Putting energy users at the heart of policy will solve the energy puzzle

As the energy transition gathers pace, the choices made by energy users will increasingly determine whether decarbonisation commitments are met. The report finds that policy is frequently not designed from the perspective of the energy user and the result is often a patchwork of overlapping, poorly coordinated and confusing policy choices.Today’s transition towards a decentralised, flexible energy system is making the traditional, top-down, centralised system increasingly out of date. Whereas energy customers used to be passive drivers of the system, their active involvement is critical to the successful decarbonisation of the energy system.ADE Director Dr Tim Rotheray said:Energy policy was built in silos at a time when the system was centralised and with few players but this approach no longer works when thousands of businesses and millions of homes are vital to making a low carbon energy system a reality.Those who try and navigate the system and take energy-related decisions – to invest in energy efficiency, to move to lower carbon heating or renewable power generation – often find a complex puzzle of choices and no overall steer to guide their decision-making.The report highlights how users are targeted with multiple policies which have the same aim, face inconsistent eligibility rules and an emphasis on outputs over outcomes. The authors highlight that if these issues can be addressed, and policy successfully engages energy users, the cost of decarbonisation could be reduced by over £8 billion by 2030[1].To achieve this potential, the report recommends: Putting the consumer perspective at the heart of the design of the new policy and regulatory framework. Letting users compete. Allow energy users to play a part in what has traditionally been delivered by a centralised system. Rewarding customers who provide a service to the system. Users who offer support to the system should be paid the price of that service. Being clear about what customers can do, and about what the system needs from them. Regulating for outcomes, not outputs. Innovation will continue to be crucial in a transitioning system, and must be encouraged. Ensuring that the public sector delivers leadership on the transition to the system that we want. Ensuring that consumers have access to good data on energy and are able to share this easily with service providers.Dr Rotheray commented:To deliver a system where energy users are able to participate in and benefit from the transition to a low carbon economy, there has to be a re-think about how policy and regulation are designed.The future system must meet users’ needs, be seen to be fair, and re-build user trust.This vision, where energy customers are at the heart of the energy system and its policy framework, is a vital part of delivering energy system decarbonisation.[1] National Infrastructure Commission, 2016, Smart Power (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/505218/IC_Energy_Report_web.pdf)