The secret to a successful energy transition? Active consumer participation!

ACER-CEER webinar: active consumer participation is key to driving the energy transition

Estimated read time: 1:20

Summary

In a compelling webinar hosted by ACER and CEER, the emphasis was placed on the crucial role of active consumer participation in driving the energy transition. With insights from the 2024 Market Monitoring Report, industry leaders discussed the significance of consumer involvement in energy systems, particularly through the adoption of smart meters and dynamic pricing models. The event highlighted how flexible energy consumption can benefit both the market and consumers by promoting lower prices and greater control over energy use. Through informative panels and studies, the discussions stressed the importance of effective communication, education, and the creation of hybrid tariffs to facilitate consumer engagement and support the EU’s goal of carbon neutrality by 2050.

Highlights

Yana Hova and Shamus Burn discuss the launch of the 2024 Market Monitoring Reports 📖🔍.
The significance of smart meters and dynamic tariffs in energy flexibility is explored 🔄📈.
Panelists emphasize the need for consumer education and effective communication strategies 🗨️📢.
The potential of hybrid and dynamic pricing models to engage consumers is highlighted 💡📊.
Philippe Vize and other experts share global insights on consumer behavior in energy markets 🌍🔎.

Key Takeaways

Active consumer participation is vital for the success of the energy transition, enabling better control and lower prices 🏭💰.
Smart meters are crucial enablers of flexibility, yet many regions still struggle with low adoption rates 📉⏳.
Dynamic and hybrid tariffs can ease consumers into flexibility, offering personalized engagement steps 🤝⚡.
Effective communication and consumer education are essential to increase awareness and drive participation in energy markets 🗣️🎓.
Innovative solutions like automation and multi-stakeholder engagements are needed to manage complexity and enable consumer benefits 🤖🔗.

Overview

The ACER-CEER webinar put a spotlight on the critical role consumers play in the energy transition. With smart meters and dynamic pricing at the core, the discussion revolved around how these technologies could facilitate better consumer engagement. By encouraging consumers to adapt their energy consumption and embrace flexible tariffs, the webinar indicated that they could significantly contribute to the EU's 2050 carbon neutrality target.

Experts shared valuable insights into how hybrid tariffs and enhanced communication could pave the way for more active consumer participation. They argued for simpler, more comprehensible contract options that allow consumers to incrementally engage with dynamic pricing models without being overwhelmed. This approach, combined with better education and outreach strategies, could bridge the current knowledge gap and motivate more consumers to switch to flexible tariffs.

The session also underscored the importance of multi-stakeholder cooperation and the role of innovative solutions like automation in managing energy consumption efficiently. The idea is to make energy systems more adaptable by integrating consumer data and preferences, thus ensuring the transition to flexible energy consumption is both smooth and beneficial for all parties involved.

Chapters

00:00 - 00:30: Introduction The chapter "Introduction" is presented by Yana Hova, vice president of Si and co-chair of two working groups: the SEER Customer and Retail Markets Working Group and the ASA Retail Working Group. The purpose of the webinar is to launch the Acer and CR 2024 Market Monitoring Reports, which focus on energy retail and consumer markets.
00:30 - 01:00: Housekeeping Rules The chapter introduces the theme of 'Active consumer participation' in driving the energy transition. It begins with a set of housekeeping rules for the webinar, noting that the session is being recorded and that the slides and recording will be uploaded to Acer. This sets the stage for a discussion on consumer roles in energy transition.
01:00 - 01:30: Market Monitoring Report Overview The chapter titled 'Market Monitoring Report Overview' provides information on how participants can engage during the presentation. It explains the use of a tool called Slido through a slider or a link provided in the chat. Participants can post questions at any time, which will be addressed during the Q&A session. Additionally, it highlights that questions can be liked by other participants to gain more visibility.
01:30 - 02:00: Retail Energy Market Analysis The 2024 Market Monitoring Report on Energy Retail and Consumer Protection offers an in-depth examination of Europe's Retail Energy Market. It highlights the major challenges and opportunities faced during the transition of energy systems. The report has been published recently and serves as an annual analysis carried out through a joint effort.
02:00 - 02:30: Decarbonization and Consumer Protection The chapter discusses the importance of understanding the current dynamics of energy retail markets to effectively navigate future challenges, especially in the realms of decarbonization and consumer protection. It emphasizes the significant role of market monitoring reports in guiding these efforts.
02:30 - 03:00: Clean Energy Transition Components The chapter discusses the critical role of data and insights in informed decision-making, especially highlighted by a recent energy crisis that led to unprecedented spikes in energy prices affecting consumer bills. Despite these challenges, there is a continued commitment to the EU's long-term goal of carbon neutrality by 2050.
03:00 - 03:30: Retail Market's Role The chapter discusses the importance of rapid and bold changes necessary for advancing the clean energy transition. It highlights the significance of active consumer participation as a driver for this change. The report underscores two critical components for the success of this transition: power system flexibility and the active engagement of energy consumers. Additionally, it points to the pivotal role that the retail market can play in facilitating these shifts.
03:30 - 04:00: Q&A and Panel Discussion Introduction The chapter titled 'Q&A and Panel Discussion Introduction' explores the importance of unlocking more flexible retail consumption in the energy sector. It emphasizes the benefits for consumers, including lower energy prices and greater control over energy usage. Shamus Burn from Acer is set to provide an in-depth analysis of the report's conclusions and recommendations, highlighting the critical role of flexibility in the success of the energy transition.
04:00 - 07:00: Sheamus Byrne's Presentation The chapter titled 'Sheamus Byrne's Presentation' outlines the proceedings following Sheamus's presentation at an event.
07:00 - 10:00: Panel Discussion The chapter titled 'Panel Discussion' features insights from authority CNMC and Pete Lun of the Economic and Social Research Institute. The session is concluded with closing remarks by Chila BTO from Acer. The discussion delves into Acer's 2024 Market Monitoring Report, which focuses on energy retail and consumer protection. A key takeaway is how active consumer participation can significantly influence the energy market.
10:00 - 12:00: Q&A Session The chapter titled 'Q&A Session' starts with a discussion on the transition benefiting both markets and consumers. There's an emphasis on sparking dialogue and action towards a cleaner and more flexible energy future. It features an introduction by Sheamus Burn, who is a policy officer at Acer.
12:00 - 15:00: Closing Remarks by Chila BTO Chila BTO provides closing remarks, focusing on the hydrogen gas and retail department. The discussion includes an overview of recommendations and conclusions from the current year's market monitoring report. A pivot was made this year to focus on flexibility and the market's need for it, examining the current status and future requirements.

ACER-CEER webinar: active consumer participation is key to driving the energy transition Transcription

00:00 - 00:30 good afternoon everyone and welcome my name is Yana Hova and I'm vice president of Si and co-chair of seer customer and Retail markets working group and of the ASA retail working group on behalf of Acer and CR it's a pleasure to have you all here for today's webinar where we launch the Acer CR 2024 Market monitoring reports on energy retail and consumer
00:30 - 01:00 protection the theme of this year's report is Active consumer participation is key to driving the energy transition how can it happen before we start today's webinar let me please share with you a few housekeeping rules please note that the webinar is being recorded we would also like to inform you that both slides and recording will be uploaded to the Acer
01:00 - 01:30 website you can ask your questions by using the slider tool or you also can access slido through a link which will be shown in a while in the chat your questions will be addressed during the relevant Q&A session although they can be posted at any time also questions from other participants can be liked to increase their visibility
01:30 - 02:00 this 2024 Market monitoring report on energy retail and consumer protection published just last week provides a detailed analysis of Europe's Retail Energy Market it offers key insights into the challenges and opportunities as we transition our Energy Systems let me Begin by sharing some introductory remarks on this annual monitoring analysis undertaken jointly
02:00 - 02:30 by Acer and CR in order to navigate the path ahead effectively it is essential to fully understand the current dynamics of energy retail markets today but also examine what is needed for tomorrow in terms of both decarbonization and consumer protection the market monitoring report plays a significant role in this regard
02:30 - 03:00 providing the data and insights necessary for infirmed decision making the importance of understanding the markets becomes even clearer when we consider the recent energy crisis we witnessed unprecedented spikes in h Energy prices which heavily impacted consumer bills we were and we remain focused on the eu's long-term goal of achieving carbon neutrality by 2050 and in this
03:00 - 03:30 context it's obvious that rapid and bold changes are needed this year's report Active consumer participation is key to driving the energy transition how can it happen emphasizes that the clean energy transition will not succeed without two critical components power system flexibility and active participation of energy consumers the report demonstrates that retail Market can play a pivotal role as
03:30 - 04:00 providers of flexibility unlocking more flexible retail consumption is not just crucial for the success of the energy transition it also provides opportunities for consumers to benefit from lower energy prices and to have greater control over the energy usage in a moment Shamus burn from Acer will delve deeper into the report's conclusions and recommendations
04:00 - 04:30 following to shamus's presentation we will have a Q&A panel discussion focused on the potential of new contracts and how effective communication can shape consumer decisions the panel will be moderated by my colleague Natalie McCoy and I'm also delighted to introduce our panelists Philip lvis from vas chobo Fernandez from the Spanish regulatory
04:30 - 05:00 Authority cnmc and Pete Lun from the economic and social Research Institute the webinar will conclude with closing remarks from Chila BTO of Acer let's dive into the acers year 2024 Market monitoring report on energy retail and consumer protection today's insights will show how Active consumer participation can drive energy
05:00 - 05:30 transition benefiting both the markets and consumers I hope the information shared Sparks dialogue and action as we work to get towards a cleaner more flexible Energy Future Sheamus the floor is yours thank you thanks Anna okay so just a brief introduction my name is Sheamus burn I'm a policy officer here within Acer um and I work
05:30 - 06:00 in the hydrogen gas and Retail uh Department I'm going to give you a high level overview of our recommendations and conclusions from this year's Market monitoring report so just as a brief introduction as Jana uh referenced we made a bit of a pivot this year where we focused on well the level of flexibility and the need for flexibility that we see within their markets and kind of examine where we are with them
06:00 - 06:30 so just to kind of give you high level conclusions what we see so when we talk about Smart Meters we see them as a key piece of infrastructure needed to enable flexibility um at the retail uh level but while we do have broad um roll out of smart meters in different member states we do see that there's quite a number that have a very small roll out so we still have 10 member states that have less than 30% of smart meter rou it in their markets but then of these have a roll out of less than
06:30 - 07:00 10% one thing that's kind of popped up uh at wholesale level this year is we've seen a significant increase and this is a 12-fold increase of negative and low energy prices um while this isn't the fault of the retail sector it does signify how we do need more flexibility at retail level because there are benefits potentially there across the EU we're seeing that 7 3% of households um are on kind of fixed
07:00 - 07:30 or fix term contracts and these are really in our view inhibiting uh more flexibility at the consumer side so we're interested in looking at this going forward and then kind of linked with this we still continue to see un targeted price interventions so we have eight member states uh with price interventions in their markets and mainly this is regulated prices at fixed costs but more broadly we still see some
07:30 - 08:00 follow on from the energy crisis with broad untargeted supports been provided to energy consumers a little mini dive on a few points that we would like to highlight so flexibility is becoming the name of the game here so if you cast your ice to the very left we can see that dispatchable generation is falling so this is our gray As you move from 2010 to 2030 you see that these figures are getting smaller so what this means is we
08:00 - 08:30 need a more flexible consumer base casting your eyes to the right hand side where we see that there's going to be a significant surge in the need for flexibility by 2030 and explicitly um daily flexibility needs what we see today is if you have a large cohort consumers on fixed price contracts that may be difficult to deliver so we're this is what we're trying to get in the report this year
08:30 - 09:00 it's not just a traditional look back it's we start casting our minds a bit forward to see what the issues are coming down the tracks if we have inaction on our part so touching again on the negative and low energy prices as I said at the outline we've seen a massive increase of these um in 2024 there are difficulties with this um and there are potential benefits looking at the level of contract update that we
09:00 - 09:30 have with our consumers we can see that it's difficult for them to kind of access the potential benefit of this but then also if this were to continue you might have difficulty from a supply side or generational side of you're going to have to start bilding building this into your model so this could lead to further cost down the track for end consumers so our whole aim here is if we can get a more consumer more flexible consumer base we can actually deliver benefits to
09:30 - 10:00 all it's not that every consumer has to be flexible just a cohort so looking at the Smart Meters so in each report for the last number of years we've been touching on the need for Smart Meters so at a foundational level they allow consumers to actually see realtime data so when you look to the very left here we see that in general we have quite a broad uptake and roll it of smart meters across the EU however when you start moving to the
10:00 - 10:30 right and so we have the two maps on the the right so the left hand side is the households and the right hand side is the non-h households we can see that yes they might have Smart Meters but the engagement with flexible contracts is less Li is limited so it's more that we need to start pushing the consumer like see what type of nudges are available to get them to engage a little bit more traditionally they might prefer a fixed price contract but in a lot of cases these off offers aren't even made available to them um so
10:30 - 11:00 this is one of the points we want to highlight so we have infrastructure in many places but it just appears to not be utilized again touching on the dominance of the fixed price contracts and how it limits flexibility so again and this is probably one of our weak points in our report that we touch on so on the very left hand side here you have these are household contract uptakes so in general we have the fixed price contract is more prevalent you will see a number of
11:00 - 11:30 countries here which are other what this means in these cases is we have variable price contracts but they there they're fixed for a set period of time and then the supplier will change and they will give 30 days notice in element it is a uh very much a fixed price contract with an limited variability built into it it's not time of use then we can see kind of slightly better story on the non-household consumer however we got we have very limited data on this and then
11:30 - 12:00 looking at the um kind of the potential for flexibility it's it's not going to be any particular type of consumer you might have short-term wins with the maybe the non-household or the industrial consumer but the residential consumer will have a part to play in this going forward you will see more EV utilizations heat pumps these all create potential flexibility which we should look at in the future
12:00 - 12:30 that is largely it some high level recommendations from my side so what we were looking at is well what do we need to see to change here we need more demand side response so our regulatory framework should evolve to permit this and enable it and this is an advance of 2030 so casting your minds back to this need for flexibility that we see we have the new EMD uh with the need for more consumer protection however we think that this must be balanced and should be we should see a stop to the untargeted
12:30 - 13:00 provision of supports to Consumers and then also looking at well the distribution system operators and how they are a key point of contact with their consumers they may face difficulties actually building more grid going forward so there maybe there's access or potential incentivization mechanisms that Regulators should look at here to ensure a more efficient grid use and upfront investment access to flexibility we've kind of have a key theme here with uh
13:00 - 13:30 the need for flexibility going forward so it's not just any particular body it's actually all so it's Regulators it's distribution system operators and member states so if the smart meters aren't provided for uh they should look at moving this on much much quicker um but then also linked with this we're looking for a provision of a broad range of flexible contract offers in particular here what we're pushing for is dynamic price contracts because what we see is once you have a dynamic price
13:30 - 14:00 contract offer available in the market you see other offers coming through and Philip will touch on these in his uh slides in the next uh in the panel discussion and finally like informed and incentivized consumers so what we see is in a lot of cases you have the provision of the offers you know such as Dynamic but we see a limited uptake of them um this yakobo will touch on this as well so we think there's a lck of information
14:00 - 14:30 we saw some good points that came out of the the energy crisis on this where the information provision came a lot stronger more Dynamic we're wanting this to be kind of become more um more broadly aware of more the consumer to be more broadly aware um of the benefits of these Dynamic price contracts but also it's important that we show like there are potential downsides if you're inactive so there's a potential benefit in that you will save money if you adjust your behavior but if you don't you may have higher cost During certain periods of the
14:30 - 15:00 day uh that it is all for me um so what I will do is I'll move to the panel discussion um Natalie if you want to take control or possibly Philip takes control here thank you very much Sheamus I think um the findings are and the perspective of this year's report are very very interesting and I'm sure um it's given uh participants and interested stakeholders if you will uh a different
15:00 - 15:30 way of looking at uh retail markets across the EU and we hope uh very much that this new approach is is welcomed and appreciated and I think it helps to put in perspective the reality and also in line with you know the goals and objectives that U Europe and and a brighter Community have set ourselves to to deliver an energy transition and and to find Energy savings and efficiency as best we can so our next part of today today's program uh as we heard from Yana
15:30 - 16:00 earlier is a panel discussion and from our three speakers as so as not to waste any more time I'll hand over directly to Philip Lewis um from vaza for those of you who do not know uh vasay they are uh an energy consultancy I like to think of them more of as a think tank but um officially they they are uh also a consultancy providing some pretty in-depth uh analytics about energy markets uh around the world in fact and as we'll see during Philip's
16:00 - 16:30 presentation now this gives them really enriches their their research and their analysis because we can see experiences all over the world and different ways of facing some of the same problems that that we're discussing here and the same Ambitions as well so over to you uh Philip very eager to to learn what's happening out there thanks Natalie and thanks to all of you it's a real pleasure to be here and and fully agree with all the
16:30 - 17:00 suggestions and conclusions on the report and uh just wanted to then uh raise a a few points um on the the challenges of course because we we all of course realize that the challenges that are involved with uh with achieving this uptake of these Dynamic tariffs and just wanted to go through a few those and think about a couple of the potential solutions to that and way forwards for that and first of all of course we realize that there is a receive Risk by consumers consumers are
17:00 - 17:30 are of course very cautious to move into Dynamic tariffs especially in environments where they don't really necessarily get a lot of communication on those and one of the possible ways forward for that is of course to try to create some degree of protection for the customers within those Dynamic tariffs and I'll mention that in a moment a bit more uh then the other thing is of course that these consumers um have been doing the same thing for many years in many markets they've only ever had flat fixed tariffs and so of course for them
17:30 - 18:00 better the devil you know it's hard to move forwards and uh so in that respect it's quite important we feel to help that customer on a journey uh baby steps in a way to move forward one step at a time but it's not only the consumers of course that are moving forwards from a sort of relaxed position it's also suppliers in many cases their business models are based on those older tariffs and they see Dynamic tariffs as low margin very often and in order to replace that um attitude I guess in a
18:00 - 18:30 way and position you need to have some degree of new services on the horizon for those companies you need to unlock those additional services and uh in addition to that um the uh the one of the challenges of course with getting value from Dynamic tariffs is naturally to have the ability to respond to those prices and uh that may mean you need all kinds of investment whether that's an EV or whether that's a battery or whether that's um any other kind of flexible asset
18:30 - 19:00 unless you're going to just respond as a behavioral pure behavioral response and in order to achieve that we need some degree of stacking of Revenue and how do we achieve that how do we actually pay for all that stuff so some of the challenges now two ways forward for all all of this in a way is first of all is to have what we'd call hybrid terrorists and I just mention what those are another way forward is to have multi-stakeholder services in order to get the the stacking and the B value thinking just very briefly about the the
19:00 - 19:30 hybrid tariffs what we mean by that is tariffs which integrate a dynamic element with some other element as well to a greater or lesser extent and these are just a very small selection of those because I only have a couple of minutes but basically to say it can be fixed and variable or more variable and fixed or it can be fixed and variable and some um uh other element as well it can be many that are stack together we also see tariffs which for example are more for example EV tariffs that are then added on to some other tariffs which might not
19:30 - 20:00 be dynamic we see scheduling in some markets where you get a benefit in a sense by scheduling your demand it's not really Dynamic tariff but it uh it links to that you'll see tariffs for example which are Dynamic and related to certain assets like heat pumps and not others or EVS as we said some uh some tffs which will also include um the various other elements that we mentioned Plus for example some flexible element which might just occur very occasionally and
20:00 - 20:30 and then you might get the other extreme which is for example modules related to Smart tariffs that give you the option and a variable degree of control over that Dynamic tariff and then and then also for example energy as a service which would include a dynamic Behavior but you won't actually be thinking about that all the time and just to say that what these tariffs ultimately do is they provide a customer with a variable degree of risk a variable degree of exposure to those to those tariffs variable degree of action that they need
20:30 - 21:00 to um apply themselves directly and it also helps them go on a journey from maybe the the where they start off to the full extreme at the other end and they can go at whatever Pace they want so just to say these are just a few examples but it helps us move in that direction that we want to move and we're seeing that all around the world but of course it's still a relatively small number of markets and as we heard in many markets you can't even offer Dynamic tariffs or they're just not being offered and then the other solution is or other
21:00 - 21:30 way forward is a multi-stakeholder service approach which this is just one example so we're involved at the moment with a a nonprofit organization started in the UK but uh has many members already and it's focusing on um on local energy markets but it's also gradually moving into a European context now and just to say that the idea is to decarbonize flexible homes create homes uh build them or or renovate them ultimately which are decarbonized so no gas heating
21:30 - 22:00 they're flexible and developed at scale and in a commercial way and um and those homes would include an integration of stakeholders facilitating local Energy Systems to Garner that that uh uh what would say the load the dynamic load averaging to flatten the load across those those homes in order to provide flexibility and in that way you're able to provide flexibility for the benefit of the network companies and the
22:00 - 22:30 suppliers and uh and therefore you're enabling those homes to go on the grid but you're so you're providing a service and a flexibility for the dnos and the dsos but you're also providing value um stacked on top of that for example for supplies and so on so essentially what you're doing by integrating a whole range of different stakeholders that I show there I'm not going to go through all of them but just to say you can then stack Revenue as well and that includes avoided Network costs Quicken you build
22:30 - 23:00 Energy savings demand site flexibility home value increase and also uh mortgage reductions just to to name some of those but what I'm the main message there is that in order to pay for a lot of this flexibility and in order to um make use of those Dynamic tariffs um we ideally want to have cooperation between all the different stakeholders many different models that can be applied to that but that I think is very critical to uh unlock that potential value uh
23:00 - 23:30 with the best outcome for consumers thank you thank you very much Phil indeed quite a lot of uh Food For Thought in terms of integrated management and um optimization of our systems going forward and in an increasingly renewable uh low voltage consumer profile so I think this is uh certainly uh something that is being considered by
23:30 - 24:00 by many markets and and certainly Regulators are preparing the way for this kind of um interactive and integrated uh management of of local energy networks systems uh with multiple stakeholders actors constantly interacting with each other so very very interesting as well also to see different types of models that allow to uh manage exposure and provide a bit of um confidence security uh adaptable to different consumer
24:00 - 24:30 preferences needs and and priorities so I think that's something we'll come back to later in the in the discussions but I hand over now to to Kobo um Fernandez he is an expert on retail markets at the Spanish National regulatory Authority and they for a few years now have had a different type of uh standard price the default price which isn't your traditional regulated fixed tariff but rather one that's already variable and and takes into account uh the spot price
24:30 - 25:00 so he'll tell us a bit more about how that works and some of the lessons maybe they learned from from the crisis uh in 2022 when uh consumers who were on these tariffs were also confronted with exposure to that di volatile Market if you will so I'll hand over to hako thank you very much good afternoon and thank you for the invitation to present our our case study that where we did an exercise to to estimate the potential benefits of modifying the consumption pattern in
25:00 - 25:30 households under a dynamic price to adap to the to the cheaper hours so the potential benefits are increasing demand in central hours with growing PB energy penetration Savings in consumer build and reduction of CO2 emissions and as Natalie say as example of a dynamic price we use the bbpc voluntary price for small consumers which is the most common Dynamic price contract in Spain because households with less than 10
25:30 - 26:00 kilowatt of contracted power are eliable for this regulated product since 2014 additionally in Spain we have time of use Network tars in 2021 for all household consumers with different uh hourly periods so we consider those Peak and of PE uh periods too therefore um what was our approach uh first we use the data of the Year
26:00 - 26:30 2023 we use the average consumption profile for uh households and according to the consumption data and household electrical equipment and services we elaborated two scenarios one for a typical equipped household excluding those electricity services that are not present in more than 25% of households mainly space Heating another one for a totally equipped household uh I want to
26:30 - 27:00 point out that we are not including EVS here because we don't have enough data yet so we we have these two scenarios as you can as you can see in the top right corner profiles and then we try to shift some loads to most affordable hours considering preb production production hours and network of PE hours that is early mornings weekends and national holidays as you can see in the in the
27:00 - 27:30 figure below then we selected some lws to be shifted washing machine R to weakens and holidays this waser to Central hours every day and water heating and space heating assuming that we can accumulate the heat to early mornings and afternoons and finally we assess uh the impact on C2 emissions by compar comparing emissions before and after the shifting of the loads considering the hourly Generation by technology and CO2
27:30 - 28:00 emissions factors applied by System operator so um what were the results uh first a total saving between 8% and 11% on their annual bills depending on whether they have typically or fully equipped household in addition uh CO2 emissions will be reduced by 3% for a
28:00 - 28:30 typical equipped household and by 6% for a fully equipped household since we reduce demand in Peck hours and finally if we look to the new consumption patterns on the right uh dotted lines we see a potential alignment of increase consumption during Central hours with the rise in solar energy generation therefore um as conclusion uh we confirm meaningful Savings in the
28:30 - 29:00 consumers Bill the support of renewable energy penetration and the contribution to to the carbonization so the benefits are there um however uh we still have uh room for improvement in the consumer awareness about all these uh benefits so as per our experience even if around 30% of households are under this dynamic product most of them still are not
29:00 - 29:30 totally aware of the potential that they have changing their consump their consump behaviors Behavior therefore we we continue working to communicate and to inform the consumers it's true that there were Improvement during the energy crisis because people are more aware of this um because of the big uh the increase on the prices they search for other uh possibilities
29:30 - 30:00 new offers but still we have to work we are trying to improve our comparison tool to incorporate more products the QR code that we are including in the build to help the consumer to understand the different concepts of it we are also publishing a color code as a traffic light to help the consumer to identify the cheaper hours of the pbpc every day and so on so uh um that's all for my
30:00 - 30:30 side thank you and I'll back to Natalie thank you very much kak this is very much um in line with what we hope to hear as well now from our behavioral scientist uh petan um is from the um economic and social Research Institute in Dublin and this is exactly the area that they work on trying to understand how people behave and how they make the choices they make and why and what's the best way on that basis of
30:30 - 31:00 communicating with uh consumers and trying to explain benefits risks uh and results and impact of their own participation and this very much goes to well the topic of our panel um how can we communicate effectively with consumers so they can understand uh their potential role and contribution to an energy transition also what it could mean for them for the environment and and in terms of their decision- making
31:00 - 31:30 processes and the elements that they take into account when when making choices so this is something that um Pete you've looked into actually quite recently um saw a study that you did for the Irish regulator exactly on this question maybe could you tell us a bit more from from your experience what do you think that consumers need um in terms of the information that they can uh make use of in in making their own decisions about
31:30 - 32:00 their energy choices uh yep thanks very much good afternoon so yes we we have a paper it's an Open Access paper if anyone wants to read it it's published in utilities policy it's simply Open Access and you can take a look at it there but as a behavioral Economist my honest answer to your question about what consumers need is I don't know and what a behavioral Economist like me and my team would do here is you've got to test it you you've got to actually get stuck in and try to experiment with consumers and that's exactly what we did in the paper and we were surprised by the result so when I say tested I can give you an idea of
32:00 - 32:30 what we did uh we exposed different consumers to primers onepage primers trying to explain to them these were templates that the energy regulator wanted companies to use to try to explain the way smart meters and time of use tariffs worked and how they could put themselves on a flexible time of use tariff and what that would what that would mean and as well as exposing them to that and randomizing different people to see different presentations of the information to see which worked best we tested using multiple choice questions
32:30 - 33:00 and using tasks where the consumers had to match a simple usage profile to an appropriate tariff they had to say look if if a usage profile looks like this what would be the better tariff to use so we could objectively see how different presentations of information affected consumers uh performance in those tasks and how good consumers really are so just a few brief lessons from that um the first thing that we found certainly in Ireland is actually in terms of attitude consumers are
33:00 - 33:30 broadly positive to Smart Meters they understand that there are potential cost and environmental benefits but they find it really really hard to use them and to actually choose an appropriate tariff so what we found and I should say these tasks that we gave people were incentivized they were rewarded for getting the answers right in the study and they really struggled um they struggled with the multiple choice questions to understand exactly how smart meters and time of Ed tariffs work and they struggled to match simple usage patterns onto the most appropriate
33:30 - 34:00 tariff even though we'd given them a full page primer and we'd incentivize them to do this so they could win rewards for getting the right answers um and I think what we get from this is that in all honesty um information and incentives is simply not enough um in Behavioral Science we call this the curse of knowledge uh the problem that when we understand to know something we find it really hard to put ourselves in the shoes of people who don't and what our studies show actually is that a representative sample of consumers
34:00 - 34:30 really struggles with time of use tariffs and there were some surprises in there as well um we thought that by using colorcoded clocks as has become quite standard in Industry where these tariffs have being um deployed that that would help people to understand we actually got a backfire effect particularly among young people and we realize of course that young people these days almost never actually engage with spatial clocks they're not brought up with them they don't use them um and actually they're much more likely to use
34:30 - 35:00 digital information so we actually found that presenting young people with the Tariff timings and prices in a simple table was much more effective than using a fancy colorcoded clock that the marketing people liked and we also found that describing electricity usage in terms of appliances instead of just simple amounts that also didn't work for us and we thought it really might if we sort of gave people intuitive examples to do with appliances so where do we end up with all of this following a study like the problem is harder to solve than we think it takes more than information
35:00 - 35:30 and incentives and You' got to test you've got to try different ways to communicate the information and test them to see which works because even if you have degrees in Behavioral Science your hypotheses are often wrong and you discover when you test them that the world is more complex than that so I think we've got to find um newer better ways to nudge people to use these tariffs better uh we've got to accept that it's a harder problem to solve than information and incentives will allow us to solve um and I think what that requires is in
35:30 - 36:00 different countries it requires more effort it requires more proper testing uh that's done scientifically not through things like um focus groups and simple kind of marketing brainstorms you've actually got to get in there and test it properly and really see what people understand yeah absolutely as as we Regulators often find ourselves saying the answer to most questions are it depends and I think when you're talking about people and behavior and choices it always depends on the person on their
36:00 - 36:30 circumstances on the way things are phrased the way they're presented there are a lot of Depends uh involved in any single decision that we have to make as as humans but certainly as as consumers um and and as we know uh markets will become more and more complex with more offers and more different scenarios different types of services available as we Al just saw from philli so that makes it all the more difficult to really provide a black and white this is what people re react to and this is how we
36:30 - 37:00 can do it um and it can very much be sociocultural can be demographic it can be generational all these different uh issues that you were just mentioning they really uh have a role to play and we have quite a few questions really great questions um have been coming in on the slide of and one of them has reminded me of another aspect of this Challenge and um and that is the the difference between types of consumers in particular vulnerable consumers or at risk consumers so those who have a
37:00 - 37:30 medical dependency or um employment situation that means they don't have as much flexibility uh so on and so forth so this is something that uh while we of course have to promote um more efficiency and and some flexibility we have to keep in mind that there are lots of different types of situations and what can we do um for the more vulnerable and how to ensure that they don't um not lose out I don't mean just even money but that they're not put at risk in any way um for these different
37:30 - 38:00 systems U trying to to manage uh and shift uh consumption different times a day so I think that's also a question maybe for all all of our panelists to keep in the back of our minds as we as we go forward with our debate this morning we have about um 15 minutes I would say that we can dive into some of these questions so if you agree I'll just pick up one of the ones I see here um and maybe Sheamus you can tell us a bit more coming from the the report
38:00 - 38:30 itself um we see that uh there is a low uptake of flexible contracts at the moment across many countries not all um why why would this be how can we promote change uh on this issue um is it just a lack of information understanding communication as we were just hearing from Pete uh do people just not want them uh do suppliers just not offer them or what have you seen so far uh when uh canvasing the the European experience building it up at a basic
38:30 - 39:00 level when you go back to the smart meters you know in generally if the smart meter is offered it enables it the dynamic price contracts if you have a if you're a large supplier with over 200,000 consumers you should be offering it to your consumer a dynamic price contract you should now because of the uh EMD be offering fixed price contracts as well that is coming so it should be it's neither e either or you should be offering both both um we do see that
39:00 - 39:30 okay in markets where you have a a large role of smart meters these contracts are not been offered yet previously they were um in response to the crisis some of them fell away more in the nording markets we see we do see them being offered uh but then there's probably an incentive there ingrained because there's a higher electricity consumption rates so the product is slightly different you know if you're in Norway your consum makes 16,000 kwatt hours of electricity perom whereas in Italy it's
39:30 - 40:00 2,000 kwatt hours perom it depends on there's other things to consider as well so do you have heat pumps do you have EVS if you have an EV a lot of people are quite interested in automatically getting it because they're not interested in charging their They Don't Really Care when their car is charged they just care that it is charged at certain times and these then open it up for automation so in general the smart meters are the the foundation Zone we need them we need them to be utilized we
40:00 - 40:30 do see that some suppliers are not offering the product and on the promotion I think yakobo was probably best to jump in there or maybe Philip will have some in insights as well um but in Spanish Cas yeah exactly what you were saying is 30% of consumers in Spain are on time of use and on pvcp how how has that happened how how did we convince people or was it by default H in fact it was by default
40:30 - 41:00 because um uh in 2014 we introduced this regulated price that is uh a dynamic uh price in fact so uh more of the people when they started the Liber the liberalization of the market they they were uh continuing with this uh tariff and they and this was uh reduced with the so the people go into the to the free
41:00 - 41:30 market but um in fact this is a a really Dynamic uh price that is uh accomplishing with all the requirements of the directive the the problem here is as we as I said before that um the people is not totally aware of of his uh the the possibilities that they have to change the behavior and and to be benef this will be beneficial for
41:30 - 42:00 for their bill and for the system but um additionally I I would like to to say about that we in Spain we have also time of use Network tariffs so uh sometimes um the congestion of the networks is um is the opposite of to the cheaper prices of the with the solar energy for instance we have cheaper prices with the energy but uh a high demand in the in
42:00 - 42:30 those hours so um because of that uh we considering different periods uh for the for the networks so um depending when you are consuming you are paying more tariff to uh the network than in other periods and this is uh thanks also to the smart meters because also we have a
42:30 - 43:00 very high deployment of these smart meters thank you f and I think this leads to another question we have here and now maybe I'll I'll pass this one to Philip because I think everything is connected as we know all these aspects are connected um but this complexity of the mixed signals between good Sun hours and good grid hours and they're not necessarily the same and how as an average mortal can I be tracking prices and grid prices and know when I can turn
43:00 - 43:30 on my machines or not um and that speaks to this issue of Automation and Management Services and something behind the scenes worrying for you so you don't have to try to keep track and understand all the numbers in the math and and decide that it's at 7:15 that you can turn it on but please stop by 727 so uh these are the kinds of issues that we will face going forward more flexibility means keeping track of more components and as a consumer dealing with so many
43:30 - 44:00 different issues in your daily life there's no time to be actively uh managing uh energy consumption to that degree so we had some questions here about you know what is the role of the utility in promoting some more flexibility and consumer interest and flexible contracts um what is the role of automation into helping with all of this and where do we see um if you will where's the drive where's where's the where's it coming from and how will it
44:00 - 44:30 get to us at the end to be more mainstream um ultimately in in the way that we all consume and interact with energy that's a big question I'm sorry I can have a get I mean it's a it is totally integrated and exactly as you said Natalie a couple of things to point out one is that first of all uh you have to have ideally you benefit a lot more when you have the assets which enable you to to benefit from um Dynamic tariffs so for example if you look just at the nordics if you have a a dynamic
44:30 - 45:00 tariff and you have an EV the price you pay for the EV uh electricity will probably be about half to onethird of what it would be if as if you don't have any real shiftable Assets in the home to do that it's probably a quarter of what you pay with a standard tariff that's not Dynamic mind you but it's massively less if you have an EV it's also massively less if you have electric heating um if you have a home where you don't have a lot of shiftable load then you're benefiting still but not anywhere near as much the other thing is the
45:00 - 45:30 complexity because the very often I mean we collect tariffs from all around Europe all the time right and and the reality is that some of those tariffs are insanely complicated for anyone to understand even a specialist let alone a consumer and um and this is doubly difficult if you have Network and uh and uh and sort of Supply tariffs included in that so the complexity is can be so high that no normal consumer could could realistically understand that so then
45:30 - 46:00 you're as you said you're limited to Automation and uh something that will automatically do that but of course the downside sometimes with automation if it's automated without the customer understanding they don't quite know what's going on it's you you need some degree of understanding so they know what the automation is the benefit they bring them just to say one point that on this when I mentioned the local energy markets Alliance one thing that we've been um Talk we've been talking very EX extensively to network companies it's actually Network companies more than
46:00 - 46:30 suppliers because the network companies have massive requirements to reduce um congestion on the grid and talk about locational it's not everywhere right in some countries like Netherlands it's almost everywhere in places like Britain it's most places now where there's a lot of congestion for connections and so on and so therefore if you want to develop in an area you want to build out you want to have more assets on the grid as a household then you end up having problems and uh and therefore the
46:30 - 47:00 network companies are very keen to collaborate to provide funding to avoid investment in the grid because that investment will take to long you can use that as a Cornerstone client right you can use that as a as a base payment and then what's left after you fulfill that need for the network you can then for example use that additional flexibility into ancillary markets wholesale markets and so on so you can stack that together just so that I think not to forget that there are ways to do it but it just needs to be done very simply and
47:00 - 47:30 understandably and that's where I think the communication and last point on that um about Smart Meters if you look at the nordics where a huge proportion of people have Dynamic tariffs they don't look at their hourly consumption all the time what they're looking at all the time is the price you you what you do with your consumption is you adjust it according to the price if it's cheap you charge if it's not you don't uh and if it's super expensive you don't do the cooking whatever but the reality is you
47:30 - 48:00 don't need the realtime consumption data all the time in front of you you need it for reconciliation uh and all you need is a price if you think about simple communication it can be as simple as that high price don't use low price use it's not so complicated thanks very much V I think that's a perfect um segue to uh asking uh asking Pete a bit more how he thinks consumers can respond in this environment keep it simple you know don't complicate things even if the back
48:00 - 48:30 office is complicated do you think people are able willing um that this world that we're talking about can be uh made simpler terms of consumer responsiveness certainly making it simpler would would help because it doesn't take much complexity for consumers to start to make mistakes and we can measure that and we have measured that and we see that um that's an important issue actually and relates to a question you asked previously was on
48:30 - 49:00 the slider that I think is worth saying I mean consumers often have very positive attitudes towards time of use tariffs towards D Dynamic pricing in principle and you then say well look if they've got these attitudes why aren't they switching to them why aren't they using them and we often say oh well it's transferring risk but the much more important thing is that it's transferring uncertainty and part of that uncertainty is the consumer themselves not knowing whether they do genuinely understand as Philips just mentioned what they're getting themselves into they're actually scared
49:00 - 49:30 of making a mistake they're scared of appearing foolish um they're scared of being an early adopter who then gets burned and all of those are uncertainties is not about you know how big is my bill going to be according to the dynamic pricing there're UNC is about my own capability to understand the system that I'm engaging with and to use it without getting burned so I think yes Simplicity is is hugely important and it may be an issue of kind of baby steps that actually we want to move consumers slowly onto gradually slightly more complicated tariffs and not try to
49:30 - 50:00 push them too quickly that I mean even getting consumers used to a very simple Dynamic tariff for a while before moving them onto something that's more optimal for them is probably a smart thing to do because they at least get a feel for it and get an understanding for it at a more simple level um I have to confess as a behavior Economist I'm deeply skeptical about some of this stuff when I see how complex some of the tariffs being offered are because we know that if you can confuse consumers to that degree you can end up actually making money out of them and confusing the whole market and then we don't get the environmental benefit and the consumers
50:00 - 50:30 don't get the benefit either so I mean if there are plenty of regulators on this call today I mean ensuring a degree of Simplicity and drawing a line when something is clearly too complicated for Consumer use which can be test I think is an important principle yeah very good thanks very much in fact in the study that you recently did you you specifically mentioned there's a difference and I think we would all agree between communication and comprehension yeah so you know bombarding people with facts with information with websites is
50:30 - 51:00 not the same thing as helping them understand and uh we heard a bit earlier about different tools you know whether it's a uh comparison websites or um information all of our Regulators we publish lots of information and and try to be very clear in protecting and defending consumer rights um we also for example you know the Spanish regulator has this interesting QR code in the bill which goes directly to the website so consumers can see their Prof their
51:00 - 51:30 profile and their consumption information so to help them get to the place without having to know where to find all the data um themselves so what other kind of mechanisms do you think we can use to bridge this difference between the communication convention um the primary one I'm going to give you again I'm afraid to repeat myself is just testing I mean it doesn't matter how good something appears to the engineer or to The Economist or to the expert behavioral expert like me is this ought to work until you actually experimentally test it you don't know
51:30 - 52:00 and what we find consistently is that when we test things what works and what doesn't work surprises us um so I I'd say it again The crucial thing to do is to devise different forms of communication and test them and see are we getting an explicit change in people's comprehension and in their confidence to use the system because it isn't just that they need to understand is that they need to feel like they understand that they have a degree of capability and competence within the system so I think the crucial thing to do is to test it properly nothing like trying it on real
52:00 - 52:30 people and see if they respond I think your example about the clock was also very interesting I guess it's a generational thing some of us are more comfortable with the Old Clock um and I I recognize that a lot of people still now check their phone to see what time it is rather than to check their wrist so that is that is a big difference uh over time that maybe those of us further along in the careers aren't so conscious and it seems logical to us but as you say have to factor in people in the in the street and real life um references
52:30 - 53:00 so I don't know we are running short of time we had a lot more questions and I think they they're very interesting um but I just wonder if we have time I think I have to hand over to toila um lots of questions also now looking about electric vehicles and whether we should be um trying to understand those tariffs and how they're constructed in the different markets as these grow um so countries are starting to uh have more and more of these uh different solutions
53:00 - 53:30 in in their system so their impact becomes uh more relevant as well so there's a lot more to cover and we'll keep working as CR and Acer you can be sure of that and uh our future editions of the MMR will also uh evolve and we'll keep trying to put our finger on the on the pulse of of how markets are evolving and what what we see happening a very big thanks to our our three panelists um and to their insights on on all the different um aspects of retail markets and consumer uh response to to the
53:30 - 54:00 possibilities and certainly looking forward to to continuing discussions and I think the the behavioral one is is key to really delivering any of these uh Innovations uh besides the Automation and and the technology so thanks again for your for your time and and for sharing us uh your your experience and and answering people's questions and with that I'll hand over to shil who'll give us some closing remarks so that we can keep the time in everybody's busy lives thank
54:00 - 54:30 you thank you Natalie and good afternoon to all of you so my role as a host is to close this webinar uh provide some policy conclusions and then say goodbye um concerning the policy recommendations and concluding remarks uh we found very interesting today's discussion and what we saw that we that there's a real potential to save on consumer bills to reduce emissions but we have to also recognize that consumers are have to be made aware sometimes they are concerned sometimes uh uh they need more
54:30 - 55:00 education and also simple information uh to work and then to use these opportunities that we have today some of the case studies in in particular the Spanish case studies show that it's possible to navigate uh uh better uh this environment to increase demand in central hours uh and to rely more on the renewable Supply but of course more work is needed and we have also learned that both fix and dynamic contracts if they are made available then uh hybrid
55:00 - 55:30 contracts will appear in the market and that's also a very useful knowledge but what was really exciting in the conversations that we had today that eventually uh there is an import it's very important that we understand consumers and what they understand out of the options that they are faced with uh the market and it's also important that we offer consumers to make small steps and in this context hybrid contracts could be useful tools uh for consumers to a little bit experiment with uh the dynamic aspects of certain
55:30 - 56:00 Contracting uh opportunities this brings me to the second point which is important is uh uh when it comes to demand side response which concerns both both households and also uh uh industrial users we noticed in our reporting that we have challenges to collect industrial consumer data and to understand and observe what this uh group of consumers uh are needing and so that's uh something an area where we would like to deepen under our
56:00 - 56:30 understanding then there is another element where we have seen incompatibility this comes to the smart meters there we see that even in countries where you have a roll out the utilization of these meters are not so successful and there might be some sort of incompatibility between uh uh between the smart meters and the availability of flexible uh tariffs then uh we also have seen that there is some sort of contractual rigidity uh in the markets and we would
56:30 - 57:00 probably need to reflect further on why is that happening and then how is it possible to to release this rigidity of Contracting and also to see you know which consumer groups would be interested in what kind of contracts so more work is needed there then at Acer we are also firmly standing uh about the efficient use of capacity uh we would like to see that uh there is demand side response and not only uh merely uh um um an efficient
57:00 - 57:30 capacity built out so you would like that that comes to and uh comes to a balance and then uh practically demand side response creates uh an opportunity to make the transition more affordable uh having the users using flexibly uh demand responding to the supply patterns we also see that the framework is very complex in this legal framework we have governments regulators and suppliers working together and so our fourth point
57:30 - 58:00 is that the framework has to become comprehensive for consumers consumers should be made aware of the benefits and drawbacks of the energ of the flexible energy consumption and they should be appropriately incentivized educated guided and informed about the collective value of flexible consumption this flexible consumption should be also recognized in the bills that the consumers received we also believe that the supplier Innovation
58:00 - 58:30 needs to evolve and over time we believe that this will take place we believe that smart meters Shall Serve their purpose but also we believe that there should be some acceleration when it comes to the entry of aggregators third parties who can act on behalf of consumers and provide access and they should be provided access to Consumer data in order that they can play their role finally I would would like to call your attention that we also published a dashboard the price retail PR price
58:30 - 59:00 dashboard next to the monitoring report and that is available also on our website equally as Jana mentioned earlier uh the slides and the webinar uh um as well as the presentations of the webinar will be made available on our website and then to say a couple of thanks uh uh and and and and uh appreciation for the discussion today I would like specifically thank you for the panelist Philip pan yopo for coming
59:00 - 59:30 and discussing uh with us I would like to thank Jana and natal for uh opening uh uh the uh the um the webinar and for uh running the discussion I would like to thank forus and all the ASA colleagues who were supporting the uh the webinar today and I would like to thank you for your active participation uh and would like to say goodbye to you thanks a lot and see you
59:30 - 60:00 at our next webinar