The Energy Barometer is a window on the views of energy professionals in the UK, whose day-job is to provide and manage the energy on which we all depend – to heat, light and cool our homes and businesses, and to get us from A to B

A year in UK energy

Click on the
to see milestones in the run up to the 2019 Barometer

April 2018 Coal-free record
June Nuclear sector deal
July FITs
September Walney Extension
October 1.5°C
October Fracking
October Net-zero target
November Moorside nuclear
November CCUS report
December Low carbon record
January 2019 Energy price cap
January Brexit defeat
January Wyfla nuclear
March Offshore Wind Sector Deal

New record for coal-free power generation, exceeding 76 hours

Nuclear Sector Deal published by BEIS

End of feed-in tariffs for small-scale low carbon installations brought forward to April 2019

World’s largest operational offshore wind farm (Walney Extension) opens in the Irish Sea

IPCC 1.5°C report published

Fracking restarts after 7-year hiatus

Ministers commission CCC to advise on a net-zero target

Plans for Moorside nuclear plant in Cumbria scrapped

CCUS deployment pathway report published by BEIS

Annual electricity generation lowest since 1994, with a record 33% from renewables

New retail energy price cap introduced

First defeat for Government’s Brexit deal

Plans for Wylfa nuclear plant suspended

Offshore Wind Sector Deal published by BEIS

Biggest Challenges

Biggest challenges

Simon Virley FEI, KPMG on the Barometer results

Top of risk radars: impacts of Brexit compound perennial concerns about UK energy policy Twitter button - click to share

Energy Institute (EI) members were asked to identify the greatest challenge facing the energy industry in 2019. Respondents gave free-text responses, which were categorised and totalled during analysis. A second question allowed them to list other concerns, shedding additional light on their thinking. As the Energy Barometer has been published annually since 2015, it is also possible to look back over five years of results and observe changes over time. For 2019, respondents identified Brexit as the biggest challenge facing the energy industry, followed by three evenly-ranked secondary concerns. Six further system-spanning concerns together make up the remainder of this year’s ten biggest challenges.

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Biggest challenges by year

What do you think is the biggest challenge for the energy industry in 2015-2019?
Answers were volunteered in open text, then coded and totalled during analysis. N=475 (2015), 393 (2016), 335 (2017), 349 (2018), 351 (2019). For all other charts, N=474 (2019), unless otherwise noted

Biggest challenges facing the energy industry

Brexit

Brexit

Most frequently mentioned with Energy policy
With the Brexit process mired in continued uncertainty, 1 in 3 EI members identified Brexit as the single greatest challenge facing their industry in 2019 - more than any other concern, and more than at any time since the 2016 EU referendum.

Brexit is seen as significantly reducing the bandwidth available inside the Government to pursue crucial energy policy decisions. EI members also cite the potential loss of access to skilled EU labour, investment and academic collaboration, and fear that damage to trade and the economy could impact on affordability and stability of energy imports.

“Brexit … is taking up all the Government's attention ... and making it harder for the UK to cooperate with neighbours at a time when flexibility and security are ever more important” - Survey participant

Energy policy

Energy policy

Most frequently mentioned with Brexit
Energy policy is frequently mentioned by EI members as a major challenge for the industry, as has been the case in previous years. Respondents recognise that UK energy policy must simultaneously safeguard supply, support markets and drive the transition to low carbon energy; this will involve meeting emissions targets while ensuring a just allocation of associated costs. They highlight a lack of clear focus and long-term planning in government policy, despite an update to the Clean Growth Strategy and the release of Nuclear and Offshore Wind Sector Deals over the past year.

“[Achieving] policy certainty and long-term direction of travel. This is currently too vague and contradictory, and hampered further by Brexit.”

Low carbon

Low carbon energy

Most frequently mentioned with Decarbonising heat
As the UK continues the complex task of decarbonising the economy, EI members view the lack of a coherent long-term plan as a significant challenge. They cite the need for a UK energy mix incorporating more offshore wind, solar and hydrogen, particularly in the face of reduced nuclear capacity. Moving beyond the power sector, decarbonising heat is seen as the next big challenge in moving to a low carbon economy. Further progress is expected to come from improving energy efficiency, and many members view carbon capture usage and storage (CCUS) as both a challenge for the UK and necessary for deeper decarbonisation.

“The UK has no coherent plan for delivering the scale of investment in energy efficiency that is known to be required for decarbonisation”

Security of supply

Security of supply

Most frequently mentioned with Brexit and Grid and infrastructure
EI members express concern that concrete plans have yet to emerge for replacing the generation capacity of coal and nuclear power plants set to close. Electricity demand will increasingly be met by intermittent sources such as wind and solar which will necessitate improved infrastructure to maintain system stability. Members also consider Brexit, geopolitics and an unpredictable global market as issues that will impact the ease with which the UK can maintain affordable and stable energy imports.

“Providing resilient supply in an uncertain and unpredictable market with little medium and no long-term demand visibility”

Other challenges facing the energy industry

Grid and infrastructure

Most frequently mentioned with Security of supply
The UK faces the challenge of replacing ageing, complex energy infrastructure. As the transition to low carbon energy sources continues apace, greater integration of new technologies is required. To improve flexibility and balance intermittent electricity supply with variable demand, EI members expect to see greater investment in battery storage and improvements in the roll-out of smart meters. Small-scale renewable generation has the potential to transform the relationship between consumers and the energy system.

“Ensuring on a national basis that all emerging technologies are efficiently integrated, for example storage and distribution of wind energy at peak / excess time” - Survey participant

Investment and cost

Most frequently mentioned with Brexit
Investment is essential for decarbonising the energy system. The suspension of the Capacity Market and stalled, or cancelled, nuclear projects illustrate the risks facing new investment in energy generation, storage and distribution in the UK. Investment and the cost of low carbon technology and infrastructure are seen to be affected by policy uncertainty, including Brexit.

“To drive sufficient investment in generation, distribution and storage assets to build flexibility across power, heat and transport to maximise the potential ... of wind and solar”

Markets, economics and competition

Most frequently mentioned with Brexit
EI members would like to see the Government working with the energy industry to ensure supply while maintaining a competitive and flexible market structure. Ensuring sufficient capacity may require new forms of support for generators, with respondents specifically citing the suspended Capacity Market and the closure of the Feed-in Tariff scheme to new applications. They are also nervous that Brexit will disrupt or damage the UK economy, frequently mentioning the two challenges together.

“Sorting out the hiatus in the Capacity Market and redesigning something that achieves adequate dependable capacity via an acceptable reward system”

Public engagement and acceptance

Most frequently mentioned with Energy policy and Brexit
EI members highlight the poor level of engagement between the energy industry and the public and the need to gain customer trust and acceptance. Issues cited include distrust of pricing and fossil fuel exploration (e.g. fracking), and a lack of awareness of the changes required by the transition to a low carbon energy system. Members acknowledge the important role of social media as a catalyst for discussion and change, but there is also fear that it may be eroding trust in expertise and in some cases weakening the power of evidence-based arguments.

“Gaining the trust of society... [so] that it believes and invests in a lower carbon future and does not block innovations”

Sustainability and climate change

Most frequently mentioned with Security of supply
EI members worry Brexit may hinder progress towards meeting UK greenhouse gas (GHG) emissions targets, particularly if the UK leaves the EU Emissions Trading System. They also express concern that the current rate of decarbonisation is too slow, identifying heat, transport, energy efficiency, and public engagement as key areas for improvement.

“To meet GHG reduction targets, a considerable step change is needed”

UK politics

Most frequently mentioned with Energy policy and Brexit
EI members consider political vacillations to be a huge challenge for the energy industry. This is, of course, significantly linked to Brexit, as it has consumed a great deal of time and energy in Whitehall and Westminster and reduced the focus on developing energy policy. EI members cite a variety of additional challenges, including public mistrust of the political system and the struggles of policymakers to develop a clear, long-term energy trajectory while navigating frequent election cycles.

“Brexit fallout, lacklustre involvement by our government … and public mistrust in our political theatre”

Climate change

Climate change targets

Prof Jim Skea CBE FRSA FEI on the Barometer results

Outlook on decarbonisation: energy professionals are increasingly optimistic about meeting emissions targets Twitter button - click to share

As part of the long-term path to meeting its legally-binding 2050 emissions target, the UK has set out a series of carbon budgets detailing interim goals for reducing emissions. A significant proportion of EI members are optimistic about the UK’s ability to meet the fifth carbon budget (2028 - 2032) to reduce GHG by 57% from 1990 levels. However, more than half of respondents still believe the UK will fall short.

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UK fifth carbon budget

The fifth carbon budget (2028-2032) requires greenhouse gas (GHG) emissions to fall by 57% (from 1990 levels). By 2032, given current UK emission reduction policies, do you expect emissions reductions to:

EI members feel more sceptical about the UK meeting its current 2050 emissions target, which requires an 80% reduction in GHG emissions compared to 1990 levels. However, there has been growing optimism year-on-year that the UK can meet this goal, more than doubling from 13% in 2015 to 30% in 2019.

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UK 2050 climate target

The 2050 UK climate target is to reduce greenhouse gas (GHG) emissions by at least 80% (from 1990 levels). Given current UK emission reduction policies, do you expect emissions reductions to: (By year)
‘Not sure’ option has been removed. N=543 (2015), 438 (2016), 466 (2017), 397 (2018), 459 (2019)

Surprisingly, EI members working in ‘natural gas and oil’ and ‘academia and research’ are the most optimistic about meeting 2050 emissions targets, while those working in ‘renewable technology’ and ‘energy demand management/utilisation’ are the most pessimistic.

Chris Stark, UK Committee on Climate Change on the Barometer results

The UK Government has committed to legislate to alter the 2050 target to net-zero GHG emissions, as recommended in May 2019 by the Committee on Climate Change (CCC). The CCC report indicates that reductions in the cost of key technologies would permit achieving net-zero, at the same cost that was originally accepted by Parliament for the present 80% reduction target (1-2% of GDP). Striving for an ambitious emissions reduction goal could also strengthen the UK’s position as a world leader in decarbonisation solutions and expertise.

Nevertheless, EI members are divided about the potential effects on the UK economy of raising the level of ambition to net-zero. Even the subsample of respondents who named ‘sustainability and climate change’ as the biggest challenge for the energy industry are divided on the economic impact this level of ambition would have. Views across different sectors vary, with those in renewables and young professionals more likely to see net-zero as positive for the economy. More experienced Fellows and those in oil and gas take a more negative stance, despite the latter’s relative optimism about meeting the current 80% reduction target.

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Economic impact of net-zero

The UK Government is considering sharpening the 2050 climate target down to net-zero GHG emissions. How do you think this policy would affect the UK economy through to 2050?

For meeting climate targets most cost-effectively, respondents advocate efficiency and integrated thinking between energy silos. When asked about effective measures the Government can implement to reach emissions targets, ‘taking a whole-system approach considering interdependencies between electricity, heat and transport’ was the second most popular choice of EI members - only energy efficiency measures are seen as more important. Furthermore, EI members frequently indicate through their open-text responses that greater progress specifically in decarbonising heat is an essential piece of the puzzle for transitioning to low carbon energy.

More than half the respondents believe that in addition to emission targets, falling low carbon technology costs are driving the energy industry to transition to low carbon systems. ‘Consumer/ citizen pressure’ and ‘wider environmental concerns’ are also named by over half the respondents as being among the main drivers.

Drivers of decarbonisation

Consumer and citizen pressure: 54%
Falling low carbon technology costs: 53%
Wider environmental concerns: 51%

EI members were asked their views on a range of thresholds that may be reached by 2030, from a list reflecting the potential pace of progress in the energy industry. Respondents are optimistic that, by 2030, the energy industry will make significant progress in electrified transport and renewable heat. Greater dominance of digital technologies in the energy industry is also widely anticipated, including new large appliances’ ability to connect to the Internet of Things; and increased energy use by data servers. On the other hand, only a small minority anticipate that risks around data security and cyber-attacks will have been eradicated, and a similarly low number believe humans will have been removed entirely from energy customer interactions.

Industry thresholds reached by 2030

5% or more of global vehicle fleet will be electric: 61%. 15% or more of global heat will be renewable: 57%. All energy customer interactions will be managed without a human: 8%. Data security and cyber attacks will no longer be a concern: 3%
Policy and investment

Policy and investment

Emma Pinchbeck, RenewableUK on the Barometer results

Renewables up, nuclear down: survey exposes contrasting fortunes of low carbon power generation technologies, while the ‘first fuel’ is still energy efficiency Twitter button - click to share

The transition to a low carbon energy system calls for a variety of generation, demand-side, and increasingly integrated solutions. Views on their relative importance and fortunes are tracked by the Energy Barometer every year, in questions relating to their perceived cost-effectiveness, the efficacy of policies designed to bring them on and levels of investment risk. Between them, answers to these questions tell us the degree to which EI members believe various measures are being successfully pursued.

When asked which measures the UK Government should pursue in order to reach emissions targets cost-effectively, EI members are consistent, putting energy efficiency improvements in the top spot for the past three years. It is seen across the board by respondents, regardless of their area of energy or career stage, as vital to a productive economy and to cutting carbon emissions without unnecessary cost.

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Meeting the fifth carbon budget

The 2017 Clean Growth Strategy indicated a 60 MtCO2e (3.5%) shortfall in meeting the fifth Carbon budget target given the UK emissions trajectory at that time. Which areas should the UK government prioritise to meet this estimated shortfall at least cost?
Respondents were allowed to choose more than one response
Angela Hepworth, EDF Energy on the Barometer results

While transport and heat are both seen as important areas for cost-effective decarbonisation, a whole-system approach – integrating heat, transport and electricity alongside decarbonisation of each individual sector – is even more strongly advocated. Renewables are seen as the way forward for electricity, though new nuclear development is also noted by nearly a quarter of respondents. Although CCUS is widely viewed as necessary for tackling climate change, it is seen by fewer respondents as cost-effective, potentially due to the absence of clear revenue streams and the current lack of incentive structures to bring it forward. Respondents who are particularly concerned about the provision of ‘low carbon energy’ – those who name it as the biggest challenge for the energy industry this year – more strongly support energy efficiency (51%) and renewable electricity (41%), but less strongly support nuclear energy (12%) and CCUS (12%), for meeting emissions targets at least cost.

Notwithstanding the Government’s current preoccupation with Brexit at the expense of other policies, the Energy Barometer’s questions relating to the impacts of policy efficacy and investment risk shed light on the relative fortunes of specific policy areas over time. These have been tracked over the past four years.

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Impact of energy policy by year

Lines: In the UK, what in your view is the level of investment risk due to policy uncertainty in each of the following areas?
Bars: What effect do you think the UK energy policy has had on each of the following areas in the last 12 months?
Net score - 'very positive/very high' and 'very negative/very low' are weighted twice as strongly as 'positive/high' and 'negative/low'. 'Not sure' answers were excluded from the calculation. A higher net score (bar above the centre line) is indicative of a policy with a perceived positive effect over the last 12 months. A higher net score (line below the centre line) is indicative of higher perceived risk due to policy uncertainty over the last 12 months

Of the generation technologies, ‘supporting renewable electricity’ took first place this year as the area where UK energy policy has had a positive effect. Alongside this, when asked to what extent policy uncertainty is contributing to investment risk, only 15% of respondents classify investment in offshore wind as high risk. Both of these views have shifted markedly from negative to positive over the past five years. The opening of the offshore wind farms including Walney Extension in the Irish Sea – the largest operating in the world – as well as falling costs for wind and solar energy in general, may have influenced perceptions.

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UK energy policy effects

What effect do you think UK energy policy has had on each of the following areas in the last 12 months?
‘Not sure’ answers are not shown on this chart. Results ordered by weighted net score.

Energy efficiency also fares very well in terms of policy efficacy and investment risk: nearly half of respondents believe UK policy on energy efficiency has had a positive effect, and only 19% see high risk in building energy efficiency. Coupled with the widely-held view that it is the most cost-effective measure for meeting emission reduction targets, energy efficiency is yet again the Energy Barometer’s ‘first fuel’.

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UK investment risk due to policy uncertainty

In the UK, what in your view is the level of investment risk due to policy uncertainty in each of the following areas?
'Not sure' answers are not shown on this chart. Results ordered by weighted net score

On the other hand, there is broad agreement among respondents that development of nuclear power in the UK has had a difficult year. In stark contrast to previous years, they view policy as being ineffective and investment risk in delivering new nuclear power stations as the most negatively affected by policy, similarly risky to CCUS technology or tidal and wave generation. In the past year, of the sites identified as suitable for the next generation of UK nuclear power plants, only one project is under construction (Hinkley). Plans for plants at Wylfa (Anglesey), Moorside (Cumbria) and Oldbury (Gloucestershire) were all cancelled or suspended.

There are mixed views regarding approaches to support policy on CCUS. In November 2018, the UK Government committed to a new action plan to deliver on its ambition of having the option to deploy the technologies at scale during the 2030s, subject to cost reduction. A small majority of EI members believe the Government should support pilot projects in energy intensive industry clusters, and half call on the Government to commit to and communicate a long-term vision of support for CCUS. Relatively few respondents think the Government should not support CCUS at all. EI members in the natural gas and oil sector were the most supportive of CCUS, but there was broad support across the board for pilot projects.

Only 13% of EI members think the Government should not support CCUS

Energy prices

Energy prices

Malcolm Brinded CBE FREng FEI, outgoing EI President on the Barometer results

Geopolitical instability is fuelling global oil price uncertainty Twitter button - click to share

Over each of the past five years, the Energy Barometer has seen EI members generally predicting modest price increases of $10-15 per barrel of Brent crude oil in the coming year. Looking ahead to the end of 2019, the mean prediction by EI members is for prices to sit at $69 per barrel by the end of the year, an increase of $9 from the point at which the survey was opened. Respondents are generally in agreement with each other, regardless of their area of energy or career stage.

More than half of EI members believe geopolitical instability will have the greatest impact on crude oil prices in 2019. As with the 2018 Energy Barometer, ‘demand levels in developing countries’ and ‘actions/policies of oil producing nations’ were also expected to have a significant effect on the market. Although the energy industry is slowly transitioning away from fossil fuels, half of EI members predict that crude oil prices will remain relatively steady over the next decade, with the price of crude oil remaining between $50 and $100 in 2030.

Drivers of crude oil prices

Geopolitical instability: 53%
Demand levels in developing countries: 50%
Actions and policies of oil producing nations: 45%

In the UK energy retail market, EI members believe crude oil prices and taxation will have the greatest impact on transport fuel prices. Although the Government has stated its commitment to decarbonise transport by ensuring no new petrol or diesel cars are sold after 2040, there is little sense among respondents that this transition will affect fuel prices in the short-term.

The market share of the ‘Big Six’ energy companies dropped from 100% in 2009 to 74% in 2018 according to Ofgem, due to increasing competition from a number of smaller suppliers. Despite this, just 18% of EI members believe changes in market competition are having the greatest impact on electricity prices. Instead, respondents highlight the cost of primary fuel and UK energy policies as key price drivers.

Almost half of respondents believe UK and European natural gas demand will be the primary driver of UK retail natural gas prices. By contrast, global shale gas production is expected to have only a minor impact.

In October 2018, fracking temporarily restarted in the UK for the first time in 7 years. A majority of EI members across sectors support shale gas exploration and development, though the proportion opposed to it has doubled to 30% over the past five years. Support is more pronounced (by 7%) among respondents who view ‘security of supply’ as the biggest challenge that the energy industry will face this year. Views are evenly split on the desirable level of government regulation - 24% are content with current UK regulations, 24% think regulations should be relaxed regarding seismic monitoring, and 19% think the opposite, that regulations should be stricter.

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Views on shale gas

Which of the following statements describes your views on shale gas exploration and development in the UK? (By year)
N=543 (2015), 438 (2016), 466 (2017), 474 (2019). No data for 2018
Flexibility and investment

Flexibility and digitalisation

Andy Hadland AMEI, Arenko on the Barometer results

There is vast potential for flexibility backed by digital technologies, given greater political will Twitter button - click to share

Flexibility

With the rise of renewables and changes in demand patterns, flexibility in its various forms plays an ever more important part in maintaining stability within the UK energy system, particularly within electricity. This ranges from battery storage and demand side response (DSR) to distributed generation from small, local providers. The 2019 Energy Barometer asked EI members about growth potential, barriers to scaling up system flexibility, and methods of engaging industry and domestic consumers.

EI members send a clear message on the importance of flexibility throughout the survey - 82% of respondents support incentivising flexibility provision in some form.

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Incentivising flexibility provision

Do you think flexibility provision:

Out of all the wide-ranging potential benefits of flexibility, the ability to deal with future uncertainty in the energy system is flagged up as the most important by nearly a third of respondents. Flexibility provision can assist in improving energy efficiency, as well as reducing required spend on new grid infrastructure. Despite this potential and commitments made by the Government and regulator, two out of five EI members do not believe that the UK has made sufficient progress on flexibility since 2017.

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Progress in energy system flexibility

In 2017, the Government and Ofgem identified actions to make the energy system more flexible. In which of the following areas do you believe the most progress has been made over the past two years?
Respondents were allowed to choose more than one response

A majority of respondents believe that the Government should support the creation of a market or other types of incentives for the development of flexibility by large non-domestic consumers. Two fifths believe the Government should endeavour to create a level playing field for demand- and supply-side flexibility. This echoes the ruling by the European Court of Justice last year which led to the suspension of the UK Capacity Market’s operations. The case was brought on the grounds that the Capacity Market unfairly favoured supply-side technologies at the expense of clean energy and flexibility-related companies, in particular DSR.

82% of EI members believe the Government should incentivise flexibility

EI members view lack of political will as the main barrier to scaling up flexibility. Other notable barriers were ‘Lack of integration between energy systems’ and ‘current market structures around flexibility’, both of which were identified by about a third of respondents.

Barriers to scaling up flexibility

Lack of political will: 43%
Lack of integration between electricity, heat and transport: 32%
Current market structures around flexibility: 31%

Battery storage is seen as the frontrunner for enabling flexibility, in particular for pairing with renewable generation sources to time-shift energy for delivery during peaks in demand. EI members predict developments in grid-scale battery storage to be the greatest area of growth potential. Respondents also flagged up electric vehicle-to-grid storage, small-scale batteries for home use and hybrid technologies as other areas where batteries can contribute to flexibility growth.

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Areas of growth potential for flexibility

Which of the following areas of flexibility will have the greatest growth in the UK energy system in the next 10 years?
Respondents were allowed to choose more than one response

On DSR, EI members from across the energy industry are in general agreement, citing ‘lack of understanding about system benefits’ and ‘lack of consumer understanding’ as key barriers to investment. Other notable barriers to investment are market-related, including ‘inappropriate market structure’ and ‘lack of specific incentives’.

Energy industry sectors at the forefront of flexibility include ‘energy transformation, heat and power generation’ and ‘energy demand management/utilisation’. 42 and 39% respectively of members in these sectors have embraced flexibility extensively or completely, either for their own operations or as a service for others.

Digitalisation

As digital technologies grow more sophisticated and their application in energy increases, the industry is set to benefit from energy systems that are more flexible and intelligent, able to manage supply and demand more efficiently. In particular, as an enabler of technologies delivering flexibility, digitalisation is seen as vital for integrating intermittent renewable energy sources such as solar and wind. Almost half of those surveyed flagged up this option as the most significant implication of digitalisation. More positively still, a majority of EI members believe a supportive policy and regulatory environment could open the door to the UK becoming a global leader in this field.

61% of EI members believe the UK could become a global leader in digitalisation

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Impacts of digitalisation

Which of the following implications of digitalisation will be most significant for the energy system?
Respondents were allowed to choose more than one response

As the data revolution broadens from ICT into energy, respondents perceive ‘data analytics and modelling/big data’ and ‘connectivity between people, devices and various business opportunities’ as the most significant aspects of digitalisation for their work.

Most significant aspects of digitalisation

Data analytics and modelling: 58%
Connectivity between people, devices and business opportunities: 53%

The value of energy usage data is still being explored and developed; when asked which aspects of the energy system would benefit most from open access to this data, EI members were split almost equally between ‘collaboration between academia, policymakers and industry’, ‘technology research and development’ and ‘energy services and tariffs’. In terms of the value of investment into digitalisation in energy, ‘smart electric vehicle charging’ and ‘smart grid infrastructure and meters’ are expected to attract the most investment through to 2020 (chosen by 45% and 42% of respondents, respectively).

The digitalisation of operations is progressing for companies and services across the energy industry. However, the pace of change appears to be quickest in the ‘energy demand management/utilisation’ sector, where 89% of respondents report that they have at least moderately digitalised operations. One fifth of respondents in this sector have extensively or completely digitalised their operations.

EI members in the first five years of their career (Associate Members) are much more likely to have embraced digitalisation than more experienced Fellows. A full three quarters of Associate Members have digitalised their operations at least moderately. While 54% of Fellows have digitalised their operations to some extent (moderately, extensively or completely), a full 75% of Associate Members have digitalised their operations, with over a quarter having done so extensively or completely.

75% of EI members early in their careers have begun to digitalise their operations

Consumers

The outlook for consumers

Dhara Vyas, Citizens Advice on the Barometer results

Is consumer king? Poor communication may prevent consumers benefitting from progress in energy Twitter button - click to share

Energy professionals completing the Energy Barometer survey are both experts in their fields and consumers of energy themselves. But what do they think household consumers in the UK as a whole want from their relationship with the energy they use, and how do they believe consumers will fare as the low carbon transition and data revolution both progress? Domestic consumers were the largest users of electricity and natural gas in 2017, making up 30% of total primary energy consumption (BEIS, 2018). The findings highlight the challenges and contradictions facing policy makers and industry leaders in building trust and acceptance around rapidly advancing technologies.

EI members strongly believe that low bills are the number one priority for domestic energy customers. When asked to select the top three desired actions expected of energy providers by their customers, almost two thirds of respondents picked the ‘low bills’ option.

Customers’ energy service expectations

Low bills: 65%
Excellent customer service and engagement: 46%
Price and cost transparency: 46%
Juliet Davenport OBE HonFEI, Good Energy on the Barometer results

Although more than half of survey respondents signalled that consumer and citizen pressure is a driver of the low carbon transition, they largely do not think that energy providers ‘ensuring a low carbon energy supply’ is a top priority for customers. And although EI members identify a more integrated systems view (connecting electricity, heat and transport) as a low-cost route to decarbonisation, they do not believe that integration of energy with other services (such as water, transport or ICT) is a priority for consumers.

‘Tariffs rewarding flexible demand’ are expected to be the most attractive energy service offer to domestic customers by 2030, according to EI members. Three out of five respondents chose this, almost twice as many as the second most popular option. Nevertheless, a similar proportion are sceptical about domestic customers being prepared to allow electricity suppliers to control their appliances, even if financial benefits are passed on. 61% of respondents think that a minority of households would allow suppliers such control.

This poses a meaningful challenge to an industry that expects flexibility to contribute significantly to its development and decarbonisation. Improved communication is seen as a way forward; half of respondents believe promotion of the benefits of smart technologies to household consumers is needed to capitalise on the lower bills and system benefits promised by these technologies. This echoes the need for improved public engagement which was cited (as in previous years) as one of the biggest challenges for the energy industry in 2019.

62% of EI members think ‘tariffs rewarding flexible demand’ will be favoured by consumers in 2030

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Attractiveness of new energy service offers

Which new energy service offers do you see as most likely to be attractive to domestic customers in the UK electricity and gas retail market by 2030?
Respondents were allowed to choose more than one response

Peer-to-peer energy is expected to be least desirable, with only 15% of respondents choosing this option. Additionally, two thirds of respondents think 30% or fewer of UK domestic consumers will trade energy with other peer-to-peer consumers by 2030, confirming the perceived lack of interest in this energy service offer. The success of peer-to-peer energy relies on consumers’ willingness to change; one quarter of overall respondents think consumers will instead stick with conventional offers.

Concerningly, EI members are sceptical that consumers will see the biggest benefit from the increased availability of energy use data. Twice as many respondents believe energy service providers, as opposed to their customers, will financially benefit the most from the data revolution in energy.

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Financial benefits from open data

Who will financially benefit the most from open access to energy use data?

Improved consumer engagement is needed to ensure they see the benefits of the digital and low carbon transformation of the energy system. Some of these benefits will be related to new energy service offers such as those that reward flexible demand; a quarter of respondents perceive a ‘lack of understanding of the value of flexibility for consumers’ as the main barrier to scaling up flexibility and realising these benefits. Similar barriers are perceived for large industrial and commercial customers, whom EI members believe would benefit from awareness campaigns about the benefits and opportunities of providing flexibility.

According to Ofgem, the energy price cap is designed to lower bills for customers on a "poor value deal", by setting a limit on the price a supplier can charge per kWh of electricity and gas used. EI members are doubtful that the price cap will necessarily lead to lower bills for domestic consumers overall, though this may be a reflection that the cap is intended to reduce bills specifically for those households on a poor value deal. Respondents that identify as knowledgeable about consumer affairs are more likely to believe the price cap will cause overall domestic consumers’ energy bills to rise.

When it comes to ensuring a fair and just transition to a low carbon economy, 40% of respondents cite ‘increased funding for energy efficiency improvements’ as the best means to ensure the transition can help alleviate fuel poverty. Worryingly, a fifth of respondents appears to believe the low carbon transition will escalate fuel poverty in the UK, regardless of government interventions to support the most vulnerable, as low-income households may not be able to readily take advantage of low carbon solutions. Over the five years of the Energy Barometer, successive governments have struggled to implement energy or social measures to significantly reduce the number of people in fuel poverty. Reducing fuel poverty is consistently seen by EI members as one of the most negative or ineffective areas of energy policy.

Energy efficiency is considered the best way to address both decarbonisation and fuel poverty

Thank you for your interest in the
2019 Energy Barometer.

What stood out to you from this year’s findings? Join the conversation on social media using #EnergyBarometer.

Have a comment, or a suggestion for next year’s Energy Barometer? Send it to us at barometer@energyinst.org

The Energy Barometer 2019 was published on 20 June 2019. The survey underlying this report was sent to 732 professional and pre-professional members of the EI. A total of 474 EI members completed the survey online in February and March 2019; the findings represent the views of the EI’s UK membership.

As in previous years, there was a high degree of consensus on most energy issues; where there were prominent differences across sectors or member grades, these have been singled out in the report. This report is the latest step towards creating an informative, useful account of the energy industry based on the views of those working within it. For more detail on the results from this year’s survey, the full data set is available for download here.

Learn more about this project and visit the archive of previous years’ Energy Barometer reports here.