Retail Electricity Market Size, Share, Opportunities, And Trends By Phase (Single Phase, Dual Phase, Three Phase), By Contract Type (Standards Retail, Market Retail), By End User (Residential, Commercial, Industrial), And By Geography - Forecasts From 2023 To 2028

The retail electricity market is anticipated to grow at a strong rate during the forecast period. Electricity retailing involves the transaction of electricity from the initial point of generation to the final end-user or consumer. Retail electricity providers source their energy supplies at wholesale rates from producers and this generated power is subsequently made available for sale on the open market at competitive prices. In addition to this, retail electricity providers may offer a variety of contract options to their customers, enabling flexible and tailored energy solutions. The retail electricity industry is growing due to the expansion of EV charging infrastructure, an upsurge in electricity consumption, and favorable investments in the sector.

Increasing EV charging infrastructure bolsters the retail electricity market growth.

Retail electricity is used in EV charging infrastructure as it provides a convenient and accessible source of power for charging electric vehicles. It enables EV owners to recharge their vehicles at various locations by leveraging retail electricity. The rise in EV charging infrastructure drives the demand for retail electricity as it becomes a fundamental requirement to power the charging stations and meet the energy needs of electric vehicle users. According to the International Energy Agency, in 2022, Europe witnessed a 50% surge in the installation of slow electric vehicle (EV) chargers compared to the previous year, with a total of 460,000 units installed.

Rise in electricity consumption drives the retail electricity market expansion.

The escalating consumption of electricity is a central driver for the expansion of the retail electricity industry. This growing demand, driven by rapid urbanization, industrialization, and the increasing use of digital technology, necessitates a steady and reliable supply of power. Due to the increase in electricity consumption, the need for energy providers increases to diversify their offerings and services, thereby spurring the growth of the retail electricity industry. According to the State Council Information Office, in 2022, China reported year-on-year growth of 10.4% in power consumption in its primary industries. The secondary and tertiary industries also experienced an uptick in electricity usage, with increases of 1.2% and 4.4% respectively over the same period.

Flowing investments drive retail electricity market growth.

Increased investments in retail electricity infrastructure, customer-centric services, and advanced technologies enhance the quality of service and consumer experience which is fostering market expansion. For instance, in March 2023, E. ON, an energy network operator in Europe, enhanced its investment in grid infrastructure and retail businesses by 20%. This strategy translates into an increase in their investment to a substantial 33 billion euros by the year 2027. Simultaneously, investments in a diverse mix of electricity sources, including renewable energy projects and advanced energy technologies, ensure a sustainable and reliable supply of electricity. For instance, in 2021, Amazon expanded its renewable energy portfolio in the United States with the addition of eight new utility-scale solar projects, totaling over 1 GW of capacity.

North America is projected to dominate the retail electricity market.

North America is projected to account for a substantial share of the market due to the robust industrial growth and rapid urbanization all of which has led to an elevated demand for electricity. According to Energy Information Administration, in 2022, U.S. retail electricity sales reached approximately 3.9 trillion kWh, marking a significant growth with an increase of 103 billion kWh from the previous year. Concurrently, acquisitions and consolidations within the industry are further propelling the growth, for example, in May 2021, NRG Energy finalized its acquisition of the retail electricity distribution firm Direct Energy, in a deal valued at $3.6 billion. This acquisition expands NRG's customers by adding more than three million retail customers across North America.

Market volatility can restrain the retail electricity market size.

The escalation in electricity prices can serve as a significant impediment to the growth of the retail electricity market. Higher electricity prices can deter consumers, potentially leading to a reduction in overall demand, which directly impacts the revenues of retail electricity providers. Moreover, for industries and businesses that constitute a significant portion of electricity consumers, inflated prices can increase operational costs, potentially encouraging them to seek cost-effective energy solutions or adopt energy conservation measures. For instance, the Maharashtra State Electricity Distribution implemented a tariff adjustment, increasing the overall average rate by 2.9% for the fiscal year 2023-24 and by a further 5.6% for the fiscal year 2024-25.

Key Developments

• February 2022: Shell finalized its acquisition of energy retailer, Powershop Australia and as part of the agreement, Powershop will continue to operate under its existing brand name but will function as a wholly-owned subsidiary of Shell. It will be integrated into Shell's Energy business in Australia, further contributing to the broad spectrum of services offered by Shell’s global Renewables and Energy Solutions business. This strategic move strengthens Shell's position in the retail business of the renewable energy sector and enhances its presence in the Australian energy market.
• December 2021: Catalyst Power acquired AP Gas & Electric a retail energy provider headquartered in New York. This strategic move further strengthens Catalyst Power's presence in the energy market. This acquisition will bring AP Gas & Electric’s presence in the New York market, providing cost-effective electricity solutions to a diverse mix of commercial and industrial customers within the middle-market segment. The integration of AP Gas & Electric into Catalyst Power's portfolio broadens its customer base and strengthens its position in the New York energy market.
• December 2021: Adani Transmission Ltd successfully concluded its acquisition of Reliance Infrastructure's comprehensive power business, encompassing generation, transmission, and retail distribution. This strategic move marks Adani Transmission's entry into the retail electricity sector in Maharashtra, expanding its presence in the power industry.

Company Products

• AEP Energy: AEP Energy, a subsidiary of the American Electric Power Company, Inc, operates as a certified competitive provider of retail electricity and natural gas. Its operations span 28 service territories across six states and Washington, D.C. With its commitment to delivering electricity and natural gas solutions, AEP Energy serves over 700,000 customers, reinforcing its standing as a significant player in the energy sector.

Segmentation

• By Phase
  • Single Phase
  • Dual Phase
  • Three Phase
• By Contract Type
  • Standards Retail
  • Market Retail
• By End User
  • Residential
  • Commercial
  • Industrial
• By Geography
  • North America
    • USA
    • Canada
    • Mexico
  • South America
    • Brazil
    • Argentina
    • Others
  • Europe
    • Germany
    • UK
    • France
    • Spain
    • Others
  • Middle East and Africa
    • Saudi Arabia
    • UAE
    • Others
  • Asia Pacific
    • China
    • Japan
    • South Korea
    • India
    • Australia
    • Other