Understanding consumer readiness for smart energy offers

In the rapidly evolving landscape of smart energy, how do we ensure that everyone can participate and benefit in the energy market? The Smart Energy Capabilities Lens is our answer to this crucial question.

What is the Smart Energy Capabilities Lens?

The Smart Energy Capabilities Lens is an innovative framework designed to understand of the demands placed on domestic consumers by different smart energy offers, technology advances, and emerging energy market developments.

It’s a powerful tool that helps us analyse the relationship between smart energy offers and the factors influencing a consumer’s ability to engage with, participate in, and benefit from them.

How it works

The Smart Energy Capabilities Lens includes five key clusters of capabilities:

1. Dwelling and local area: The suitability of a home and its location for participating in smart energy opportunities.
2. Energy tech and usage: The appropriateness of a household’s energy usage profile and existing technology.
3. Digital tech readiness: The household’s digital skills, hardware, and connectivity.
4. Financial: The financial status and money-management skills required to engage in opportunities.
5. Personal and social: Personal factors, mindset, values, and social connections that enable engagement.

Each cluster is broken down into specific factors, allowing for a comprehensive assessment of a household’s readiness for various smart energy offers.

Why the capabilities lens matters for the energy transition

As we decarbonise our energy system, new smart energy products and services are key to creating the flexibility we need. But these innovations risk being accessible only to certain groups – like homeowners or digitally confident consumers.

The Capabilities Lens is fundamental to ensuring a fairer, more equitable transition. It helps us:

• Identify the consumer characteristics that enable participation in smart energy offers.
• Recognise which households are at risk of being left behind.
• Guide the development of more inclusive energy products and policies.

By understanding the diverse capabilities required, we can work to make the benefits of the smart energy transition available to all, not just those with the “right” circumstances.

The Capabilities Lens provides the crucial insights needed to create an energy system that works for everyone, not just those with the right combination of circumstances and capabilities.

Real-world application in assessing the Demand Flexibility Service

The Demand Flexibility Service (DFS) provides a valuable real-world example of how the Capabilities Lens can be applied. This GB-wide demand shifting service, run by the National Grid ESO, offers households financial rewards for reducing their electricity use during peak times.

Using the Smart Energy Capabilities Lens, we were able to:

1. Profile the DFS offer:

The DFS had relatively low barriers to entry, requiring only a functional smart meter. The digital skills needed were also fairly basic, such as receiving emails about the service.

2. Evaluate actual uptake and benefits:

However, when we looked at which households were actually participating and benefiting, we found some concerning disparities:

• People with long-term health conditions and those struggling financially had slightly worse experiences and outcomes.
• Tenure status, on the other hand, was less of a factor, as the DFS had no technology requirements tied to ownership of the home.

3. Uncover new insights:

The Capabilities Lens revealed nuanced relationships between different consumer capabilities:

• Digitally confident people with limited mobility were able to effectively shift their energy use.
• Those with limited mobility but low digital confidence, however, were at risk of putting their health at risk to participate because they couldn’t easily see what appliances worth flexing.

4. Inform advice and support:

These insights allowed us to develop tailored advice and support resources, ensuring consumers can make informed decisions about participating in the DFS and similar schemes.

5. Drive policy change:

We’ve used the evidence from our DFS evaluation to advocate for stronger protections and more comprehensive smart energy advice and support, particularly for vulnerable consumers.

By applying the Capabilities Lens we gained invaluable insights that are shaping our ongoing work to create a fair and inclusive energy transition. This demonstrates the capabilities lens’ power as a tool for understanding, supporting, and empowering all consumers, regardless of their circumstances.

The Smart Energy Capabilities Lens in action in offer profiling

One of the key applications of the Capabilities Lens is in our Offer Profiling Tool. This tool uses the Lens to analyse various smart energy offers, from smart plugs to dynamic time-of-use tariffs, assessing the capabilities required for each.

For example, comparing a smart plug to a dynamic time-of-use tariff reveals significant differences in the capabilities required:

• A smart plug might primarily require digital tech readiness and some changes in energy usage.
• A dynamic tariff, however, might demand more comprehensive engagement across all capability clusters.

This profiling helps both industry professionals in designing more inclusive offers and energy advisors in guiding consumers towards suitable options.

In this video, Chloe and Katey explain why smart energy offers risk excluding some people and how CSE is championing a more inclusive energy transition:

https://www.youtube.com/watch?v=BciXJY7rKmI

Beyond complexity

It’s crucial to note that offers requiring more capabilities don’t necessarily mean more complex market offers. The Capabilities Lens helps us move beyond surface-level complexity to understand the nuanced requirements of different energy innovations. This understanding is key to the transition – we need these innovations, but we also need to make them as accessible as possible.

Using the Smart Energy Capabilities Lens

Whether you’re an energy advisor, industry professional, or policymaker, the Capabilities Lens offers valuable insights:

• Energy advisors: Use it to better understand client needs and match them with appropriate energy offers.
• Industry professionals: Apply it in product development to create more inclusive and accessible energy innovations.
• Policymakers: Utilise it to assess the potential impacts of new energy policies on different consumer groups.

By embracing the Capabilities Lens approach, we can work together to ensure that the smart energy transition is not just technologically advanced, but also fair and inclusive.

Measuring success

The effectiveness of the Capabilities Lens is demonstrated through its application in tools like:

• The Energy Choices Tool, which helps consumers find suitable energy options.
• Smart Energy Action Plans, which use capability assessments to create personalised roadmaps for consumer who receive our energy advice.

And through its application in research like:

• The evaluation of the Demand Flexibility Service which used the capabilities lens to analyse different household experiences
• Research with consumers for the HOMEflex code of conduct which used the capabilities as a sampling framework to bring a broad range of consumer views into the code development process.

These applications show how the Capabilities Lens translates into practical, impactful solutions for consumers and the industry.

Collaborate with Us

We’re always looking to refine and expand the applications of the Capabilities Lens. If you’re interested in collaboration or have insights to share, we’d love to hear from you.