Supply options
The electricity market includes organisations that generate, distribute, or supply power to consumers. To get more value from electricity, these organisations can provide more than one of these services.
The codes and standards for generating electricity are different from those for distributing or supplying electricity. Selling electricity to customers is a heavily regulated activity through the licensing regime run by Ofgem.
The decision tree shown in Figure 3 lists the wide range of supply options available to renewable generators, not all of the supply options will be suitable for communities as the generation level required is too high, ie Licence Lite and Full Supply Licence.
1 Cornwall Insights / Lux Nova, (Heat Network Electricity Revenues and Licensing Guidance, published 8 Nov 17)
Energy Supply Pricing
Generators sell to suppliers at a wholesale price (in 2020, this averaged 2pper kWh) and suppliers sell to customers at retail prices (in 2020, ranging from12 or 24p for domestic customers). The retail price covers the costs of additional services, shown in Table 1. Costs will vary by size of customer, and over time (for example, in 2017 Ofgem is reviewing how the Distribution Use of System is charged).
Table 1: Indicative elements of a typical total electricity retail price
| Element | Price (p/kWh) | % of total |
| Charge for electricity | 4.8 | 46% |
| Distribution Use of System | 1.8 | 17% |
| Transmission Use of System | 0.7 | 7% |
| Balancing Services Use of System Charges | 0.4 | 4% |
| Losses | 0.2 | 2% |
| Supplier margin and metering charges | 1.0 | 9% |
| Levies (CfDs RoCS Green Deal) | 1.0 | 9% |
| Climate Change Levy | 0.6 | 5% |
| Indicative for a small /medium commercial user | 10.5 |
Selling electricity to customers is a regulated activity. Table 2 shows a number of ways to meet the regulatory requirements. In some cases, this requires a specific supply licence, however, in others, there are no license requirements. Each of these options is then described in more detail below.
