New research by McKinsey & Company has found the recent fall in UK energy prices could accelerate the energy transition, with many consumers now willing to switch to new suppliers, flexible energy tariffs, and green products and services to cut household bills.
The research, which surveyed more than 2,000 UK consumers, found that a third of consumers are now considering switching suppliers, and almost half are willing to adopt energy-saving time-of-use (ToU) tariffs. ToU tariffs offer cheaper energy prices when demand is generally low, but conversely will charge more for energy consumed when demand is higher.
The research also found that a quarter of consumers are willing to buy additional green products and services from energy retailers, such as energy management services, solar panels, electric vehicle chargers, and heat pumps.
These findings suggest that falling wholesale prices are spurring UK consumers to seek out low-cost alternative suppliers and services. Competitive prices were among the biggest drivers for potential switchers, and the recent wholesale price drop will for the first time allow energy retailers to offer tariffs below the government price cap.
“The findings point to falling wholesale prices driving a more competitive market where low-cost and low-carbon tariffs, products, and services will be the key differentiators of the future,” said Kiril Bliznakov, Senior Partner at McKinsey & Company. “Balancing the need to keep energy costs low and comply with Ofgem decarbonisation regulations will require an umbrella strategy aimed at cutting combined costs and carbon emissions across the energy value chain.”
“The ‘gamification’ of energy services and rising demand for energy-as-a-service offerings will create new opportunities for suppliers to increase long-term customer loyalty and to both decarbonise and cut household bills,” he added.
The research comes at a time when the UK is facing a number of challenges in its transition to a low-carbon energy system. The country is heavily reliant on imported gas, and the recent rise in global gas prices has pushed up energy bills for consumers.
However, the falling wholesale prices could provide some relief to consumers and help to accelerate the energy transition. By switching to new suppliers and adopting flexible energy tariffs, consumers can save money and help to reduce the country’s reliance on fossil fuels.
