All you need to know about how the UK energy market works
8th June 2020 | Commercial Energy
The energy we use relies on a massive network of generators, distributors and suppliers. From that first cuppa in the morning to our favourite late-night TV shows, we’re dependent on the UK’s energy network to power our lives. Here we explain how it is structured, how it operates, what your rights are as an energy consumer, and what you need to know when shopping around for the best deals on gas and electricity.
How does the UK energy market work?
There are three key elements that ensure you have gas and electricity at the flick of a switch or the push of a button.
- Electricity generation – Historically, the UK has generated most of its electricity by burning fossil fuels such as coal and gas, but increasingly we’re using renewable energy sources such as wind and solar as well as nuclear power and imports from other countries.
- Transporting energy through the distribution networks – Once electricity is generated, it is transported around the country through a grid which manages supply and demand from homes, businesses and other users, such as schools and hospitals. Gas has a national distribution network similar.
- Selling energy to consumers – As consumers we get our gas and electricity from suppliers who buy energy in the wholesale market and then sell it on to us. You can choose your supplier and it’s easy to switch between them if you find a better deal.
What’s the National Grid?
The National Grid is the system operator for Great Britain’s electricity and gas supplies. It operates the network that carries energy around the country, managing supply and demand so that users have a safe and reliable supply of energy. The grid is built around two networks – transmission and distribution. Transmission networks are like energy motorways – transporting it long distances at high voltage or volume to match demand. Then, just like the road system, energy is switched to the distribution network, which takes it on a more local journey, at a lower voltage or volume, into homes and businesses.
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