Energy UK response to DESNZ consumer-led flexibility consumer engagement consultation

Executive Summary

Energy UK welcomes the Department for Energy Security and Net Zero (DESNZ) considering how to encourage uptake of consumer-led flexibility (CLF). Not only is CLF key to the Government’s clean power and Net Zero plans, but it can also provide significant benefits to consumers, including lowering their energy bills. Cornwall Insight modelling finds that £14 billion could be saved in a 2040 high flexibility scenario, with the majority of this coming from lower wholesale prices. Importantly, all consumers benefit from lower wholesale prices, not just those that can and choose to participate in flexibility.

Having said this, Energy UK has some substantial concerns with a high-intervention consumer engagement framework:

• As CLF services are a nascent market, there is a risk that these measures hinder innovation, rather than support it.
• As the smart meter rollout and market-wide half hourly settlement programme are still ongoing, which are key enablers for CLF services, many consumers cannot yet engage even if they want to.
• There are greater practical market barriers that are hindering uptake of CLF, which need to be solved first to enable greater consumer engagement.

As such, we recommend that DESNZ draws a stronger link between any interventions it progresses and how these would address specific consumer engagement barriers.

For example, we see value in the following:

• Publishing better data on the growth of smart tariffs, uptake of CLF products, and the consumer experience. For example, through Ofgem, Competition and Markets Authority (CMA) or DESNZ market monitoring.
• DESNZ focusing on facilitating market access and other enablers required for aggregators and suppliers to offer attractive consumer products.
• A communications campaign to raise awareness of CLF, and how consumers could engage on this and more broadly contribute to Net Zero, through existing trusted channels. Members have mixed views on if this would be more valuable once the market is more established, particularly given the good work of consumer-led flexibility organisations (CLFOs) in already delivering CLF offers and encouraging consumer participation.
• DESNZ supporting solutions to gaps in the information landscape for specific CLF applications where appropriate. For example, the Government should implement its commitment to provide certifications on electric vehicle (EV) battery health.
• Further considering the need for high-level principles for CLF offers, focused on delivering an improved consumer experience.