Clean Energy Retail – The Role of Clean Energy Retailers in the Net Zero Transition was a report by Energy Systems Catapult commissioned by OVO Energy exploring both the expanded role that retailers needed to play in the Net Zero transition and the policy & regulatory reforms required to incentivise low carbon choices and new innovations.

The report recommended that energy retailers need to build trust and strengthen relationships with customers, and develop innovative propositions, that focus on:

• Consumer outcomes – focusing on delivering the outcomes that reflect consumer preferences, house type, level of EV charge, desire for ‘green’ electricity etc, as opposed to simply billing for gas or electricity.
• Low carbon products and services – developing personalised, “modular” and adaptable propositions – including bundling a range net zero products and services (e.g. heat pumps, EV chargers, solar, battery storage, etc..).
• Vulnerable households – support for vulnerable households should be designed to also drive low carbon objectives that improve future resilience and drive energy efficiency.
• Financing – facilitating long term financing for customers, managing the complexity of installing energy efficiency and low carbon technologies with SME partners.
• Innovative tariffs – mainstreaming innovative tariff offerings, such as “time of use”, “type of use” and green tariffs to improve the customer experience and make the best use of new energy assets.

Policy reforms included:

• Incentivising Low Carbon – enabling energy retailers to develop offers which incentivise people to make low carbon choices and become more flexible. Faster rollout of smart meters will be crucial but wider reform is also needed to sharpen wholesale price signals market-wide with half-hourly settlements and to strengthen green tariff frameworks.
• Improving Customer Experience and Competition Metrics – making it simpler to choose low carbon offerings and easier to port that offer when switching supplier, whilst maintaining trust. This means simplifying the customer experience and improving data access.
• Innovation, Vulnerable Households and a Just Transition – ensuring the transition to clean energy is accessible for all. Consumer protection measures must be updated and move with the times to continue to look after consumer interests. We also need smarter approaches to addressing fuel poverty, making use of data to identify those at risk and partnerships to help determine interventions.

Good Energy commissioned Energy Systems Catapult to carry out whole system scenario modelling – with the specific constraints of allowing no nuclear power or fossil fuel energy supply – to determine if Net Zero by 2050 was still possible.

We utilised our Energy System Modelling Environment – which is a peer reviewed, least cost optimisation model. Plus our new Storage and Flexibility Model (SFM) – which provides a greater level of detail into how the energy system might function under Good Energy’s chosen scenarios.

The SFM platform produces highly granular dispatch information and explores the different roles and responsibilities of energy technologies and services in 2050, on an hour-by-hour basis.

Good Energy used the modelling results to compile a report supporting their efforts to increase renewable energy generation and storage in the coming decades.

Smart Systems and Heat (SSH) was the UK’s largest project aiming on overcoming the barriers to the decarbonisation of residential heat using smart, consumer-focused services.

The five-year, £30million government-funded programme,  ran  running consumer trials of smart energy services, exploring new business models and market structures (including interoperability).

Energy Systems Catapult addressed the technical, regulatory, economic and social barriers that block new low carbon heat products, services and business models getting to market.

EDF used the learnings from SSH to launch a low-carbon, hybrid-heating offering for households that are off gas-grid and use oil or LPG heating.

Dan Bentham, Head of R&D Smart Customers at EDF Energy, said: “EDF was involved in SSH from the very start. Residential heating is a huge contributor to our carbon emissions, so we were keen to know how we can help our customers and the UK as a whole transition away from fossil fuels and onto renewable low carbon heating.

“What SSH has shown to us is that not only do we have to think about new business model and customer propositions and how we can offer new services to consumers but also the new policies and regulations needed to accompany those.”

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Bristol Energy became the first energy supplier in the UK to trial selling Heat-as-a-Service tailored to customers individual home and behaviour.

Energy Systems Catapult helped Bristol Energy design the proposition with our Consumers Insight team before carrying out Test and Demonstration in our Living Lab. Offering both fixed price and pay-as-you-go Heat Plans, customers purchased hours of warmth for their home rather than of buying units of energy (kWh).

The trial helped Bristol Energy test an innovative business model selling a smart energy service that gave consumers improved control over cost and comfort. This attracted new customers who switched to a Heat Plan and the data helped them design, tailor and target a range of new Heat Plans, including suitable retrofit options for each customer.

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