Why technology is crucial to the recovery of the energy industry’s reputation

While consumers wait for further updates on support from the government, the UK energy industry is already quietly working in the background to alleviate the challenges by helping to improve the way energy is consumed, measured and managed, writes Rachel Eyres, Business Unit Director for Energy and Utilities at Expleo.

With consumer champion Martin Lewis recently delivering an emotional rant after it was announced the energy price cap would be updated four times a year from October, the industry is currently the subject of much disapproval across the UK.

In fact, energy bills could rise even further this year, as new forecasts released at the beginning of June by Cornwall Insight predict that EU sanctions imposed on Russian oil could mean that the annual energy bill for the average UK household will hit nearly £2,900 ($3,523) from October.

Now, it’s all eyes on the UK Government and Ofgem, as the regulator looks at ways to protect consumers and deliver a fairer, greener energy system amid record price hikes and increased concerns surrounding natural gas supply from Russia.

Although some levers are already being pulled to counter the impact of the energy price hike’s impact on the cost of living – with the government putting £9.1bn ($11.01bn) forward to reduce bills, including council tax and energy bill rebates as well as extending the Warm Home Discount – there is more to be done.

Industry watchers suggest the Government is waiting to see where gas prices are heading before planning further assistance – but the same experts believe Russia’s invasion of Ukraine and years of underinvestment in the energy sector could already have sparked a worldwide oil, gas, and electricity crisis, that ‘is much bigger than the oil crises of the 1970s and early 1980s, and that will last longer’.

While consumers wait for further updates on Government support, the UK energy industry is already quietly working in the background to alleviate the challenges we all face by helping to improve the way energy is consumed, measured and managed.

Once executed, the changes that are currently underway in the retail market will contribute to net-zero targets and negate the long-term impact on the customers’ wallet.

Also of interest:
Ofgem weighs more frequent price cap updates to benefit UK consumers
Gas and power prices continue to soar due to Ukraine conflict

Smart meter roll-out

Top of the list for suppliers to focus on is the smart meter roll-out. This is already helping consumers to make changes that contribute to a reduction in their energy consumption and lower energy emissions. All meters come with a handy in-home display which shows consumers exactly – to the penny – how much energy they’re using. This makes it easier for them to see where they can make small changes to reduce their usage.

Equally, campaigns that focus on educating the consumer about how to manage consumption to benefit both the environment and their pocket have never been more needed and the consumer has never been more ready to listen!

There is also potential to unlock greater adoption of new technology that will make our homes more energy efficient. Energy providers can lead on showcasing new technologies in the home such as solar panels and heat pumps. And as the world moves toward electric vehicles (EVs), the industry has a real opportunity to align agendas and create partnerships with companies in the home charging market, factoring that appliance into overall energy costs and decisions.

Smart meters also support the introduction of new tariff options for suppliers when combined with other market changes:

Half-hourly settlement

Traditionally, electricity consumption by smaller businesses and households is settled based on an estimated usage profile throughout each day, applied to all consumer types regardless of their actual behaviour. With the roll-out of smart-meters the industry is now able to record consumption data at more regular intervals (48 of them each day to be precise), allowing for a much more granular view of how and when each household uses electricity.

In addition to the smart meter roll-out the market-wide half-hourly settlement programme is now underway, and once completed this new settlement system will query and process these readings from smart meters in 30-minute intervals in homes and small, non-domestic sites.

This means that smart ‘time-of-use’ tariffs can soon be offered – whereby the price varies for a unit of energy depending on the time of day it is consumed. This is a vital step towards creating a UK-wide smart energy system, where the nation spreads out its energy use, helping to break the cycle of peaks and troughs in demand and reducing the system’s reliance on additional carbon intensive power stations while helping customers to run their appliances at cheaper times of day, further reducing their bills.

Once fully rolled out, half-hourly settlement and smart metering is expected to deliver net benefits to British consumers of up to £4.5 billion ($5.47 billion) between 2021 and 2045 – a tangible way to off-set the impact of perpetual price rises.

Also of interest:
Energy Transitions Podcast: Bridging the UK’s energy supply and demand gap with storage
Next-Generation technologies for sustainable energy islands

Faster switching is key to post-crisis recovery

The third and final lever that the industry is in control of is the faster switching transformation, which will enable customers to switch between gas and electricity suppliers more reliably in 24 hours – rather than weeks. The ability to easily switch suppliers will be key to reigniting healthy market competition and consumer confidence as we emerge from the current energy crisis.

And, with several suppliers going out of business, creating a competitive energy market has become even more important. In a world of instant gratification where groceries can now arrive within minutes, the energy industry has some catching up to do when it comes to reducing the hassle factor for consumers.

Making the switching process painless will benefit the consumer by encouraging greater market competition – and while the number of deals available right now may be low, this is unlikely to remain the case for long.

Only by harnessing the combined power of these three major transformations, all firmly rooted in technology, will the industry be able to support the consumer and the environment through the worst energy crisis since the 1970s.

The energy suppliers that innovate and make best use of these technologies, while retaining excellent customer service, will be the ones to emerge from the crisis leading lead the pack. This will mean engaging with customers in a more holistic way, in addition to the corresponding technological and system changes. By doing so, suppliers have an opportunity to make themselves a key partner for consumers looking to reduce their bills – while playing a key role in the UK’s transition to net-zero.