Consumer archetypes for Ofgem
To help Ofgem better understand the impacts that changes in the energy system have on different groups of consumers, CSE developed a set of groups of energy consumers, or ‘consumer archetypes’. Together, these represent all the households in Great Britain.
Smart energy policies don’t benefit everyone equally
‘Decarbonisation, decentralisation, digitisation and decreasing consumption’. However you characterise it, the energy market is in transition.
As we shift towards renewable technologies, electric vehicles, smart meters and other data-driven technologies, new business models and types of energy services are becoming possible.
But these changes create completely new ways to generate unfairness. They threaten to leave behind large numbers of people as new complexities or costs exclude them from being able to participate meaningfully in our future energy system.
Our Smart and Fair? research programme is dedicated to ensuring all households can take part in the transition to our future energy system and identifying emerging inequalities or distributional impacts. As part of the programme, we worked with Ofgem to help them understand the capabilities of different types of energy users.
Painting a picture of different types of consumers
Ofgem’s primary responsibility is to protect energy consumers, especially vulnerable people, by ensuring they are treated fairly in the energy system.
To help Ofgem understand the ways that new policies might affect people, they commissioned CSE to develop a set of consumer archetypes which describe the characteristics of different groups of energy users. These can be used to explore the impacts of different policies on each group.
Ensuring more people can participate in our future energy system
Read more about how understanding consumer capabilities will help us design a greener, smarter and fairer energy system that will support our transition to net zero.
Building on our previous work for Ofgem
We have now developed 3 versions of the consumer archetypes for Ofgem. The first iteration was created in 2012. We refreshed the datasets in 2019 and again in 2023.
Using consumer archetypes in the DIMPSA model (2012)
Back in 2012, CSE developed an analytical model – DIMPSA (Distributional Impacts Model for Policy Scenario Analysis) – to help Ofgem take a more sophisticated approach to its impact assessments. DIMPSA used a dataset in which the population of Great Britain was segmented into a set of distinct groups of energy consumers, or archetypes, which together represent all households across the country. DIMPSA was then used to model different policies and assess the impacts of these on different types of households.
An improved energy consumer dataset for 2019
In 2019 we generated a new energy consumer data set, using the most recently available data and revising our segmentation approach and analytical techniques. These presented a more representative set of archetypes to reflect society at the time, and expectations of future changes in the energy market. This dataset included 13 archetypes.
We produced these archetypes by combining data from various national datasets including:
- Living Costs and Food Survey (LCF)
- Ofgem’s Consumer Engagement Survey
- The English Housing Survey.
In this way, the LCF data was augmented with external analysis such as whether households have engaged in the energy market in the last 12 months (either by comparing tariffs, switching tariffs or switching energy supplier), their historical supplier switching behaviours and attitudes to new market products as well as dwelling characteristics (e.g. energy efficiency).
Different households in the data set were then segmented into different energy consumer archetypes. This process included input from Ofgem with an initial workshop, held with a range of key Ofgem staff, to identify key factors to be considered when deriving the archetypes.
Refreshing the consumer archetypes for 2023
In 2023 we refreshed the dataset again to use the most recently available data. Additional datasets were included. Additionally, the total number of archetypes increased from 13 to 24. This allows more nuanced and detailed descriptions of energy consumers in Great Britain. We expanded on the previous set by bringing in additional information such as disability type (e.g. vision, mobility, learning difficulties), type of boiler, and smart meter ownership. We have included more information on the benefits received by households, and the eligibility of each archetype to government discount schemes.
The variables included in the dataset were weighted according to their relative significance in defining the archetype, resulting in a set of 24 archetypes that are tailored towards highlighting consumers that are vulnerable in terms of the energy market across Great Britain. For each archetype, statistical summaries covering the geographic distribution, socio-demographic characteristics, dwelling, energy engagement and energy consumption characteristics are provided.
How archetypes help promote fairness in the energy system
The archetypes serve as a tool to enhance understanding of the diverse characteristics, capabilities, and likely market experiences across the population of energy consumers – the different drivers that exist for households to engage in energy related policies. They enable a more considered and nuanced approach to policy design and promotion of energy technologies.
They are intended to be used to understand how different policies may impact on different types of households and energy consumers and to investigate existing or proposed policy designs. Or, to help rebalance any policies which have been identified as unintentionally overlooking or disadvantaging certain households.
Going forward, these new archetypes can be used to shape further analysis around the ongoing energy market transition, enabling a deeper understanding of:
- Vulnerabilities in the context of the capabilities demanded of consumers in the emerging markets in smarter energy services.
- The potential distributional impacts that these markets could bring.
- What sorts of intervention might be needed to mitigate negative impacts.