The Better Markets Bills has people salivating. Promoting competition, empowering the consumer and sticking it to big utility companies is the sort of thing that goes down well on the doorstep.
7 day switching will make it easier for people to move and greater transparency in the way switching sites make their money, will give people the confidence to choose the best tariff for them rather than the best tariff for the switching site. However it’s the stuff that is – or should be – going on in parallel that will make the biggest difference.
Over the next few years, our energy system needs to digitise; just like the TV and mobile phone networks. With that digitisation comes all sorts of opportunities ranging from a much better understanding of real time demand at grid level through to empowering consumers to know what their energy use is costing them minute by minute. The building blocks for this revolution are smart meters.
Understanding demand and the type of equipment or appliances that are creating it, means greater opportunity for demand side response so that demand curves can be flattened and expensive peaks decreased. The consumer benefits with cheaper bills but can potentially be a part of that demand side response as well by offering up the heating of their hot water tank, or perhaps soon the charging of their electric car, as something that must be done within a certain timeframe but at an exact time of the DSR company’s choosing. There’s an appealing kick back in that deal for the consumer as well.
So too does the digitisation of the system encourage the installation of energy storage and the ability to use the many smart appliances on the market in their full ‘Internet of Things’ glory. Our energy consumption individually and collectively becomes smarter, more dynamic and, as that helps us to avoid using energy when market prices are at their peak, it will bring down bills too.
But the really important bit is that this digitisation unlocks half hourly billing. Consumers will be able to see how much energy they used in each half hour period and how much it cost them. For the savvy consumer, that incentivises DSR but could also lead to a complete transformation in the way our energy market works.
Instead of signing up with a single energy company, perhaps in the future consumers will sign up with a broker who will shift them between energy suppliers so that they can take advantage of the cheapest energy price in every half hour. There are all sorts of regulatory barriers in the way of that but there are already suppliers who are shifting commercial customers between tariffs on a half hourly basis so it is not too big a leap of the imagination.
The Better Markets Bill will take us in the right direction - more than anything it gives Government another go at encouraging a greater enthusiasm for switching – but alongside, there needs to be regulatory change on half hourly settlement, storage and DSR that will unlock the real rewards of both digitisation and (we hope) the consumer’s renewed enthusiasm to play the energy market.