This report is brought to you by Utility Week Intelligence in association with CGI
Consent – the make or break of energy flexibility
Cementing demand-side flexibility as a day-to-day tool for operation of a net zero energy system is dependent on consumer buy-in. Can market players persuade consumers, at scale, to give consent to control of their flexible assets? Read on for reflections from the latest meeting of the Utility Week Flexibility Forum…
The decarbonisation of our energy system by 2050 is fundamentally dependent on our ability to harness energy flexibility.
Without this, the costs and timeline for the energy transition will spiral and proliferating distributed and consumer energy resources – like electric vehicles – will become parasites on the system rather than valued assets and agents of resilience.
To avoid this fate, it is essential that consumers with flexible demand buy into the idea of allowing their assets to participate in energy flexibility markets, whether actively – even better for most – passively, via automated processes managed by trusted flexibility service providers.
This will mean consumers giving consent for third parties to access their energy data and agency over when their EVs, heat pumps, solar panels and more consume energy. In the minds of many energy system participants today, securing this consent presents a significant challenge.
At the latest meeting of the Utility Week Flexibility Forum a diverse range of energy system stakeholders came together to discuss what it will take to create an environment which normalises consent from consumers for service providers to leverage their demand and their tech to balance the system.
In a wide ranging discussion, four key points emerged as essential enablers of consent:
Outstanding propositions with compelling consumer benefits
There was a very strong view from participants at this meeting that “the proof of this pudding will be in the eating”. To grow participation in energy flexibility markets, the onus should be on service providers to develop compelling propositions with customer value front of mind.
One regulatory leader expressed a view that there has so far been a “market failure” in this regard while another senior market expert suggested many current propositions feel like “exercises in delivering government policy” which “really leave customers cold”. There is a pressing need for customer-centric innovation on a larger scale and the development of propositions which can marry enticing consumer benefits with the delivery of whole system value, they added.
Some barriers exist within the current market architecture which may be hampering this innovation however. One senior executive from an influential not-for-profit entity observed that there is “asymmetry between different classes of people who want access to [consumer data] – like suppliers versus innovators – for example.”
The same leader added: “There is also asymmetry within classes of people in the system.” Referencing a key discussion point from the Flex Forum’s previous meeting, they noted that some suppliers are exhibiting considerably greater risk appetite in their willingness to interpret rules around the consents required to market new products and services. This creates a feeling that “some are playing fast and loose with the rules” in a race to gain consumers consent and, they observed, “this is not ideal”.
“The proof of this pudding will be in the eating.”
Easy to understand consent frameworks and cast-iron data sharing
Closely linked to the discussion about information asymmetry and unequal access to consumers, were points around the need for simple, easy to understand consent structures for consumers, underpinned by comprehensive trust frameworks for data.
A poll of event participants revealed that the group overall rated existing market consent frameworks as a barrier to increased participation in energy flexibility. Several individuals voiced concerns over the potential for multiple consent touch points with consumers – for example for access to smart meter data, half-hourly settlement, marketing and access to other energy assets – to prove exasperating and confusing. A need for a more rational, cohesive approach to facilitating consumer participation is needed, it was agreed.
One influential digital energy expert pointed to Estonia as an exemplar nation in this regard. There, consumers are able to “auction” their demand profile and energy assets on a central market platform, with consents for all the relevant data use built into the bidding process from service providers.
The reference sparked considerable interest, though it was observed that the UK environment – which is substantially different in terms of societal digital enablement – might mean such a model would be difficult to copy and paste.
Notwithstanding this, there was universal agreement that ambitions to grow consumer participation in energy flexibility must be matched with a simplification of consent structures and underpinned with cast-iron trust frameworks which allow open access to valuable consumer data for qualified parties. One network leader also called for a focus on freeing up the ability of relevant parties to use data about consumer readiness for participation – for example knowledge that an individual has an EV – as a justification to contact them with information about flexibility opportunities. “We don’t necessarily have the necessary consent to do this,” they observed.
It was agreed that these building blocks must be in place by the end of 2026 for the advent of market-wide half-hourly settlement – the arrival of which is widely expected to open up bigger potential smart time-of-use-tariffs and other smart energy propositions. It was also acknowledged that the creation of a new “consent dashboard” to promote participation in energy flexibility market is, on the recommendation of the Energy Digitalisation Taskforce, a current focus for Ofgem. Further insight into what this might look like is expected in the latter half of this year.
Robust consumer protection
The development and adoption of data trust frameworks is an important foundation for consumer confidence and the acquisition of consent for data access. But it is not enough on its own to reassure consumers that they will not expose themselves to undue risk by agreeing to take part in the brave new world of energy flexibility.
For this, well thought-through and clearly sign-posted consumer protection and complaint escalation routes need to be in place. “Consumers need to know that when they are entering into this world they have places to go to if things go wrong. The Ombudsman type piece needs to be in place,” said one energy digitalisation expert. They added that making service providers accountable and answerable to an independent consumer protection entity is also a “part of the balance of trust” in market participants.
As an extension of this point, several participants pointed to the establishment of voluntary codes of conduct for flexibility service providers – such as the one developed as part of the HOMEflex project – as helpful in creating a sense of common understanding among market players around what good service and behaviour towards customers should look like. However, even those on the call who have been close to the development of these codes acknowledged that they are “a hygiene factor”. “For consumers, something like HOMEflex is not going to make them participate,” said one senior power network leader.”
“Consumers need to know that when they are entering into this world they have places to go to if things go wrong.”
Better information dissemination
With strong consumer protection in place, individuals whose interest in energy flexibility has been piqued – perhaps following acquisition on of an EV and/or home battery, for example – should feel confident about exploring new, dynamic time of use tariffs and flexibility services to engage with.
But what about the vast majority of consumers who remain blissfully unaware of the very concept of energy flexibility? To improve broad awareness and appreciation of what energy flexibility is and how it can benefit consumers, it was widely agreed that much better information needs to be made available.
A poll of event participants showed that current information provision for consumers about energy flexibility – what it is, how they can benefit from participating and how it will help the system – is considered to be poor by all market stakeholders.
To improve the situation, some suggested the priority should be on better packaging and presentation of information which is already available. But the majority indicated that it was independent voices which were needed to help educate and spread awareness.
Several event participants made it very clear that independent dissemination of information does not require the establishment of a public information campaign or marketing body. But there was a feeling that public figures and influencers could act as advocates of participation. One senior network representative also suggested there could be a role for price comparison sites, which generally have good consumer trust ratings, to play here.
Thinking about how to take a smart, targeted approach to building awareness of energy flexibility opportunities, a senior representative from a Distribution System Operator said existing data access rules are causing challenges. They pondered how limitations on the ways that different market players can use available consumer data might be overcome or adapted to encourage a greater variety of parties to promote flexibility opportunities to customers that are ready to take them.
“There are a lot of people with flexibility to offer up who don’t necessarily realise it,” said the DSO leader. “One of the things I've got in my head is, we can work out from the data we have access to that people can participate – if they've got solar [panels] or electric vehicles etc – that kind of data is available via the DCC, or will be after market-wide half-hourly [settlement] and so on. But we don't necessarily have the consent to use that and send that back to the customers. We don’t have consent to say, do you realise you can already get that benefit. I’m struggling with how we close that loop so that we can give that proposition back the other way.”
With all this said, one event participant representing a smart EV charging enterprise was keen to gently push back on an over-engineering of consumer information provision. Bringing the conversation full circle to the strength of propositions, they observed: “We didn't need large scale information rollouts to encourage people to get smartphones…Obviously there are some formal things we need to be doing for data consent and to give consumers confidence. But actually, I think the best way we win this and the best way we increase MW upon MW of available flexibility is just to be really good and to be something that consumers really want.”
“We didn't need large scale information rollouts to encourage people to get smartphones.”
Concluding remarks
Rich Hampshire, vice president digital utilities at CGI – Utility Week’s strategic partner for its Flexibility Forum, offers reflections on the community’s first meeting
The second meeting of Utility Week’s Flexibility Forum presented an opportunity to explore one of the challenges identified in the inaugural session; that of securing consumers’ trust to allow their low carbon assets to participate in the markets for flexibility. And, once again, there was broad consensus between representatives from across the energy system on what’s needed.
From the need to bring forward propositions and services that grab consumers’ attention and offer meaningful choices about how they meet their energy needs; to how those propositions are marketed and ensuring consumers understand enough to choose wisely; to the need for robust redress mechanisms that create the basis of a “balance of trust” between consumers and their chosen service providers; and, of course, access to data.
The identification of the importance of securing consumers’ trust and the “asymmetry” in access to data mirror two of the four market failures identified by Ofgem in their 2023 Call for Input on the Future of Distributed Flexibility.
Examples from other territories, such as Estonia; from other sectors, such as the adoption of smart phones; and from similar public awareness programmes, such as Smart Energy GB were discussed. Each of these came under robust scrutiny and, whilst none of them provide a perfect “copy and paste” for the specific context of Britain’s flexibility markets, each provides lessons that can inform our approach.
Once again, this session demonstrated the sector’s desire to collaborate and to identify and address barriers to the creation of flexibility markets.
About the Flexibility Forum
Utility Week’s Flexibility Forum, created in association with CGI, is a community for all stakeholders in the development of energy flexibility markets and services in GB. Through running regular events which promote discussion and learning on topical issues, and publishing insights into these meetings, it is our ambition that the Flexibility Forum will encourage consensus and understanding about how to tackle market challenges and accelerate realisation of the value energy flexibility should bring to a sustainable, affordable energy system.
We are open to enquiries for new participation in the Flexibility Forum. Please contact Jane Gray at: janegray@fav-house.com, content director Utility Week, if you would like to join future meetings.