Energy is an essential part of any business. Whether it’s for heating the office or running the computer processors, your company depends on the business electricity suppliers. But for working with these you should have a level of knowledge about the UK energy sector, how it works and the hidden facts about UK business energy suppliers.
Back in the time when the Climate Change Act obliged electricity providers, the UK’s utility providers were getting 80% of their energy from fossil fuels. As of 2024, the UK energy sector generates 42.3% of its power from renewable sources. This marks the first time in history that the UK’s green energy surpasses the capacity of fossil fuels in power generation.
How the UK Energy Sector Works?
In the UK, energy starts its journey from the plants. For that, there are various techniques such as fossil fuels, nuclear power, and renewables like wind power, solar and biomass. These plants generate electricity and then save on a national grid. And the high-voltage transmission wires supply electricity to local substations around the country.
The substation transformed High-voltage electricity into low-voltage power so that domestic and businesses can use power according to their needs. Electricity providers purchase energy from these wholesale markets and ensure seamless supply to customers.
But as the UK is working to achieve a net zero by 2050, there are many hidden facts that you should know. Let’s take a closer look at the new sustainable UK energy sector.
5 Things You Didn’t Know About UK Energy Suppliers
Mostly Don’t Generate Electricity
Most UK energy suppliers don’t own any sort of energy generation plants. They supply power by purchasing from the wholesale market and sell to consumers at a retail tariff rate. But this rate is fixed by the government, which is different for domestic and energy suppliers for business. This function looks like a retail market in which there are many options for the consumer to purchase. It helps to keep the market competitive and forces energy suppliers to take unique customer-centric initiatives, which directly helps utility providers and consumers.
Rise of Smaller Energy Providers
The retail market helps various small utility providers to grow with new techniques and reliable customer support. In recent years, smaller and greener suppliers have gained popularity, often outperforming traditional “big six” best electricity providers in customer satisfaction surveys. For instance, the Utility Warehouse has a popularity in domestic energy supply and Maxen Power is dominating the race for the first sustainable business energy supplier. They have been recognised for their dedicated account handlers and value-for-money customer support team. Moreover, they are focusing on particular goals such as a greener future and competitive prices.
Pricing Strategy and Market Dynamics
Energy suppliers mostly buy electricity from the wholesale market to control this value and to keep tariffs at competitive prices. The Office of Gas and Electricity Markets (Ofgem) regulates all energy suppliers. They issue the cap to limit how much suppliers can charge customers, ensuring affordability and protecting vulnerable consumers. While this cap does not apply to fixed tariffs, it creates a competitive environment where suppliers must offer attractive pricing to retain and attract customers. The retail energy market also helps the new energy suppliers for business and domestic to grow. It makes the UK’s energy sector highly competitive, with numerous suppliers vying for customers. This competition drives suppliers to offer lower prices and better service options.
The Role of Smart Meter
Smart meters are the revolution which is evolving the UK energy sector by enabling more efficient energy management and facilitating the transition to a modern, flexible energy system. With smart meters, businesses receive real-time data with 100% accuracy which helps them reduce energy consumption and assists them in making informed decisions. According to the stats, 86% of smart meter users reduce their energy usage by real-time data-driven decisions. Most smart meters share half-hourly consumption data with electricity providers, ensuring that customers are billed only for the energy they actually use.
The UK energy suppliers also plan to utilise these smart meters to convert grids into smart grids. It will be a digitally integrated network developed to enhance the efficiency and reliability of electricity supply. This structure upgrade is hoped to provide significant economic benefits and support the UK’s goal of achieving net-zero emissions by 2050.
Customer Satisfaction Varies Widely
The major issue with most business energy suppliers is their customer support. Customer satisfaction from energy suppliers dramatically varies from provider to provider. According to recent surveys, the smaller energy suppliers are providing better customer support in comparison to the major big six utility providers. While they have extensive resources, customer service ratings for the best energy providers in the UK vary significantly. Some customers report dissatisfaction with service levels compared to smaller providers and suppliers. This is often because of their personalised customer support and dedicated account handlers for each customer.
