Retail Energy Market Research Articles

Competition, regulation and price controls in the GB retail energy market

After 2008 Ofgem increasingly intervened in the GB domestic (residential) retail energy market. The Competition and Markets Authority (CMA) found that ‘weak customer response’ gave the major suppliers market power, which they used to set excessive prices and to discriminate against less engaged customers. The CMA quantified the customer detriment at an average of £1.4bn per year. In 2018 the Government proposed that Ofgem impose a widespread price cap. This paper explains the evolution of this policy then challenges the Ofgem and CMA analyses. Despite a concern about price differentials, especially involving vulnerable customers, there is not a competition problem.

A fog-based internet of energy architecture for transactive energy management systems

Internet of Energy (IoE) is a subset of the Internet of Things which covers all aspects of electrical energy systems and provides secure connectivity and interoperability between power grid and Internet. In this paper, we present a fog-based IoE architecture for transactive energy (TE) management systems. The proposed design consists of three different layers. In the first tier, home gateways are employed which collect customers energy consumption data and provide necessary interface between customers and power grid. In the second layer, there are some local fog nodes located at the network edge and provide services with low latency. From the TE system point of view, the fog node act as retail energy market server which provides energy services to the end users. In the third layer, cloud servers are utilized to provide permanent and reliable data storage and high computing power. The proposed architecture supports different communication protocols such as hypertext transfer protocol, constrained application protocol, and OpenADR. We calculate the required bandwidth and delay performance of both fog- and cloud-based models. We present an optimal day ahead energy consumption schedule and an intercustomer energy trading mechanism for exchanging energy between end users. The performance of the proposed architecture is evaluated in terms of different power grid and communication network metrics. Results confirm the superiority of the proposed architecture.

The Quest for Reasonable Retail Energy Prices in Europe: Positive and Normative Dimensions

Public opinion in various EU Member States increasingly perceives energy prices as unreasonable. Primarily owing to distributional concerns, state interference with the liberalized retail energy market is ever-present across many EU Member States, despite its implications for the development of competitive (national and EU) energy markets. Rather than solely engaging with the conditions of state intervention as such, this article takes a step back and argues that an appreciation of what constitutes a reasonable price for energy supply is a necessary prerequisite in determining the relevance, scope, and conditions of state intervention in retail energy prices. In the absence of a definition of the concept in secondary legislation, it offers a novel conceptual framework centred on the contextual interpretation of ‘a reasonable price for energy supply’. This article offers two understandings of reasonableness: one underpinned by the principle of market competition and the other understood as affordability. It elaborates on the different set of conditions and criteria against which they are judged and it explains how these have informed various instruments enshrined in the energy liberalization directives for achieving reasonable prices for end-consumers. These range from consumer empowerment measures to more direct consumer protection measures informed by affordability concerns. After providing a taxonomy of the latter instruments, it examines their respective advantages and disadvantages by focusing on how these are perceived by the EU framework. Its broader aim is to contribute to a more nuanced understanding of what is meant by a ‘reasonable retail energy price’ within the context of national and EU competitive retail energy markets and explore how the resulting tension between the two understandings of reasonableness is accommodated in the broader EU constitutional and institutional context.

Non‐cooperative game theory based energy management systems for energy district in the retail market considering DER uncertainties

In this study, a general framework for implementing a retail energy market based on the Nikaido–Isoda/relaxation algorithm is proposed as an electricity market structure with large distributed energy resources (DERs) penetration and demand side management of consumers. Moreover, the consumers are able to participate in the market as prosumers (i.e. producer and consumer at the same time). By considering the related uncertainties, the DERs can maximise their expected payoff or profit by undertaking strategies through the price bidding strategy, based on the proposed structure, considering Nash equilibrium. The results show the effectiveness and accuracy of the proposed framework in determining the optimal power set-points of players participating in the market to achieve the objectives.

The CMA energy market investigation, the well-functioning market, Ofgem, Government and behavioural economics

The GB retail energy market, and Ofgem's regulation of it, have been controversial. In 2014 Ofgem asked the CMA to investigate. Its Provisional Findings of July 2015 take a similar approach to that of Ofgem since 2008. Both find weak customer response allowing unilateral market power, and support various regulatory interventions. The specific characterisation of the CMA's benchmark well-functioning market, with its requirement that firms have efficient costs, seems attributable to Ofgem. Possible reasons for similarities include Ofgem's involvement in the process before the CMA reference, policies of previous Governments including an initial strategic Steer to the CMA, and the increasing influence of behavioural economics especially via the OFT. Now the present Government has put in place a new Steer, without emphasis on consumer behavioural issues and with strong emphasis on deregulation rather than regulation. Experience and thinking about behavioural economics also continue to evolve. The paper discusses implications for the CMA.