Utility Week

Utility of the Future: Consumers UTILITY WEEK | 13TH - 19TH MARCH 2020 | 25 As we move into the latest pillar of our Utility of the Future series, we will explore how technology and decarbonisation will fundamentally change how consumers buy energy. What will be the impact on customer engagement? And how will we protect those that are vulnerable? Will the rise of automated switching and price comparison websites bring long-term sustainable benefits? And as we move towards a distributed network, what is it like to be a prosumer? We begin our look at these changing relationships with a report into buying energy as a service. Rather than paying for kilowatt hours, the prevailing view is that going forward this will be replaced by purchasing 'heating a room for a number of hours'. This would help to pay for the installation of measures such as heat pumps or retrofit. There are plenty of glitches to iron out before heat as a service can get serious, but the first trials certainly look promising. Denise Chevin, Utility Week Intelligence Editor T he prospect of a decarbonised energy system is now tantalisingly close, pushed forward by an infusion of renewables into the grid, the falling cost of wind and solar PV power, and advances in energy storage and smart digitalisation. A modernised grid could deliver more from less, at substantially lower cost, but it would also require a rethink of market structures and a system that incentiv- ises suppliers to sell customers volume, leading to waste. Keen to forge a new path, energy providers are experi- menting with a range of new business models, products and services that redefine their relationship with custom- ers and how they pay for their energy. Energy-as-a-Service (EaaS) would see suppliers take over end-to-end management of a customer's energy service to optimise efficiency and help them avoid the upfront capital costs associated with low-carbon heat- ing systems. Time-of-use optimisation models leverage value from flexible energy sources by shiƒing electric- ity demand to cheaper times of day when fossil fuels are less in use. Other disruptive ideas, such as peer-to-peer energy trading platforms, lifestyle products and bundled services, also promise to transform the nature of transac- tions and suppliers' engagement with the market. A diverse range of options can be expected in a decarbonised future, explains Laura Sandys, business entrepreneur and policy innovator at Challenging Ideas: "Different components will be incorporated into energy packaging. It won't just be about kilowatt-hours deliv- ered, a charge may also include payment towards solar panels, an electric car, or perhaps home energy effi- ciency measures. Energy suppliers may offer financial service products, for example, an electric vehicle might continued overleaf Analysis Power to the people: reinventing the grid Distributed renewables coupled with AI and machine learning offer a heady mix of possibilities for recasting the energy system into something that gives the customer ownership of costs and carbon, but practical problems remain. Stephen Cousins separates science fact from science fiction. be leased with embedded energy equivalent to a certain number of miles a week, so utilisation of energy is part of the overall capital asset." Hard reset The government has committed to fully decarbonise the energy system by 2050 and is currently working with Ofgem and industry stakeholders to define the policy, legal and regulatory changes needed to future-proof the energy retail market. As the principal interface between the energy sys- tem and consumers, suppliers have a key role to play in ensuring that customers get access to the benefits of a smart, low-carbon energy system, including increased flexibility and lower costs. Tom Pakenham, director of electric vehicles at Ovo Energy, tells Utility Week: "Energy suppliers are not just thinking about how they charge differently, but how they build a different relationship with customers and find new ways to interact with them. It begins with a kind of a recognition that the relationship is going to be deeper and more complicated than just buying and selling a commodity with a mark-up." An important driver is the need to simplify custom- ers' engagement with energy in the face of a more com- plex distributed grid, he adds: "Mass uptake of flexibility and smart energy consumption will require us to make it really easy for our customers. The majority will want to delegate intelligence to some form of platform that can control it on their behalf, get them the lowest price energy for their needs, or even sell back energy to the grid." "Energy suppliers are not just thinking about how they charge differently, but how they build a different relationship with customers." TOM PAKENHAM, DIRECTOR OF ELECTRIC VEHICLES, OVO ENERGY

• Cover