Ensuring social justice in our future energy system: CSE’s response to Ofgem’s call for input
In the fast-evolving landscape of the UK’s energy transition, ensuring social inclusion and fairness must remain high on the agenda. At the Centre for Sustainable Energy (CSE), we’re committed to championing these values through our pioneering Smart & Fair program, which has been driving change since 2019.
While it is undeniable that our energy system needs to become smarter and more flexible, getting there requires significant and disruptive change. This change brings new ways to generate unfairness by altering the distribution of system costs and benefits between consumers.
It threatens to leave behind large numbers of people as new complexities or costs exclude them from being able to participate meaningfully in our future energy system. At CSE, we’ve been working with industry partners on projects that identify and mitigate the emerging inequalities in flexibility markets through Smart & Fair.
In our full response to Ofgem Call for Input Engaging domestic consumers in energy flexibility we make several recommendations based on our research.
Our response and recommendations are grounded in the principles of:
- Increasing consumer trust in the energy market
- Reducing inequality of participation
- Assessing the distributional impacts of the changing energy system
Increasing consumer trust
Trust is the bedrock upon which consumer engagement in Demand Side Response (DSR) stands. To achieve this, we propose:
1. Establishing common standards: The development of the HOMEflex Code of Conduct, which outlines clear requirements for communicating with customers, is a promising start. Regulatory efforts should build upon these standards to ensure uniformity and transparency.
2. Scaling up smart energy advice: To enhance consumer trust and simplify the complexities of the evolving energy system, we must expand the provision of smart energy advice. Through reliable market wide information and tailored advice and support for those who are least able to cope with any negative impacts. This will require investment in advice organisations.
Reducing inequality of participation
To avoid creating a two-tier energy system, one that benefits the resource-rich and penalises the resource-poor, deliberate actions are required including:
1. Monitoring consumer access to services: The market must deliver a range of services including those that cater to the needs and limitations of customers in vulnerable circumstances. Ofgem should monitor access across various consumer segments and act on gaps in the market.
2. Identifying vulnerable consumers: Ofgem must guide flexibility service providers in identifying vulnerable consumers and measuring their uptake of services. Building on vulnerability strategies already implemented, clarity around this is really important.
Fostering community and local involvement is key to making DSR accessible to all. We need:
1. Framework for community DSR: Establishing a framework for street and community-scale DSR offers, while enabling local intermediaries, can drive energy projects and DSR services at the grassroots level.
2. Trusted messengers: Supporting community energy groups and other non-profit organisations in a local area as trusted messengers for vulnerable consumers enhances outreach. Collaboration with flexibility providers can amplify this impact.
We need commitment to assessing distributional impacts
As we navigate the complexities and potential costs of these interventions, it’s important to remember that without them, a significant portion of our society could be excluded from meaningful participation in our future energy system.
To address this, we’re calling for a commitment to assessing distributional impacts. Ofgem, the Future System Operator, and the government must commit to rigorously assessing the distributional impacts of the changing energy system. Demonstrating fairness in policy design is key to increasing trust in the energy system.
Creating an energy system that’s greener and smarter and means people can afford to heat their homes is a big challenge. But it’s possible – if we act now and plan ahead.