Energy Systems Catapult welcomes the opportunity to this Ofgem Consultation on Innovation in the energy retail market.

Key points:

Innovation through flexibility: Energy Systems Catapult supports reforms that introduce more flexible licensing regimes (e.g., derogations or restricted licences) to enable faster market entry for innovators while maintaining consumer protection.

Multi-track regulation can unlock innovation: to unlock diverse propositions to meet diverse consumer needs, we need to allow different regulatory regimes for different types of energy – e.g. primary vs secondary electricity supply.

Understanding and empowering consumers: Innovations like dynamic tariffs, demand-side response, and local energy markets can reduce costs and emissions, but consumer engagement – e.g. testing products and regulations before full-scale rollout to gauge effectiveness and refine – and trust are critical for adoption.

Addressing wider barriers to innovation: Major barriers include regulatory rigidity and limited access to smart meter data. Important to focus on enabling data sharing and simplifying regulatory processes for propositions like Energy-as-a-Service models.

Enhancing consumer protection and inclusivity: New products and services must remain accessible to all, ensuring that vulnerable or digitally disconnected consumers are not left behind, with guardrails to protect from risks.

Accelerating pathways to market: Expanding sandbox trials and simplifying the Licence Lite regime can create clearer pathways for new energy propositions to scale, driving innovation in the retail energy market. Consumer engagement will be crucial for this – and tools like Living Lab can support effective regulatory development.

Addressing lack of innovation in non-domestic retail market: there is a lack of new energy supply products and service offerings for non-domestic customers compared to domestic customers and lack of consumer protection that hinders innovation.