The Changing Face of Energy Consumption - the rise of the energy 'prosumer'

Over the past ten years, large energy retailers have loudly declared that they are changing their business models from that of energy supply to the new world of ‘energy services’. So what does that actually mean and why is it necessary?

Despite their actual lack of movement and response, these large retailers look to have been remarkably prescient. 

Up until very recently energy consumption was a very passive business. The most active energy consumers are switching suppliers reasonably regularly to get the best prices, - and in Ofgem’s state of the market report 2018 they reported that a rolling amount of around 19% households were regularly switching (that figure is likely to be higher today as switching rates continue to increase). However, 23% of households are still likely to have never moved away from their incumbent energy providers – a very loyal and ‘passive’ customer base.

However, times they are a changing. Not only are customers switching in increasing numbers, a small, but growing, minority are taking an even more active interest in their energy consumption and supply, and the technology around it. The growth of EV ownership and use is in part driving this – with EV registrations standing at around 200,000 in total as at the end of May 2019. But why is this relevant to the uptick in engagement in energy consumption? Primarily because EV owners are far more likely to be switching to EV’s as they become aware of how emissions are impacting the environment – and that means that they are likely to have a far stronger interest in where their energy comes from and how they use it. 

New technologies (all enabled by the smart meter roll out) are now linking EV batteries with in-home solar power generation and other battery storage to create virtual power plants. Add in new technology to turn these in-home ‘power stations’ into large scale demand side response and consumers are increasingly becoming prosumers, removing the need for the old style model of an ‘energy supplier’ altogether as they become generators and suppliers themselves.   In fact, the European Renewable Energy Foundation predicts that the number of British Energy \prosumers’ will have grown from around 1 million in 2015 to 24 million by 2050 - around 50% of all UK households! The market for these consumers is increasingly being captured by new challenger brands such as Octopus and Bulb, as well as other non-supply market entrants like Solo Energy, who are taking their new propositions direct to consumers. This raises the question – what role will the big 6 have in the future of energy supply now consumers are increasingly taking a far more active role in energy generation and consumption?