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This project ended in Aug 2022 and is now closed.

Research and Development of Market Structures (REDMAST)

Network operators
  • National Grid Electricity Distribution
Funding mechanismR&D project sponsored by WPD
DurationJan 2022 - Aug 2022
Project expenditure£170,000
Research areaDecarbonisation and Net Zero and Communities and Customer Vulnerability
Regions
  • South West
  • South Wales
  • West Midlands
  • East Midlands
  • July 2022

    This month the work is drawing to a close. Three starting alternative market models have been evaluated against the assessment criteria and the independent b…

The energy industry is going through considerable change, not only with the current gas price crisis and supplier failures, but also the impact of decarbonisation and the adoption of domestic Low Carbon Technologies (LCT's). The list of change is extensive. These new LCT technologies were not present when the current market structure was arranged. Which, with greater customer uptake predicted, will have a considerable impact on the energy market. These technologies are changing the requirements of energy delivery, the UK’s energy demand is expected to double by 2050. And notably, the incorporation of heat and transport requires greater security within the electricity market to protect customers from volatile prices. 

Furthermore, it is evident that several changes are required to reach net zero. This project, delivered by Frontier Economics aims to identify whether the market structure itself could be a barrier to Net Zero. Critics have called for greater unity between all players within the energy market, to deliver a single understandable voice to customers. That way, they can understand the most efficient ways to manage their supply, and have confidence that they are getting the best deal. 

This project will set a baseline by evaluating the current energy market. Firstly, assessing how we arrived at the current supplier hub model, then focussing on the current issues within the market, such as exploring the causes of the recent increase in supplier exits. Following this, the project will identify the future energy market requirements, explain these transition pathways under the current market structure and highlight the key issues limiting change. Then, it will assess alternative market models. This will include an international review of alternative markets and also draft alternative market models from the bottom-up, which may better enable the future energy market requirements. Finally, the study will develop an assessment criteria to evaluate the international and alternative market models and assess their relative strengths and weaknesses against the current model.