Smart Grid News and Analysis

IoT World Forum 2018
IoT World Forum 2018

npower Shines a Light on Energy Company costs


Energy supplier npower has today launched the second report in its Energy Explained series. ‘Energy Explained: Inside the Cost of Energy’ sets out the real numbers behind the energy industry and presents the facts on how power stations are financed, how and why energy is traded, and how it is priced for consumers.

The report provides the inside facts of energy today, as the cost of upgrading the nation’s energy infrastructure set to increase energy bills unless households can take action through efficiency measures.

Paul Massara, RWE npower CEO, said “At times during the debate on energy, facts have been in short supply, but we urgently need to dispel some myths to restore trust in the energy industry. The most common number associated with energy in the UK is six – the ‘Big Six’ suppliers. But this report shows how misleading this is. It’s time we looked at the 80:20 rule in energy too – the 80+ organisations that trade on our energy markets, from major oil companies and international banks to small traders, and 20 + generators who produce the power we all buy. In total there are over 140 companies involved in the production, generation, trading, delivery and supply of energy in the UK, all of whom influence the price we pay as consumers for the energy we all use.

“Suppliers control less than 20% of a bill and I want to shine a light on all the different aspects of energy – particularly to reassure my customers that there is no hidden profit: we made a 3.2% margin in our retail business in the first nine months of 2013. Over the same period our power stations were struggling to recoup the hundreds of millions of pounds in investment required to build them, and made a loss of £59million. In 2013 we traded energy with around 80 other companies through open market exchanges. The actual unit price of energy in the UK is one of the lowest in Europei – but bills are high because British houses waste so much energy. If we can increase the efficiency of the UK’s old and draughty housing, we can ensure that annual energy bills are some of the lowest too.”

Inside the Cost of Energy

‘Energy Explained: Inside the Cost of Energy’ sets out how household energy bills have changed since 2007 and gives an outlook of how they will change out to 2020, showing that:

• Policy and regulation costs are expected to rise by 272% between 2007 and 2020

• Transportation costs will increase by 74% to fund new investment in infrastructure

• Supplier costs remain flat – with profit at around 5% each year

• Without taking action to save energy, annual household energy bills could rise to £1330 by 2020.


Energy in numbers

The report also sheds some light on the real numbers behind energy:

• At least 16 different policy and regulatory costs will have a direct impact on energy bills by 2020ii

• 80+ participants trade on the UK wholesale energy trading market, including banks, oil companies, large industrial buyers and independent energy traders

• 20+ power station operators generate energy and sell it on the wholesale market

• 30+ energy supply companies operate in the UK, buying energy on the wholesale market

• 7 electric and 5 gas distribution network companies own and operate the wires and pipelines to transport energy around their regional networks.