A lot of the literature looks at lock-in as a systemic issue but I think it would be really interesting to drill in to an existing technology – such as domestic gas use – and see how lock in applies to this. I think that it’s only really by understanding this that policies can be effectively designed to allow consumers the option of doing something else and picking another technology. Or you could design policies to incentivise existing incumbants to change their practices………
Lock-in is not just about existing consumers or technology but is also about institutions. Government (regulator or policy maker), trade associations and industry organisations are all locked in to particular patterns of thinking and doing. I think there’s a strong chance that this is particularly applicable to Ofgem. Particularly as large numbers of ex energy employees have moved from industry (during privatisation and unbundling/splitting) into the regulator. Maybe the same old ways of thinking get passed down the hierarchy and even new employees themselves get locked in to the standard way of thinking. If this is the case, then the institutions themselves must be a barrier to innovation in energy system models and energy approaches.
In the news this week, Ed Davey has written to the regulators concerning the gas market dominance of Centrica which has 41% of the domestic gas supply market. Interestingly Centrica’s CEO has been talking up the competitiveness (?) of the UK gas market and the relative cost of UK gas prices in Europe. It’s difficult to see how you can call something competitive with low switching rates which are getting lower. The following graph shows the monthly percentage of customers who switch. It’s going one direction:
With regard to the EU cost one, this is really interesting stuff as the UK actually has average pre-tax gas prices for Europe (it’s just that we have a low rate of VAT which makes a bit of a difference). The following graph is from Eurostat but you can make your own minds up about how cheap UK gas is (not). Not that this should be particularly surprising as we do import the majority of it!
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