Published 24 July 2023
Last updated 23 February 2024 — See all updates
Download the full outcome
Towards a more innovative
energy retail market: summary of responses
Detail of outcome
This Call for Evidence asked about:
- the barriers to, and enablers of, innovation in the retail
market
- how to unlock greater innovation in the market
- the role for government in this
The government response provides an overview of the key themes
identified through the Call and sets out government’s position on
these issues, with a full summary of responses in Annex A.
The Call helped clarify 2 key points:
- there is widespread consensus in the sector on the
fundamental ‘building blocks’ that are critical if we are to
significantly evolve away from the current market and deliver on
our vision for the future. These refer to ongoing reforms aimed
at delivering improved technological infrastructure and more
efficient price signals in the market. Our view, as informed by
the call, is that a renewed focus on the delivery of these
building blocks is the most important action we can take towards
unlocking a step change in innovation in the market
- there is a lack of consensus on the specific elements of the
current retail market regulatory framework that may be acting as
barriers to innovation, or on what government should do about
this. While critical, delivering the building blocks in isolation
may not be sufficient to deliver on our vision for the market,
and reforms to the regulatory framework could play an important
role. We welcome the increased attention being given to the
question of regulatory reform by industry in recent months but
note that this is a highly complex subject and on most issues a
consensus view is yet to emerge
Reflecting this lack of consensus and the complex trade-offs
involved with any potential reforms (particularly when it comes
to those aimed at increasing innovation), in most areas more work
is needed before specific proposals for regulatory reform are
brought forward. It is also clear that while we expect certain
changes to the regulatory framework will be required, there will
not be a silver bullet or single regulatory ‘fix’. Rather, we
expect that there will be an iterative process of scoping and
implementing reforms as we prepare for, and transition to, new
market arrangements.
We will be guided by 2 overarching aims for any regulatory
reforms relating to innovation in the retail market:
a) making sure that the consumer protection framework is fit for,
and that consumers are empowered to engage with, a market that
may be more varied and dynamic than today
b) removing regulatory barriers to innovation where in the
interest of consumers, noting the varied benefits we expect such
innovation to bring (as outlined above).
Any reforms pursued in line with these aims must also align with
our overarching priority to deliver the building blocks for the
future retail market.
This Call helped identify and prioritise the key issues that
government and Ofgem will be considering as part of this
iterative process. By mapping out these issues and government’s
view on how they relate to our objectives for the retail market,
we hope to provide an effective basis for collaboration with the
sector as we work towards specific reforms.
It was published alongside Delivering a better energy
retail market, which set out government’s vision for an
energy retail market that works better for consumers, is more
resilient and investable, and supports the transformation of our
energy system.
Feedback
We received 41 responses from:
- consumer groups
- energy suppliers
- other market participants
- think tanks
We also held online meetings with individuals and stakeholder
groups, attended by over 50 stakeholders. We used their feedback
alongside the written responses to inform our next steps.
Original call for evidence
Summary
This call for evidence considers barriers to innovation in the
energy retail market.
This call for evidence ran from
9am on 24 July 2023 to 11:59pm on 18 September
2023
Call for evidence description
As the main interface between consumers and the energy system,
the energy retail market has the potential to play a positive
role in supporting decarbonisation and ensuring that consumers
see the benefits. However, if this is to happen, we need to
unlock significantly more innovation in the market.
While there is broad consensus that the current retail market is
unlikely to deliver the innovation required for a net zero energy
system, there is no such consensus on the extent to which
government intervention is needed or on where any interventions
should be targeted.
That is why we are launching a call for evidence on this subject,
with a commitment to follow up with policy proposals for
consultation later in 2023.
We’re seeking views on aspects of the retail market policy and
regulatory framework which may be acting as either barriers to
innovation itself or to the ability of consumers to access the
benefits of such innovation.
The call for evidence will be of particular interest to:
- the energy industry
- Innovators
- non-governmental organisations (NGOs)
- consumer groups
- academics and policy think-tanks
Documents
Towards a more innovative
energy retail market: a call for evidence
