Testing how consumers can have multiple electricity providers

Current regulations assume that each household has a single supplier for all electricity consumption, but our Innovating Beyond Retail report highlighted the potential for multiple suppliers serving different types of energy use – such as a dedicated EV bundle, community energy schemes, or ultra-flexible tariffs.

While there might be concern around potential complexity, the reality is that greater choice and tailored energy services could unlock new business models, attract innovative market players, and better align regulation with actual consumer needs.

By moving beyond the one-size-fits-all approach, we can explore whether regulation should differentiate between essential energy uses, such as heating and lighting, and discretionary consumption, such as EV charging.

We are running a trial using our Living Lab and Whole Energy Systems Accelerator (WESA) facility to explore the concept of secondary suppliers to test how a more flexible and diverse energy market could function in practice.

The WESA secondary supplier trial is designed to explore innovative approaches to energy regulation, focusing on creating flexible, efficient, and consumer-friendly energy markets. Using real-world data and consumer feedback, this project provides valuable insights into regulatory and business model innovations for Net Zero.

The challenge

The way we consume electricity is evolving. Beyond traditional uses like lighting and appliances, more consumers are now relying on electricity for EVs and heat pumps. This has made electricity demand more varied, not just in when it’s needed, but also in how flexible it can be. While it is generally hard for people to shift the time that they can use the former (e.g. when we cook dinner, etc), it is becoming very easy to shift when we need electricity for the latter (especially charging up EVs).

However, existing regulations don’t account for this diversity. Consumers are required to have a single supplier for all their electricity use, often leading to a one-size-fits-all tariff. This restriction may limit demand flexibility, hinder the development of innovative consumer-focused offerings, and create barriers for new market entrants.

These issues, if addressed, could have the potential to unlock flexibility and innovation in the energy market, benefiting consumers and the wider energy system.

The solution

We’re using our Living Lab and Whole Energy Systems Accelerator capabilities to simulate the real-world experience of living with a secondary supplier and understand the impact on consumers and the market. This includes:

• Simulated billing models: Using real energy consumption data, we’re testing four billing propositions:
  • A traditional single supplier with a flat tariff (as a control comparison)
  • A primary and secondary supplier arrangement, where EV energy is priced dynamically, and the rest of the home energy is on a flat rate.
  • A primary and bundled secondary supplier proposition, combining EV energy costs with vehicle leasing, insurance, and out-of-home charging, and a flat rate tariff for the home.
  • A community energy model, offering cheaper EV tariffs when local renewable generation is available.
• Consumer insights: The project will explore how consumers respond to having multiple suppliers, different pricing for EVs versus the rest of their home, and whether bundling EV charging with other services or incorporating a local community aspect influences their perception of the secondary supplier model.
• Business model innovation: Exploring the commercial elements of this approach, both for new market players and existing market incumbents.

Key innovations

1. Creating the consumer experience of future energy scenarios: The project uses WESA’s unique facilities to simulate detailed, realistic bills with actual consumer data, enabling deeper insights into consumer behaviour and preferences.
2. Collaborative policy development: The trial engages with stakeholders such as Ofgem and DESNZ to refine and test regulatory frameworks.

Impact

The findings aim to inform the industry’s exploration of the secondary supplier model by supporting:

• Regulatory reforms that enable innovative pricing and supplier models, helping the energy system better balance renewable generation with demand.
• The development of appealing consumer propositions that fairly reward users for shifting flexible loads in the most effective and impactful ways.

Key findings

• Consumers would accept the secondary supplier model if it saved them money.
• Propositions within the secondary supplier model could provide additional system flexibility.
• The model requires regulatory change to be commercially viable.