UK energy market size.
Covered in this Report
This report concerns the UK energy market, specifically: electricity generation and demand, gas supply and demand and UK retail energy market.
Brands: British Gas, EDF, E.ON, npower, Scottish Power, SSE, OVO, Octopus Energy, Bulb, Shell Energy, Uswitch, Centrica, Bord Gáis Energy, Kraken Technologies, Hudson Energy.
Expert Analysis from a Specialist in the UK Energy Market
This report, written by Claudia Preedy, a leading analyst in the energy industry, delivers in-depth commentary and analysis to highlight current trends in the UK energy market and add expert context to the numbers.
Consumer interest in energy bills, as a result of rising prices and business failures and their increased awareness of their energy usage offers opportunities for suppliers to 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 and offering smart products, such as smart thermostats and more dynamic time-of-use tariffs.”
Claudia Preedy
Senior B2B Analyst
Table of Contents
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Overview
- Key issues covered in this Report
- Market context
- Covered in this Report
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Executive Summary
- The five-year outlook for the UK energy industry
- Figure 1: Energy industry outlook, 2022-27
- The market
- Gas remains the fuel source with the highest electricity generation
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- Figure 2: Proportional importance of fuel source in UK electricity generation, 2017 and 2021
- Ambition to achieve net zero emissions by 2050 will push up electricity demand
- UK’s dependence on gas imports
- The consumer
- Switching rates plunge as soaring wholesale cost limit customers’ choice
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- Figure 3: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2016-22
- Public support for solar farms is stronger than nuclear power
- Figure 4: Customer attitudes towards power generation sources, 2022 (% of respondents)
- Companies and brands
- Large legacy suppliers are regaining market share amid market upheaval
- Figure 5: Domestic gas supply market shares in Great Britain, by company, 2017-21
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- Figure 6: Domestic electricity supply market shares in Great Britain, by company, 2017-21
- Surge in supplier collapses adds further costs to energy bills
- The five-year outlook for the UK energy industry
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Issues and Insights
- Energy storage to play key role in transition to clean electricity supply system
- Hydrogen has a central role in helping reach Net Zero by 2050
- High quality customer service remains key driver for customer loyalty in retail energy market
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Electricity Demand and Generation
- Trends in electricity supply
- Total electricity supply
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- Figure 7: Analysis of electricity supply in the UK, 2017-21
- Figure 8: Analysis of electricity supply in the UK, 2017-21
- Electricity generation by type of fuel
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- Figure 9: Analysis of electricity generation the UK, by type of fuel used, 2017-21
- Figure 10: Proportional importance of fuel source in UK electricity generation, 2017 and 2021
- Coal generation
- UK coal power generation to end by October 2024
- Decommissioning of some coal-fired assets delayed in response to energy crisis
- Drax aims to use BECCS technology to become carbon negative by 2030
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- Figure 11: Analysis of electricity generated in coal-fired power stations in the UK, 2015-21
- Gas/CCGT generation
- While gas generation continues to play a critical role in the energy mix, unabated gas will need to be phased out in the 2030s
- 2021 saw increased reliance on gas-fired electricity generation
- Figure 12: Analysis of electricity generated in gas-fired power stations in the UK, 2015-21
- Figure 13: Analysis of electricity supplied from gas-fired power stations in the UK, 2015-21
- Nuclear power generation
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- Figure 14: UK nuclear sites’ planned closure dates, as of July 2022
- Nuclear new build plans
- Hinkley Point C expected to be commissioned in 2026
- Nuclear’s share of UK power generations falls to just 15% in 2021
- Figure 15: Analysis of electricity generated in nuclear power stations in the UK, 2015-21
- Renewables generation
- The rate of new renewables capacity has fallen in recent years
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- Figure 16: Annual renewable capacity additions in the UK, 2010-21
- UK renewables sector offers strong investment and deployment opportunities
- Renewables generation drops in 2021 due to less favourable weather conditions
- Figure 17: Renewable electricity generation in the UK, 2017-21
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- Figure 18: Share of renewable energy installed capacity by technology, MW and %, 2017 and 2021
- Onshore wind
- Offshore wind
- Solar power
- Hydro electricity
- Bioenergy
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- Figure 19: Bioenergy electricity generation capacity, by type of plant, 2017-21
- Renewable electricity capacity development pipeline
- Figure 20: Renewable energy projects in pipeline, by technology, as of April 2022
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Gas Demand and Supply
- UK’s dependence on gas imports
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- Figure 21: Total UK gas supply, 2017-21
- Figure 22: Total UK gas supply, 2017-21
- Current status of shale gas fracking in the UK
- Wholesale gas prices
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- Figure 23: Average wholesale gas prices, forward delivery contracts, 2021-22
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Future Energy Mix and Demand
- Future energy demand under National Grid ESO’s Future Energy Scenarios
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- Figure 24: Annual electricity demand in Great Britain, 2021-50
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- Figure 25: Annual electricity demand in Great Britain, 2021-50
- Achieving net zero requires the government to proceed with policies at pace and implement measures now
- Future potential energy mix
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- Figure 26: Projected installed electricity generation capacity (including storage and interconnectors), by scenario, 2021, 2030 and 2050
- Gas demand forecast
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- Figure 27: Forecast GB gas demand, 2021-50
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Retail Energy Market
- Market development
- Figure 28: Proportion of domestic electricity customers, by supplier type, by region, 2022
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- Figure 29: Proportion of domestic gas customers of British Gas Trading and other suppliers, by region, 2022
- Majority of domestic customers on default tariffs
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- Figure 30: Number of non-prepayment domestic gas customer accounts, by type of tariff, by supplier, 2022
- Figure 31: Number of non-prepayment domestic electricity customer accounts, by type of tariff, by supplier, 2022
- Fixed tariffs now priced well above price-capped variable tariffs
- Figure 32: Average annual bill on SVT versus supplier’s cheapest tariff, by major supplier, 2022
- Switching rates plunge as soaring wholesale costs limit customers’ choice
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- Figure 33: Number of supplier switches in the domestic gas and electricity markets and share of small suppliers, Great Britain, 2017 -22
- Figure 34: Number of supplier switches in the domestic gas and electricity markets, Great Britain, 2016-22
- Ofgem reclassifies “Big Six” energy supplier category to “legacy suppliers”
- Large legacy suppliers are regaining market share amid market upheaval
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- Figure 35: Domestic gas supply market shares in Great Britain, by company, 2017-21
- Figure 36: Domestic electricity supply market shares in Great Britain, by company, 2017-21
- Surge in supplier collapses adds further costs to energy bills
- Government support packages to help households with rising energy bills
- Market development
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Energy Policy and Legislative Environment
- Government commitment to reach Net Zero by 2050
- Carbon budgets and Net Zero Strategy
- UK to accelerate home-grown power to boost long-term energy independence
- 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
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Regulatory Environment and Changes
- Industry regulation
- Market reforms introduced in 2014 to encourage competition and supplier switching
- Further market reforms following CMA Energy Market investigation
- Introduction of temporary price cap on default tariffs
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Market Drivers
- Drivers for investment in energy system and infrastructure
- UK government’s energy infrastructure delivery strategy
- Decarbonisation of UK energy system
- Figure 37: Low-carbon power generation capacity targets, 2022
- Ambition to achieve net zero emissions by 2050 will push up electricity demand
- Smart grid development to support low-carbon economy
- Significant investment in whole system infrastructure required
- Hydrogen has a central role in helping reach Net Zero by 2050
- 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
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- Figure 38: Breakdown of average large legacy supplier dual-fuel household bill, 2020
- Figure 39: Breakdown of average domestic electricity bill, 2020
- Figure 40: Breakdown of average domestic gas bill, 2020
- High quality customer service remains key driver for customer loyalty
- Smart meter rollout programme
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Competitive Strategies in Retail Energy Market
- Business models focussing on helping customers going green and cut bills
- Suppliers develop innovative solutions for growing EV market
- Green technologies and connected homes market offer growth opportunities
- Energy suppliers tap into residential solar and energy storage market
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Company Profiles
- Centrica
- Group strategy
- Centrica commits to be a net zero business by 2045
- British Gas takes on more than 700,000 new customers through Ofgem’s Supplier of Last Resort Process
- Financial performance
- Figure 41: Financial analysis of Centrica, 2017-21
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- Figure 42: Centrica revenue segmental analysis, 2021, £ million
- British Gas Trading
- Focus on innovative Connected Homes products
- Financial performance
- Figure 43: Financial analysis of British Gas Trading, 2016-20, £million
- EDF Energy
- Domestic customers
- Planned new nuclear power stations
- Development of renewable assets
- EDF moves into EV charging market
- EDF forms partnership with Kraken Technologies to strengthen customer service and evolve its offering
- Company strategy
- Financial performance
- Figure 44: Financial analysis of EDF Energy Holdings, 2015-19
- Figure 45: EDF Energy revenue segmental analysis, 2021
- E.ON Energy Solutions
- Takeover of npower
- E.ON migrates all its residential and SME customers to E.ON Next, which will service all legacy Npower and E.ON customers
- Company strategy
- Financial performance
- Figure 46: Financial analysis of E.ON Energy Solutions, 2016-21, £million
- Figure 47: E.ON SE Group UK revenue segmental analysis, 2020
- ScottishPower Energy Retail
- Focus on improving customer service processes and digitisation of customer proposition
- Smart solutions
- Hydrogen projects
- Financial performance
- Figure 48: Financial analysis of ScottishPower Energy Retail, 2017-21
- Figure 49: ScottishPower revenue segmental analysis, 2021
- SSE
- SSE sells retail unit to OVO Energy
- SSE intensifies its strategic focus on its core low-carbon electricity business
- Renewables at core of SSE Group’s business strategy
- Net Zero Acceleration Programme
- Financial performance
- Figure 50: Financial analysis of SSE, 2018-22
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- Figure 51: SSE revenue segmental analysis, 2021
- Shell Energy Retail
- First Utility acquired by Shell
- Shell acquires solar battery maker Sonnen
- Shell acquires Hudson Energy
- Shells Energy acquires broadband and phone business of Post Office
- Financial performance
- Figure 52: Financial analysis of Shell Energy Retail, 2016-20
- OVO Energy
- Acquisition of SSE’s retail business puts OVO in the top three largest suppliers in Britain
- Launch of dedicated EV division
- Company strategy
- Financial performance
- Figure 53: Financial analysis of OVO Energy, 2016-20
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The Consumer – Type of Energy Tariff
- Two in five respondents say they’re on a fixed tariff
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- Figure 54: Type of energy tariff, 2022, (% of respondents)
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Attitudes towards Energy Supplier and Bills
- 62% of energy customers satisfied with customer service from their supplier
- Over half of energy customers are worried about their ability to pay future energy bills
- People prefer a supplier with strong green credentials
- Strong interest in time-of-use tariffs
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- Figure 55: Attitudes towards energy suppliers and affordability of bills, June 2022 (% of respondents)
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Uptake of Energy Efficiency Products and Future Intentions
- Energy efficient lights most popular energy efficiency products to have been installed
- Upfront costs remain a key barrier to the uptake of energy efficient products
- Figure 56: Energy efficiency products installed in the last two years, 2022 (% of respondents)
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- Figure 57: Consumer intentions to install energy efficiency products, 2022, (% of respondents)
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Attitudes towards UK Power Generation And Home Energy Efficiency Measures
- Public support for solar farms is stronger than nuclear power
- Installing energy efficiency measures is too expensive for the majority of people
- Figure 58: Customer attitudes towards power generation sources and energy efficiency measures, 2022 (% of respondents)
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- B2B research methodology
- Consumer research methodology
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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
- All-Energy Exhibition & Conference
- RWM & Letsrecycle Live 2022
- Solar & Storage Live
- SPE Offshore Europe Conference and Exhibition
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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