State of the Energy Market 2019

Publication date
3rd October 2019
Information types
Policy areas

Energy is an essential service for homes and business around Great Britain, and energy bills are one of the largest single items of regular expenditure. Households and businesses together spend around £55 billion on energy each year. Questions about how energy is produced and supplied, its affordability, and its environmental impact, are at the forefront of public debate. This report aims to contribute to that discussion by providing rigorous and clear analysis of the current state of energy markets, including the retail and wholesale energy markets and the networks.

As the independent energy regulator, we have a crucial part to play in making sure that energy markets are working in the interest of consumers. This year, we published our  Strategic Narrative which sets out the outcomes that we want to achieve. These are: 

  • Enable competition and innovation which drive down prices and result in new products and services.
  • Decarbonise to deliver a net zero economy at the lowest cost to consumers.
  • Protect consumers, especially the vulnerable, stamping out sharp practice and ensuring fair treatment.

In line with our consumer protection objective, we implemented government legislation to cap the price of default tariffs from January this year. The cap is protecting around 11 million consumers on these tariffs, many of whom are in vulnerable situations, by setting a maximum price that suppliers can charge them per unit of energy. The cap ceases to have effect in 2023, at the latest, and we are required under the Tariff Cap Act to determine whether the cap can be lifted earlier on the basis of whether the conditions are in place for effective competition in the domestic retail market. We have published our framework for doing the assessment alongside this report.

This year’s State of the Energy Market Report includes an assessment of competition in retail and wholesale energy markets, affordability and vulnerability, the UK’s progress in reducing greenhouse gases, the security of our energy supplies, and, for the first time, how energy networks are performing.

Key facts on Competition

20% The proportion of consumers switching supplier between July 2018 and June 2019 (last year: 19%)

64 The number of active licensed suppliers in June 2018 (last year: 70)

£260 The approximate amount consumers on a Standard Variable Tariff could save by switching to the cheapest tariff basket in the market between June 2018 and June 2019 (last year: £290)

3% Average large supplier profit margins in 2018 (last year: 4%)

49% The proportion of consumers who reported they have never switched, or have only switched once (last year: 61%)

53% The proportion of domestic consumers on a default tariff, not including prepayment meter tariffs (last year: 53%)

25% The proportion of electricity and gas microbusiness meter points on default and deemed contracts (last year: 26%)

158 The number of licensed gas shippers in 2018 (last year: 146)

189 The number of licensed firms generating electricity in 2018 (last year: 170)

59p/therm Average wholesale day-ahead gas prices in 2018/19 (last year: 48p/th in real terms)

£58.6/MWh Average wholesale day-ahead electricity prices in 2018/19 (last year: £48/MWH in real terms

Key facts on Affordability and Vulnerability

£1,184  Average dual-fuel energy bill for a typical consumer with the large suppliers in 2018 (last year: £1,117), an increase in real terms of 4% in 2018 prices.

8% The proportion of total expenditure that low income households spent on energy in 2017-18, compared to 4% for the average income household.

19% The proportion of households in England living in privately rented homes that are identified as being fuel poor, compared with 11% of all English households.[1]

26% The proportion of households in Scotland living in privately rented homes that are identified as being fuel poor, compared with 25% of all Scottish households.

20% The proportion of households in Wales living in privately rented homes that are identified as being fuel poor, compared with 12% of all Welsh households.

14% The proportion of prepayment meter customers who reported having self-disconnected in 2018 (last year: 10%)

16,500 The number of excess winter deaths that can be linked to people living in cold homes in winter 2017-18.

£2.5bn The amount of direct subsidies targeted at vulnerable households in winter 2017-18 (last year: £2.5bn)

 

[1] Note that definitions of fuel poverty differ across nations.

Key facts on Decarbonisation of Energy

42% The percentage by which the UK reduced its greenhouse gas emissions between 1990 and 2017.

50% The percentage by which carbon emissions have fallen over 2010-2018 in the energy sector, the best performing sector

2% The percentage by which carbon emissions have fallen over 2010-2018 in the transport sector

35% The percentage increase in the market share of electric cars in the UK from 2017 to 2018, to 2.5% of the market.

£31 The estimated consumer cost of carbon price policy per tonne of carbon dioxide saved from 2010 to 2018, up from £27 over 2010-2017

Key facts on Security of Supply

0 The number of times gas deficit emergency measures have been deployed this century

403 million cubic meters The maximum demand for gas during winter 2018/19, compared to 418 mcm/day during winter 2017/18

12% of total GB gas supply The contribution of LNG as a source of GB’s gas supply in winter 18/19, up from 6.1% in the previous winter.

60 GW The current underlying peak demand for electricity

25.1 GW The average winter margin for 2018/19, compared to an average margin of 24.4 GW in winter 2017/18 and 20.5 GW in winter 2016/17

£1.19 billion National Grid system balancing costs in 2018/19, compared to £1.08 billion in 2017/18

Key facts on Energy Networks

11% The reduction in the number of power cuts across GB since 2015. The duration of power cuts has fallen by 9%.

8.8/10 Customer service scores for gas and electricity distribution companies in 2017-18 (Last year: 8/10)

64,100 The number of fuel poor homes that have been connected to the gas grids since 2013.

850,000 The equivalent number of tonnes of Carbon Dioxide by which the electricity network companies have reduced the carbon footprint of their networks since 2015.

1.7 The number of gigawatts (GW) of generation that was connected to the lower voltage electricity networks in 2017-18 (last year: 3.2 GW).

6 The number of network companies that forecast that they will achieve a Return on Regulatory Equity above 10% over the RIIO-1 price control period.