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The Progressive Policy Think Tank

Energising the Market: A country comparison of consumer engagement in the retail energy market

This briefing note reviews the main features of retail energy markets in five countries – Germany, Sweden, France, the US (California) and Australia – to extract relevant examples of consumer engagement in these countries that could be applied to the UK market. To achieve this, we suggest how approaches from other countries could be implemented in the UK, with a particular focus on the role Ofgem and Price Comparison Websites (PCWs) could play.

According to a report for the EU’s Agency for the Cooperation of Energy Regulators (ACER), the UK was ranked as having the third and fourth most competitive markets in the EU for electricity and gas respectively. The scoring is assessed based on a broad range of criteria, including market concentration, customer switching and pricing.

This may come as a surprise given that, compared to other industries, the level of consumer trust in the energy market is low – although it has recently risen slowly. In a situation where the UK electricity and gas markets both score highly for competitiveness, but consumer trust is low to the point that a form of price cap is being considered by Ofgem (acting on government instructions), it becomes even more important to encourage consumers to participate in the market. The research draws on experiences from the five other countries mentioned in order to put forward ideas for how this can be achieved.