Innovative energy business models, such as peer-to-peer trading or energy as a service, are attractive to different groups of customers. Disengaged consumers with low trust in the energy market could face further disadvantages, while already active consumers could reap even greater benefits, which risks widening existing socio-economic inequalities.
Messages for Policy
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New retail energy contracts are emerging that are more complex and beyond what retail market regulation was designed to accommodate
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Not all consumers will adopt these business models. Willing adopters all tend to be younger, but some want new models because they are disengaged, they mistrust energy companies and worry over energy bills; others are highly trusting, higher-income groups that are enthusiastic for new technology
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Environmental concerns are at best secondary motivators in consumer behaviour compared to the desire to save money, get the best deal, or be independent of large energy suppliers
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Without intervention, already affluent, educated and engaged consumers will capture the benefits of low carbon business model innovation and exacerbate existing socio-economic inequalities.
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References
Further Reading
Hall, S., Mazur, C., Hardy, J., Workman, M. & Powell, M. Prioritising business model innovation: what needs to change in the United Kingdom energy system to grow low carbon entrepreneurship. Energy Res. Soc. Sci. 60, 101317 (2020). This work explores how the same business model archetypes used in the current study invite new regulation and policy across the energy system.
Poudineh, R. Liberalised Retail Electricity Markets: What We Have Learned After Two Decades of Experience? (Oxford Institute for Energy Studies, 2019); https://ora.ox.ac.uk/objects/uuid:7f3578a6-27b8-47d0-b2f2-c3aeff2b9053This study evaluates the stresses placed on retail energy markets by business model innovation and how these stresses invite a systemic rethink of retail energy market regulation as opposed to more incremental intervention.
Ambrosio-Albala, P. et al. From rational to relational: how energy poor households engage with the British retail energy market. Energy Res. Soc. Sci. 70, 101765 (2020). This study shows how moving from an individual rationality to a social relations perspective can uncover the ways in which social inequalities can be exacerbated by retail energy markets for domestic consumers.
Acknowledgements
The original study was partly funded by the Engineering and Physical Sciences Research Council (grant EP/N029488/1), the Economic and Social Research Council (grant ES/M500562/1) and the UK Research Councils (grants EPSRC EP/L024756/1 and NERC NE/G007748/1) as part of the UK Energy Research Centre (UKERC).
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Hall, S., Anable, J., Hardy, J. et al. Innovative energy business models appeal to specific consumer groups but may exacerbate existing inequalities for the disengaged. Nat Energy 6, 337–338 (2021). https://doi.org/10.1038/s41560-021-00821-w
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DOI: https://doi.org/10.1038/s41560-021-00821-w
