The energy retail landscape is evolving rapidly on both sides of the Atlantic. As markets mature and face new challenges, retailers in both the UK and the US are adapting to meet changing customer needs. Despite quite different regulatory environments, both the UK and the different regions within the US are coming to terms with the next great challenge in energy: balancing the trilemma of affordability, availability, and sustainability. 

At Gorilla, we are privileged to work with energy retailers on both sides of the Atlantic, giving us a unique perspective into the approaches that companies are taking. One of Gorilla’s energy experts, Ben Tucker, recently got together with Suzanne Tyrell and Nancy Holly of Capco to discuss their thoughts on cross-market learnings and international differences. Capco's energy practice has been providing expert advice and innovative thinking to energy markets, with 1200 consultants operating on projects across the globe. Here's what we learned from these parallel journeys.

The UK Market: Affordability dominates conversation

The British energy market is currently experiencing a significant transformation. While security of supply remains stable – with recent winter outlooks showing few concerns – the focus has shifted to sustainability and affordability challenges.

Britain has made substantial progress in renewable energy adoption, supported by government initiatives like the Contracts for Difference (CFD) scheme. The recent retirement of the last coal-fired power station marks a significant milestone in the country's transition to cleaner energy. However, the market faces a notable challenge: British electricity prices are currently among the highest globally.

Two major changes are reshaping the UK market:

- The Review of Energy Market Arrangements (REMA), which may introduce locational pricing

- Market-wide half-hourly settlement (MHHS), an ambitious project to transition meters to half-hourly settlement

REMA is currently in a consultation phase, so the impacts on the market are still up in the air, but MHHS is due to be in full operation by 2026. Retailers are already moving to make the necessary changes.

The US Market: Regional Diversity leads to regional challenges

The US market presents a more complex picture, with significant variations across regions. In many respects, it doesn’t make sense to talk about “the US market”. Different regions follow very different rules, with some remaining regulated and fully verticalized. Across the deregulated states, there are 7 major Independent System Operators (ISOs). Six of these operate under federal rules set by the Federal Energy Regulatory Commission (FERC), but the Texas system, known as ERCOT, is completely independent.

ERCOT stands out as a leader in standardization, with all electric meters reading at 15-minute intervals and a centralized data repository - a project that was completed 10 years ago. However, other Independent System Operators (ISOs) like PJM, ISO New England, and New York ISO operate under different rules and standards.

This regional diversity creates unique challenges:

- Each state maintains its own renewable portfolio standards

- Data interchange methods vary significantly across utilities

- Operating models must be flexible enough to accommodate different market requirements

- Customer support teams need extensive knowledge of multiple market nuances

There are commonalities across the nation - the grid is aging in practically every region, with a lack of new generation capacity at the same time as electricity demand soars. A combination of demand from industry and data centers alongside a push for greater electrification is placing a huge strain on existing resources in every regional market. Notably, the PJM interconnection in the east of the United States has seen a price explosion in recent capacity auctions, which will inevitably see retailers grappling with soaring costs and thus soaring tariffs.

Gorilla have focused their efforts on the south of the United States thus far. ERCOT is perhaps the most liberal energy market in the world, while geographically Texas has to deal with extremes of heat and cold and a truly massive area in which to supply electricity and gas. Despite its reputation, Texas is actually a leader in renewable energy generation, demonstrating the benefits of their open market for retailers and consumers alike. 

Looking more closely at operations, one immediate and surprising difference for Gorilla was in timing. The instinct for Gorilla was to provide as granular options for settlement timing as possible, and enable different users to scale up their calculations to their chosen period. This worked well in the UK, but occasionally caused some inefficiencies in the US, where monthly aggregations are more common and calculating everything at much shorter intervals was a waste.

Common Ground: The Push for Innovation

Despite the unique differences highlighted above, both markets have a lot of common ground in terms of the opportunities and challenges they are facing:

EVs and Distributed Energy

The rise of electric vehicles and distributed energy resources is pushing retailers to develop more sophisticated pricing models. There's a growing need for custom pricing at the individual meter level, especially for residential customers with solar panels, EVs, or battery storage.

Data Management

Both markets struggle with data accessibility and standardization. The UK's transition to half-hourly settlement mirrors Texas's earlier move to 15-minute interval data, providing a concrete example of the possibilities available to UK retailers. A particular barrier to better data access is the traditional structure of organizations with IT often acting as gatekeepers over tools and data sources. Whether willingly or not, it can be difficult for other teams to quickly get the data they need, slowing operations.

Customer-Centric Solutions

Energy retailers in both regions are moving beyond simple electricity supply to offer value-added services like smart thermostats, solar panels, and batteries. This evolution is particularly advanced in Texas, where weather events have driven consumer interest in reliability and sustainability.

Looking Ahead: Future Challenges and Opportunities

The energy retail sector is at a crucial juncture. Success in both markets will depend on:

1. Flexible Technology Solutions: Retailers need systems that can adapt quickly to market changes without requiring extensive IT intervention
2. Portfolio Management: The ability to analyze and optimize diverse customer portfolios becomes increasingly important as adoption of distributed energy resources grows
3. Custom Pricing Capabilities: As energy use patterns become more complex, the ability to offer personalized pricing becomes crucial
4. Data Analytics: Understanding customer usage patterns and behaviors will be key to creating compelling offerings

The Gorilla platform was built to be an end-to-end solution for energy retailers that will help them to tackle the energy trilemma, unlocking new products and greater efficiencies through pricing and forecasting applications. If that sounds good, then let’s talk.

Conclusion

While the UK and US markets have taken different paths in energy retail development, they face similar challenges in adapting to a rapidly evolving energy landscape. The future success of energy retailers will depend on their ability to balance customer needs, regulatory requirements, and technological capabilities while maintaining competitive pricing and sustainable practices.

The lessons learned from each market's unique experience provide valuable insights for energy retailers worldwide. As we move toward a more distributed, renewable-based energy system, the ability to optimize data-driven decision making and learn from and adapt to different market models will become increasingly important.

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