Smart and Fair?
Exploring social justice in the future energy system
Project duration: June 2019 ongoing
Our energy system is changing. It needs to become smart to get to net zero carbon emissions. And it needs to do so in a way which is fair to maintain public support for change.
But can these two vital outcomes be achieved together in our future energy market?
Our Smart and Fair? programme is exploring both how they could co-exist and what needs to be done – and by whom - to ensure they do.
The first exploratory phase reported in September 2020 and we are now developing and applying its findings and recommendations in an expanded Phase 2 of the programme.
Achieving the UK’s net zero carbon emissions target cost effectively needs the energy system to become smarter, more flexible and responsive to accommodate high volumes of renewable energy. ‘Smart’ is an integral quality of our pathway to net zero.
At the same time, it is clear from many years of consumer research and most recently and forcefully, the UK Climate Assembly, that public consent for, and participation in, the transition to a smarter system is dependent on that transition being unambiguously ‘fair and inclusive’.
‘Smart’ without ‘Fair’ is not socially acceptable or politically sustainable. But ‘Fair’ without ‘Smart’ would mean we fail to achieve the societal goal of getting to net zero.
The changes we’re likely to see range from the widespread introduction of domestic time of use (ToU) tariffs to opportunities to participate in novel yet rewarding new areas such as battery storage, electric vehicles, demand flexibility, ‘heat as a service’ contracts and local peer-to-peer trading – available through new technologies and consumer services.
Together, these changes will massively and rapidly disrupt the way consumers interact with the energy system. They create demands on consumer capabilities and attributes that have hitherto been largely irrelevant to meaningful participation in the energy market. And the offers will dispense rewards to consumers for changing (or having changed) their patterns of energy demand in ways previously immaterial to what they paid for energy.
The shift to a smarter system therefore has the potential to bring with it completely new ways to generate unfairness (in terms of the likely distribution of system costs and benefits) and to leave people behind (in terms of the complexity and costs of participating).
Understanding the nature of these risks and establishing how they can best be avoided is the key objective of CSE’s Smart and Fair? programme. It is essential to answering the question: how can the transition to a net zero energy system in the UK be both smart and fair?
Phase 1 of the programme (June 2019-October 2020) was funded by Scottish & Southern Electricity Networks (SSEN) and Western Power Distribution (WPD) and was principally an exploratory exercise to develop an analytical framework to examine the issues, identify key risks to consumers and propose potential approaches to addressing these. Findings and outputs from Phase 1 can be found here, including details of the Capability Lens, the Consumer Classification Model, the Guidelines for Smart Energy Practitioners and 21 recommendations for purposeful action by government, Ofgem and others.
Phase 2 of the programme kicked off in May 2021 with increased support from SSEN and WPD and additional funding from the Energy Redress Fund. It involves a number of new projects and an expansion of the programme, as opportunities, needs and funding enables, across four broad categories:
- Tool development and data validation.
- Market monitoring and distributional analysis.
- Support for implementation of Phase 1 guidelines.
- Initiatives to widen participation.
This work will enable us to generate new insights, shape policy guidance, facilitate stakeholder engagement and contribute evidence for our advocacy work.
As part of the first category we are developing the ‘Smart and Fair Energy Choices Tool’ to be used by energy advisors in England, Scotland and Wales to advise clients about new offers and help them navigate the complexities of the emerging smart energy market.
This will be backed by our Retail Market Monitoring programme that will collate the latest information on smart energy offers, products and services in a central database. Importantly, this will include the conditions that consumers must be able to fulfil in order to access any particular service or product – such as digital skills, ability to be flexible and shift energy use, availability of off-street parking and private EV charging, etc.
Details of all Phase 2 activities will be added to this web page in due course.
We continue to explore new opportunities for expanding our work on the programme. If you would like would like to get involved in Smart and Fair? please email firstname.lastname@example.org.