Getting the customer on board is crucial to the transition to a smart energy system, the European electricity industry association Eurelectric highlights in a new report.
To this end customers need to be empowered with ‘awareness’ and ‘trust’ – awareness of the opportunities offered by the market, of switching possibilities, of their own consumption and preferences, and trust in the market actors and processes (switching, billing, etc.). In addition they need ‘choice’ from a range of products, services and contract types designed by competing retail companies – all underpinned by the right regulatory framework.
Eurelectric’s publication is aimed to provide insight for consumer associations, policymakers and regulators across Europe on the consumer and regulatory frameworks for smart energy systems.
According to Eurelectric an appropriate regulatory framework needs to strike a fine balance between stability to spur investment and development, and flexibility to apply to different national contexts and adapt to changing circumstances over time. To achieve this Eurelectric believes “decisive action” should be taken by national and European policymakers and regulators in six areas:
- Show customers the value of becoming more active – encouraging customers to provide flexibility to the energy system is only possible if they receive clear financial signals that lead them to become more active in energy retail markets.
- Set up a secure, efficient and transparent framework for data exchange – data exchange is indispensable for the proper functioning of the smart energy system and will be a key means of creating new value.
- Clearly separate competitive and regulated activities – like today’s energy system, the smart energy system will be composed of regulated entities (DSOs) and commercial players (e.g. suppliers, ESCOs, aggregators, etc.), and a well-functioning division of work between both types of players, as well as well-functioning interactions should be ensured.
- Unblock market access for demand response – customers will only take up a more proactive role in the smart energy system if the gains they stand to make are worth the effort of becoming more involved. While large industrial customers can directly offer their balancing services in the market, smaller customers will participate through their retailers or third parties that aggregate demand response from many customers.
- Incentivize smart grid investments – distribution grids represent the backbone of the future smart energy system, and services and products in the competitive segment of the system will only develop to their full potential if the distribution grid can integrate them.
- Set up supportive innovation policies – innovation will be key in developing the smart energy system and satisfying the diverse needs and preferences of European customers.