Change is afoot in the energy industry and it will have positive outcomes for the consumer, so why is it so challenging to get this message across effectively?
The fact is that whilst various industry bodies and working groups debate new legislation, consider charging reforms and look ahead to how energy might be generated and consumed in the future, most consumers are interested in the here and now. They want to know why their energy bills are rising and what the real point is in a smart meter.
Energy is complex and though we all use it and need it, and many of us would like it to be generated more sustainably, there is a distinct lack of understanding about how the process works, and even less engagement in it. In a study we carried out amongst consumers last year over a quarter (25.7%) said that they didn’t have time to keep switching suppliers, that it was hard to cut energy usage and they weren’t confident that they knew how to combat price rises.
Meanwhile, within the energy industry, two important regulatory processes are currently underway. The first is the mandatory domestic half-hourly settlement which places incentives on suppliers to buy energy to meet their customers’ demand in each half hour of the day. The idea behind this is to make use of accurate and timely half-hourly consumption data from smart meters, to improve the quality of settlement and thereby encourage innovation and a more efficient use of energy. It is also designed to maximise benefits to consumers, with estimates of up to £40bn being cut from energy bills in the coming decades.
Simultaneously, Ofgem is looking at targeted charging reform. This is about changes to how the costs of the networks used to deliver electricity are recovered, to ensure that they are shared fairly amongst those that use the networks. The need for reform is urgent because an increasing number of households and businesses are generating energy themselves, often through solar panels and wind turbines; they are also storing it and there is increased use of heat pumps and electric vehicles. The rate of change is rapid, and demands alterations in the charging structure, which again will benefit consumers.
Both of these developments indicate the transformation that is occurring within the power companies and the broader energy industry. They acknowledge the benefits of the data that is being sourced from smart meters and the efforts that some households are making to generate, use and even supply their own energy.
More effort, however, needs to be put into translating the positive impact of these developments on consumers. Energy usage and how it is charged needs to be conveyed in a way that will engage, not confuse, householders.
There are a multitude of solutions available that allow consumers to see and control the energy they are using. These range from smart thermostats that can adjust the heating, even remotely, through to in-home displays that use intelligent graphics to show current energy use and a budget bar to help with cost control. These devices are designed to make energy manageable and understandable for consumers. They are also part of a journey to the future home, the ‘Hybrid HomeTM, in which smart devices are used alongside traditional systems to help people live in comfort whilst saving energy and minimising spend.
It is this vision that resonates with consumers. So, when the industry pushes forward with regulations and reforms, reviews and responses it needs to communicate what this really means to households across the UK, so they can get on board for the journey.