The transition to a future energy market powered primarily by renewable sources of power must deliver for all consumers, Consumer Scotland has said in a new report.
The energy market has already undergone significant change in recent years, with increasing amounts of renewables such as wind and solar replacing traditional fuels. This is likely to accelerate in future.
In parallel, technologies such as heat pumps, electric vehicles, rooftop solar panels and home batteries are expected to see ever greater take-up.
These devices will be critical to allow consumers to be flexible in their energy use – using it at different times of the day and reducing peak demand in the morning and evenings.
Doing so will reduce the need for expensive new network and generation facilities, and bring down the costs of the wider energy system.
To unlock these potential benefits, consumers need to have access to the right products and services, and incentives need to exist to reward certain behaviours.
Consumer Scotland wants this to happen in a way that means everyone can benefit, and ensure that no consumer groups are left behind.
Consumer Scotland commissioned independent energy experts Regen to undertake an assessment of the impacts, challenges and opportunities for consumers in Scotland relating to the net zero transition of the GB energy market.
Its report - and Consumer Scotland’s accompanying overview paper – identified potential opportunities for consumers including cuts in overall costs, improved service standards and access to innovative new tariffs through smart meters.
However, there are also issues of concern with high up-front costs associated with the installation of new technologies, their operation can be complex and not all consumers will be able to engage with them.
Consumers in Scotland, particularly in the north, face disproportionately high bills compared to the UK-wide average due to significant geographic and housing factors, which will pose additional challenges in future.
Consumer Scotland research has already highlighted a range of existing challenges for consumers including energy debt and arrears, continuing high levels of fuel poverty and complaints.
There is also a gap in understanding of how to identify and target consumers most in need of additional support in future.
The Regen review identified four key areas to support consumers through the transition:
- the use of market incentives to improve the focus on consumers
- ensuring energy support meets the needs of consumers in vulnerable circumstances throughout the net zero transition
- embedding consumer protections across new services
- tackling digital literacy to ensure more consumers can benefit from new technologies
Consumer Scotland Energy Policy Manager Diarmuid Cowan said:
“Over time, the successful deployment of new low carbon technologies in ways which benefit consumers will require reforms to the retail energy market.
“This will have consequences for consumer bills, how consumers use energy and the range of products and services available to them.
“The existing retail energy market design is unlikely either to result in a fair and inclusive energy market for future consumers, or to support the widespread changes needed to enable the transition to net zero.
“We need to start thinking now about what the future retail market should look like to ensure the transition to a low carbon energy system is accessible and affordable for all.”
Consumer Scotland will use the report to inform the recommendations and advice provided to government, regulators and businesses to ensure the interests of energy consumers are acted upon through the transition.
Background
Ensuring a just transition for consumers in the GB retail market: Overview paper
Ensuring a just transition for consumers in the GB retail market
Regen is a membership organisation which provides independent, evidence-led insight and advice to support the transformation of the UK’s energy system to net zero.
The report was analysed the current research and evidence base on the retail energy transition in Great Britain across academia, policy documents, innovation projects and thinktank reports.
Consumer Scotland is the statutory body for consumers in Scotland.