How to have a future energy system that is both smart and fair
CSE’s Phase One report sets out findings and calls for deliberate and purposeful action
17 September 2020
We know the energy system definitely needs to get much smarter if the UK is to achieve our commitment to reach net zero greenhouse gas emissions by 2050 at the latest.
But can it get smarter in ways which ensure widespread consumer participation and share the costs and benefits of the transition fairly? Can we have a net zero energy system which is both smart and fair?
This is a vital question because, as recently concluded by the UK Climate Assembly, the public will insist that the transition to net zero is done in ways which are fair and inclusive. ‘Smart’ without ‘fair’ is not socially acceptable or politically sustainable.
It’s also the question that’s at the heart of CSE’s Smart and Fair? programme which we launched in June 2019, with support from Western Power Distribution and Scottish and Southern Electricity Networks.
We’ve now completed Phase One of the programme and published our report outlining our findings and recommendations (and our plans for Phase Two). Our work leaves little doubt about two important findings and an obvious resulting conclusion:
- The sorts of smart innovation needed and coming forward in the energy market – from time of use tariffs to smart technologies – will bring with them new ways to generate unfairness and leave people behind.
- The smart innovation we need is unlikely to be forthcoming if we seek to achieve fairness by insisting that every smart offer in the market has itself to be fair and inclusive from the outset.
- Smart and fair outcomes will not emerge reliably from the market without deliberate and purposeful action to secure them by policy-makers and regulators, including requiring adherence by all market participants to a set of Smart and Fair Guidelines.
Below, the Smart and Fair? Capability Lens reveals an extensive range of consumer capabilities and attributes required to participate meaningfully in smart energy.
The report sets out a draft of these Guidelines and makes 21 recommendations for this deliberate and purposeful action by BEIS, Ofgem, energy system practitioners (including energy suppliers, network operators, innovators and consumer advocates). These recommendations include:
- Funding the design and testing of interventions to widen participation.
- Introduction of policies to reduce the risks of consumer harm from poorly designed, targeted or realised smart energy offers.
- Committing resources to effective market monitoring and ongoing distributional impacts analysis.
- A requirement on all market participants to follow the Guidelines.
- A re-evaluation of definitions of consumer vulnerability to reflect risks associated with the transition to a smarter energy system.
The report also describes the analytical framework and associated tools which CSE has developed in Phase One, with input from expert stakeholders, including the Capability Lens, the Offer Profiling Tool and the Consumer Classification Model.
To find out more, download a copy of the Phase One report.
We will be holding an on-line workshop on the morning of 12 October exploring the results of Phase One of Smart and Fair? with respondents from Ofgem, SSEN, Ovo, WPD and BEIS. To register, click here.
For more details about Smart and Fair? including to download the Offer Profiling Tool, see the full project profile.