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Consumer Services in Electricity Markets: A Scoping Study

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Energy Consumers Australia

The energy affordability crisis households and small businesses are experiencing means accelerating the development and diffusion of effective energy management services and technologies is an urgent policy, regulatory and market priority.

The problem is, to quote writer William Gibson, “The future is already here — it’s just not very evenly distributed”.

Innovative new technologies for generating, storing, and managing electricity are emerging that will change when we use electricity and consequently the entire electricity system. Solar panels allow homes and small businesses to generate their own power, while home batteries or electric vehicles with vehicle to grid technologies allow us to store it. Smarter, more efficient appliances are emerging that can give us better information about how and when they are drawing power, while allowing consumers or other third parties a host of pre-programmed and dynamic smart controls. Taken together these new technologies hold out the promise of individualised services, helping households and businesses to better manage their energy use and reduce their bills.

However the energy management services to connect and package these new technologies in a way that works for consumers is yet to emerge at scale and it remains very difficult for most households and
small businesses to track and understand their energy use, let alone take steps to manage it.

To understand the factors holding back the delivery of innovative customer services and technologies, Energy Consumers Australia commissioned The Brattle Group to do a scoping study to review similar markets where those services are already in place, and to talk to a small group of companies offering innovative energy services, who are currently active in, or had sought to enter the Australian market.

This research provides new insights into the scope of innovative energy services and technologies available to us, and the barriers that market participants perceive towards realizing those services:

• There is inertia in the system, both within incumbent businesses, and at a framework level, that acts as a hard barrier and a cultural break on innovation.
• It is not clear that anyone in the supply chain has the incentive to deliver an energy management service that optimises the outcome for consumers.
• To knit all the devices and technologies together that would deliver the holistic outcome for consumers relies on a level of interoperability (standards) that does not exist.

Most importantly, while these barriers are certainly significant, they are not insurmountable. The paper
suggests a number of potential remedies, including:

• An innovation ‘sandbox’ that creates a space for experimentation in a regulatory environment that can be complex and prescriptive.
• Explore mandated national targets for energy savings and management.
• Accelerate the development of consistent standards for energy management devices to unlock integrated solutions for customers.

Energy Consumers Australia will use the findings in its dialogue with government, regulators and industry on retail market reform.

This Brattle study adds to the evidence base established within Energy Consumers Australia’s Power Shift project, funded by a Commonwealth Government grant, which is improving our understanding of what really works in supporting consumers with vulnerabilities to manage their energy bills, and identifying opportunities for market solutions. Energy Consumers Australia welcomes further engagement and feedback on this study and the Power Shift agenda, to build on the evidence base and equip decision-makers to better design, target and develop information and tools for consumers.

The full report can be read here.

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