As Europe’s electricity system undergoes a major transformation, consumers may be expected to change some of their habits. But this will only happen if consumers have something to gain from these changes and they are given a proper choice, says Monique Goyens.
Monique Goyens is Director General at BEUC, the European Consumer Organisation.
Even today, if you want to know how much electricity you have consumed recently, your bill is often your only point of reference. And trying to understand your electricity bill is challenging for a huge majority of us.
This may be about to change. New technology and gadgets are entering the market which could allow us to monitor, and therefore moderate, our consumption almost in real time. This could help us save money on our electricity too.
Technology to the rescue
Take an app on your phone, where you could see what you are consuming in real-time at home and what it will cost you. The tech geeks would probably find that fun in itself. For the average consumer though, this would also carry helpful price signals to incite him or her to consume when electricity is cheaper.
Shifting some of your electricity consumption to times of the day when electricity is cheaper, or cutting your electricity use when there is a peak in demand, is what energy policy wonks call demand-side flexibility or demand response. Some form of demand-side flexibility already exists. Day-night tariffs already cater for consumers who can use energy at night when it is cheaper. But demand-side flexibility is set to go to a whole new level.
In theory, the system would work something like this. When electricity demand is low, your electricity supplier would charge you less for any consumption. When demand for electricity is high around 19:30, electricity would be expensive. At midday, when solar power is peaking and most people are working or not at home, electricity demand and its cost will be lower.
So, in the future, as we are expected to have more electric cars, we could shift their charging from 19:30 to midday, and this should allow you to save money. This would be called a dynamic electricity price offer, where what you pay depends on when you consumed your electricity. Today, owning an electric car might seem like a remote scenario but with costs expected to drop fast in the coming years chances are that this will change.
You might not need to shift your consumption much. Or to have an electric car. If you live in Athens in the summer, you won’t be able to shift your air conditioning use from 19:30 to midnight. But you could moderate it for short periods in ways that are barely noticeable to you, but which will be noticeable for your wallet: a cash reward for 15 mins in low mode for a few days a month could make a difference! These are some examples of what the energy services of the future might look like. Digital technology and energy storage options will lead to countless more.
It’s all about choice and money
Not everybody will be willing to sign up to these new types of tariffs or services, of course. Parents with young children are more likely to have their heating on all the time rather than having a staggered approach. Others might not be able to, or want to turn down their heating or cooling for short periods.
The market must cater for that. Choosing a flexible electricity tariff or service must be a choice, and not a fake choice which the market chooses for you because there is no alternative.
In the EU on average, electricity prices have risen by about 25% between 2008 and 2015. In Slovakia, energy bills account for as much as 14.5% of average household expenditure .
Things that help consumers spend less on electricity are usually welcome. So if consumers decide to opt for flexible electricity contracts, it is crucial that they are able to save money by doing so. They should not end up paying the same or even more than on a conventional tariff.
Rules needed to guide the market & protect consumers
With the ‘Clean Energy for All Europeans’ package, the EU is currently overhauling the energy market’s rules. It is looking at how to open up the energy market to new services providers and make these kinds of flexible electricity offers more commonplace.
It’s very important that the EU doesn’t just open up the market but that it also makes sure consumers have peace of mind when they sign up to these types of offers. There are basic principles the EU must bear in mind when it draws up this legislation: give consumers real choice and make sure any savings for the system are turned into financial savings for consumers.
Exciting changes in the energy market should not lead to unnecessary and additional complexity. If consumers take the time and effort to sign up to an offer, they should know it will be worth it financially and know they can always sign up to alternatives. Otherwise, our habits in consuming electricity simply won’t change much.