Reform of the UK’s energy retail market is essential to accelerate decarbonisation and deliver a more flexible, resilient energy system, a new report has found.
Energy UK and BFY Group warn that current regulations are constraining innovation, limiting suppliers’ ability to support electrification and expand low-carbon technologies.
While the UK has made strong progress in decarbonising electricity generation, demand-side transformation remains a critical gap in reducing emissions and improving energy security.
Expanding technologies such as heat pumps, solar panels, batteries and electric vehicles will reduce reliance on gas and shield consumers from price volatility.
However, the report argues that without structural reform, households and businesses will struggle to access the full benefits of cleaner, more flexible energy systems.
Suppliers face regulatory and financial pressures that restrict investment in new services, including dynamic tariffs and flexibility solutions that can lower costs and emissions.
Improved pricing signals are seen as key to enabling consumers to shift demand, using electricity when it is cheapest and lowest carbon.
Flexible retail models could also deliver system-wide benefits, potentially unlocking £30–£70bn in savings by reducing the need for costly infrastructure upgrades.
Dhara Vyas, Chief Executive of Energy UK, said: “The role of energy suppliers has long been misunderstood and is sorely undervalued. Between them, these businesses have a relationship with nearly every customer in the country. For too long they have been held back from innovating and delivering products and services fit for the twenty-first century.”
David Watson, Principal at BFY Group, added: “The retail energy market was designed for commodity supply. By 2030, it needs to enable flexibility at scale, attract long-term investment and support millions of consumers to engage with a very different system. A structural and not incremental transition is what is needed.”
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