Technology can empower consumers at a time of high energy prices

The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

Greater penetration of internet-connected devices and appliances will help manage bills

Since October 2021, European households have been hit with high, fluctuating energy prices. And the future seems bleak: high prices are here to stay. But there is a silver lining. While the current energy situation is dire, it also brings a great opportunity to accelerate the energy transition.

And we do not have to look as deep into new technologies as one may think. Capitalising on a number of already available solutions, end customers can make a significant impact in decarbonising the EU’s energy sector while also cutting their energy bills.

These existing technologies address the immediate need to offer more control over individual electricity consumption and bills, while also making strides in electrification and driving the clean energy transition.

CUSTOMERS TAKE CONTROL

The European Commission’s ongoing harmonisation of the EU energy market has fostered a much-needed transparent pricing scheme. This has paved the way for new business models and suppliers to serve hourly-based retail electricity services.

Since fluctuating prices create an incentive for flexibility, these app-based energy management solutions like Tibber and Greenely have become profitable for residential consumers in recent months.

In addition to savings, these apps also adapt consumption patterns to the availability of renewable generation thus allowing for a low CO₂ system. And as energy prices will not stop fluctuating, the business models taking advantage of this will prevail.

END-USER ENERGY MANAGEMENT

These pricing models are however only useful when consumers can be flexible with their electricity use as well. Luckily, today, more and more average consumer devices or household appliances are connected to the internet. What, just a few years ago, was quite complex and highly proprietary, is now mainstream, leading to increased penetration of connectivity in household devices.

This opens for more control, adaptation to price variations and lower bills for household energy consumption. Household appliances can be set on schedules via energy management platforms to run when energy prices are lower and customers can make use of these to better control electricity consumption in general.

As increased connectivity is no longer expensive or complicated to integrate, this will be expanded to even more household uses including larger devices such as hot water heating in washing machines and dishwashers.

CONTROLLABLE LOADS

Additionally, in many parts of Europe new types of electrical loads are being added to the system. The ongoing penetration of heat pumps throughout Europe, and especially in the Nordics where they are commonplace in residential buildings, provides a large, controllable, often wifi-enabled load making it suitable to integrate into energy management platforms.

Similarly, we also see a quick and increasing uptake of electric vehicles (EVs). Their charging systems are extremely well-suited for controlling and shifting to low-cost charging times.

Behind the metre, there is an increasing number of photovoltaic (PV) installations which form part of the local generation system. Through this, production and consumption can be optimised to try to avoid fluctuating prices.

MONEY WELL SPENT

But heat pumps, EVs and solar PV sound like technologies that exclude those hardest hit by the current energy prices: low-income households. This makes it all the more important to support lower-income households with access.

One thing is certain, Governments will spend money to help alleviate the stress of high prices. Funds could be best used to introduce these technologies via support schemes rather than subsidising electricity bills or capping prices.

Residential subsidy schemes to install EV charging stations or to switch from gas to heat pumps already exist throughout Europe. Tweaking such programmes to make receiving support dependent upon the devices being connected will put direct control in the consumers’ hands at no major additional cost. Allocating support in this way additionally opens up for innovations and start-ups that create new jobs.

We should not underestimate the power of the individual customer to take advantage of existing technologies that can save them money. Given Europe’s pressing need to transition to clean energy, strategies that enable both consumer savings and make steps towards a low carbon system should be favoured for adoption. •

This is the first in a series of three articles in which Johan Söderbom examines what next-generation technology means for the energy transition and the opportunities that lie within.

If you have a thoughtful response to the opinions expressed here or if you have an idea for a thought leadership article regarding an aspect of the global energy transition, please send a short pitch of 200 words outlining your thoughts and credentials to: opinion@foresightdk.com.