With the Ofgem currently themselves under review in the last couple of months they have been working hard to drive through change more than ever. With the news now that there is to be a major competition inquiry into the big six energy companies the question also has to be asked what this will mean to the energy industry in regards to future regulation, fines, effects to the renewable industry and more.
Is Competition Being prevented
Although no fixing of prices between suppliers has been uncovered the recent investigation has found that there is a competitive nature adopted by all included in an attempt to stop effective competition. This is very evident in the renewable sector where the industry continually puts the pressure on local and national government over grid parity in particular even though renewable output is only 4% of energy GDP. Thus it is this type of competitive nature that is being criticized.
Have Solar And Wind Projects Been Held Up Or Stopped
Although there is no direct examples of commercial wind and solar PV projects being held up by the big six there are other examples of stock piling viable solar and wind power land to grow there own market. This is particularly concerning due to the weight they carry within the industry many other smaller suppliers are unable to compete with their project proposals. What this also calls into question is due to the amount of projects within the big six possession the amount of time such projects take to come to fruition and also the continued low UK output of the renewable sector given the big six’s input.
How Can The Figures Be explained
While it’s true that wholesale energy prices to the big six do rise they also fall and this is one of the biggest concerns from regulators that as wholesale gas and electric prices have risen so have bills but when they have fallen the price the consumer pays hasn’t, it has only gone one way. From 2008 when profits within the industry stood at approx £213M to recently released figure showing profit of approx £1.2B it’s fair to say that the industry has something to answer for given that wholesale prices while fluctuating within this time period have no way warranted such substantial gains. Given that in this period as stated renewable energy from UK solar power, wind, biomass, thermal, hydro and other sources has not even risen by more than 3%, which is startling given the current EU obligations and the supposed amount of investment the big six had looked to put into the sector.
Will the CMA Clean Up The Industry
The power of the CMA will be able to have over the market remains to be seen given the pricing guidelines and simplicity tactics that Ofgem have tried to employ thus far have made little difference to the dominance of the big six. However they do have considerably more powers than Ofgem and the possibility of breaking up the big six has been under discussion.
Could Energy Providers Be Forced To Invest In Renewable Energy
Although many of the big six to already state that they carry out such procedures given the amount of profits being discussed and the minimal impact the renewable sector is having on conventional energy maybe the CMA could adopt an approach where a certain percentage have to be applied to renewable technology. Similarly there could be time frames placed on renewable projects and so the days of holding on to viable solar panel farm, on and offshore land for a long period of time without doing anything with it could be subject to fines or reacquisition clauses.
The Big six Begin Price Freezes
Although many may put this down to a PR token gesture the first of the big six SSE has recently put in place a price freeze until 2016 with more expected to follow. However such little action could come to late as consumer anger has consistently risen due to the amount of annual capital energy bills now take up with many stating Ofgem is not fit for purpose. Such anger only grew with the new that consumers were subsidizing green projects be it domestic solar panel incentives or commercial wind projects or other renewable installations a vast majority of the UK were unaware of the increase to their bills as a result. Thus the energy market it appears is in for further change and given the looming 2020 deadline on carbon and renewable power there could be potentially be clearer direction for the market for those who have opposed it most.
Some previous related articles of interest:
The improving construction of solar cells
Is the demand for solar and renewable energy being met
Scotland leading the way for renewable energy