Energy sector needs consumer-centric overhaul to unlock flexibility, says new report
5 June 2025
The future energy sector should be more accessible and designed around the needs of customers says the Energy Technology Group in its Vision for Consumer Centric Energy Retail Report, commissioned by the Energy System Catapult snd launched at the ADE: Demand annual reception at the Houses of Parliament today.
The report proposes ways energy can be consumed differently, offering tailored services to customers and delivering them the cost and convenience benefits, through their relationship with their electric vehicle, heat pump or solar panels.
A consumer led and flexible energy retail future must start to reflect the varied and changing needs of the consumers. It is also crucial for the transition to unlock flexibility in the domestic market with the The Clean Power 2030 report by the National Energy System Operator (NESO) – the recommendations of which the government has accepted – stating that the system will need approximately a five-fold increase in domestic flexibility.
“There is too little choice in the energy sector, that isn’t tailored to different customer needs and not delivering the real fair value of their actions on the system,” says Laura Sandys, chair of the Energy Technology Group. “This report outlines policy solutions to Ofgem and Department of Energy Security and Net Zero that will deliver real value to customers, much easier propositions and give customers more control over their energy through their smart EVs, heat pumps and solar panels.”
However, to achieve this reduction the report highlights that there are a number of barriers that must be overcome:
• Flexibility must be designed with the consumers’ best interests at heart. For too long the energy sector has been focused on selling a commodity not a customer outcome. This requires a mindset change and strong leadership in government focussing on consumer needs.
• Consumers should receive appropriate remuneration for providing their flexibility. To date customers receive very little of the whole system value and customers are being short changed.
• Robust standards and inter-operable devices will be required to make it easy for consumers to participate with confidence. Complexity reigns in the energy sector making customer adoption difficult. Simplification and rationalisation of the system must take place.
• Automation and digitisation must allow consumers to benefit from the full capability of their smart devices. The sector has to adopt the practises from other sectors that have made the customer journey simple and frictionless. The sector is too slow to learn from other sectors.
Smart energy asset providers can offer the solutions to these challenges. Similar to the mobile phone, appliances have specific characteristics but have been ignored by policy with all the focus on energy suppliers. The unique role that heat pumps, domestic EV chargers and solar panels have is that they are:
• Fixed asset: smart energy assets installed in peoples’ homes stay with customers for many years while they can swap energy suppliers at will. The operators and installers maintain long-term relationships with consumers, especially in the case of service contracts, managing the asset throughout its life and upgrading the functionality of the asset through software upgrades. This relationship is long-term, fosters trust, unlike the often transient relationship with energy suppliers.
• Bridge market signals and consumer needs: smart energy assets automate consumption based on real-time signals, integrating flexible assets like EVs and heat pumps into markets such as balancing and ancillary services.
• Granular level data: smart energy assets meter energy usage at the appliance level, unlocking energy efficiency savings without penalising non-shiftable uses. This granular data allows for much greater control by customers and more options for new propositions designed around their needs.
• Aligned incentives: smart energy assets have no incentive to sell more energy but have a clear ambition to deliver the best value and benefits to their customers throughout the life of their asset.
David Watson, CEO of Ohme, the UK’s leading EV charger manufacturer: “Unlocking the potential flexibility of millions of smart EV chargers will be key to ensuring that the UK delivers its Net Zero ambitions while driving down energy bills for customers.
“As a founder member of the Energy Technology Group, Ohme welcomes the findings of this report and looks forward to working with government, regulators and the industry in delivering these solutions to addressing the current challenges in customers accessing the markets. Our ongoing energy flexibility trials have seen Ohme reward drivers with more than £500,000 in the past year.”
The advantages of a consumer led retail market will be increased energy security and resilience, the greater introduction of low carbon technologies in turn bringing whole system costs down benefiting all customers not just those that deliver flexibility.
In its Clean Power 2030 report, the National Energy Service Operator (NESO) projects that levels of demand flexibility needs to increase by four to five times by 2030. Grid flexibility services are estimated to save £10bn in energy costs by 2050.
