State of the energy market 2018

Reports, plans and updates

Publication date

Industry sector

  • Supply and Retail Market
  • Distribution Network
  • Generation and Wholesale Market
  • Offshore Transmission Network
  • Transmission Network

Energy is an essential service and the lifeblood of our economy. Questions about how energy is produced and supplied, and how affordable it is, are at the forefront of public debate. This report aims to contribute to the debate, by providing rigorous analysis of the current state of energy markets, and the outcomes they achieve.

Ofgem regulates Great Britain’s gas and electricity markets, to protect the interests of current and future consumers. Through our regulation, we aim to deliver five outcomes for consumers:

  • Lower bills than would otherwise have been the case

  • Reduced environmental damage both now and in the future

  • Improved reliability and safety

  • Better quality of service, appropriate for an essential service

  • Benefits for society as a whole, including support for those struggling to pay their bills.

In our second annual State of the Energy Market report, we assess how well energy markets are working for consumers in achieving these outcomes.

It is our second annual assessment of the state of energy markets in Great Britain. It focuses on developments in the energy markets over the past year.

British households and businesses spend around £50 billion on energy each year and their experience of the energy market is mainly via the retail side of the market. This is where trends elsewhere in the market will have their most immediate effects on consumers. For example, disruptive business models and innovative technologies, combined with environmental policies, are shaping the energy sector and feeding into consumers’ energy bills.

There have been many positive developments in retail markets since we began implementing the remedies set out in 2016 by the Competition and Markets Authority (CMA). Consumers now have more suppliers and innovative deals to choose from than ever before, and it is becoming easier for consumers to switch tariffs and suppliers. However, the retail market is still not delivering the desired outcomes for all consumers.

This is why we extended the price protection, originally introduced for customers on prepayment meters, to a further one million vulnerable customers receiving the Warm Home Discount. In July 2018, Parliament mandated us to take further action by introducing a temporary price cap on all standard variable and default fixed-term tariffs. We are working to have the cap in place by the end of 2018.

Improving retail energy markets is only part of our focus. Britain’s energy system is undergoing a profound transformation to meet our need for clean, secure and affordable energy. We aim to facilitate this transformation, and to ensure that all consumers benefit from it.

State of the energy market report 2018: At-a-glance summary