Switched-on customers changing energy market
Dr Alastair Martin outlines how renewable local schemes can plug into supply and demand
Are you too rich, too lazy or too stupid? Apparently, there’s an even chance that you’re one of these.
That’s because half of all households have never switched energy supplier, and those are the only reasons why you wouldn’t. Or so it’s said…
This is twaddle, of course. Whether in dentistry, pensions or rot repairs, we all transact outside our spheres of knowledge and rely on experts to guide us. This needs trust – and nothing destroys trust like conflicting advice. Energy is now such a battleground that politicians disagree even on things they agree about – like price caps.
Something (else) weird is happening in Westminster. The Conservatives are showing their devotion to the free market by implementing something very reminiscent of recent Labour policy: telling energy companies how much they can charge.
Sure, there are differences, and we should expect plenty of dilution before this election promise becomes law. What’s more interesting is how we got here. Some of the more energy-savvy politicos (and all parties have one or two) have already figured it out. Laura Sandys, former Tory MP for South Thanet, recently pointed out that the energy market is abuzz with competitors, but has precious little competition.
On top, they’re offering a hassle with bills, a smart meter that may or may not arrive, and the call centre of doom. Customers distrust the offers and get ripped off as a result. The price cap is Government punishing industry for this sorry state of affairs. Energy suppliers have been naughty, and have been sent to bed without their tea. The industry only has itself to blame.
At Flexitricity, we stay out of household energy. We concentrate on balancing supply and demand among business energy users, community energy schemes, and small generators of various sorts. This makes money for the commercial organisations which join in. As things stand, though, it’s a difficult model to take into the home.
But the home can march into the energy industry. People do care where their energy comes from and they understand far more of that than they’re given credit for.
What will change this industry is inquisitive, demanding customers. Energy companies are already obliged to insulate houses – it’s for those who live in them to cash in. Electric vehicle users can insist on smart tariffs – why shouldn’t they charge up when electricity prices go negative on windy nights?
We already do equivalent things with business customers. Community schemes, based around local renewables, can turn the whole town into energy experts. By owning their own supplies, customers can buy and sell from each other and bypass the big energy companies.
The energy industry designed in Whitehall two decades ago is going out of date fast. Neither government nor energy firms can keep up. So what if customers switch supplier? They’re not lazy or stupid and they don’t like paying over the odds. They will switch the whole industry. ● Dr Alastair Martin is founder and chief strategy officer of Flexitricity.