As the UK energy market navigates a period of significant transformation, staying ahead of consumer trends and technological advancements is crucial for energy retailers such as Octopus Energy, British Gas, EDF Energy, SSE, and OVO Energy.
At Impact, our extensive research through the Low Carbon Technology (LCT) Tracker provides invaluable insights into these shifts, allowing us to support energy retailers in making informed decisions that align with consumer needs and market demands.
Current Trends in the UK Energy Market
- Heat Pump Adoption
The adoption of heat pumps is a critical component of the UK’s strategy to reduce carbon emissions. Despite this, our LCT Tracker reveals a decline in consumer satisfaction with heat pumps and a decline in consideration amongst those who currently don’t have one.
Early adopters have now had heat pumps for a longer period, allowing for more comprehensive evaluations of their performance. Issues such as reliability and running costs may contribute to this dissatisfaction, as evidenced by a decrease in satisfaction in these two areas.
The complexity and cost of installation further deter potential adopters, with 45% of interested consumers reconsidering once they understand the necessary home modifications.
- Consumer Trust and Environmental Impact
Consumers claim they are most likely to approach energy suppliers for information about low-carbon heating alternatives, whether it be heat pumps or hydrogen boilers. This is likely due to consumers considering them credible and trustworthy, more so than other sources such as the Government, Local Authorities and gas and electricity network operators (GDNs and DNOs). This presents an opportunity for energy suppliers to strengthen their leadership in environmental initiatives.
With climate change concerns driving interest in low-carbon technologies, energy retailers must continue to foster trust through transparency and effective communication about their sustainability efforts.
- Information Sources and Net Zero Goals
Consumers place their trust in Net Zero/LCT charities and community energy groups for advice on energy usage and low-carbon technologies. These are the only two sources that have higher levels of trust than energy suppliers. To enhance their own credibility, energy retailers can collaborate with these trusted sources.
Our research indicates that energy suppliers are perceived as being ahead of government bodies, local authorities, DNOs, and GDNs in terms of their contribution to achieving net zero. This leadership may be attributed to the direct consumer interactions and tailored services energy suppliers offer, which make them more visible and accessible compared to other entities. However, there is a notable gap in consumer empowerment, with only a fifth feeling capable of making changes to support these goals.
- Financing Low Carbon Technologies
Affordability remains a key concern for consumers, particularly in the context of achieving net zero emissions.
Our research question on financing low-carbon or energy efficiency improvements covered a wide range of technologies, from solar panels and electric vehicles (EVs) to LED bulbs and smart plugs. This context allows us to understand the varying levels of consumer willingness to invest in these technologies.
Half of the consumers indicated a preference for self-financing their low-carbon energy efficiency improvements. However, those willing to spend a lower amount are generally less likely to consider any technology. In contrast, consumers prepared to invest larger sums are more open to high-cost technologies such as EVs and wind turbines.
Additionally, individuals with higher incomes show a greater openness to adopting and funding these technologies. This pattern underscores that financial capability is a significant factor in the adoption of low-carbon technologies. Therefore, financial support will be absolutely key in driving the widespread uptake of these technologies. Notably, 15% of those willing to invest are prepared to spend £5,000 or more.
Partnering with Impact on the LCT Tracker
Energy suppliers have the unique opportunity to become Impact’s partners in the LCT Tracker initiative. This partnership allows energy retailers to gain deeper insights into consumer trends and include bespoke questions to address specific business challenges.
Future waves will provide data segmented by energy retailer, allowing for detailed rankings on various aspects of LCT support to consumers. The LCT Tracker is conducted bi-annually and has been providing nationally representative data across the UK since 2021, supported by several Distribution Network Operators (DNOs) and Gas Distribution Networks (GDNs).
For more information on becoming a partner in the LCT Tracker and to explore how this collaboration can benefit your organisation, please contact Tom Gould, Managing Director at Impact, at tom.gould@impactmr.com.