Until now, people consumed whatever electricity they needed and then received a bill for it. Apart from the bill, there was little way of them knowing what their consumption actually was. Now however, new technology and gadgets are hitting the market which allow us to monitor, and therefore moderate, our consumption almost in real time.
Technology to the rescue
Imagine having a display on your wall, or an app on your phone, where you see what you are consuming in real-time and what it will cost you. The energy geeks would probably find that fun in itself. For the average consumer though, this would also carry helpful price signals to incite him or her to consume when electricity is cheaper.
Shifting some of your electricity consumption to times of the day when electricity is cheaper or cutting your electricity use when there is a peak in demand is what policy wonks call demand-side flexibility, or demand response. Some form of demand-side flexibility already exists. Day-night tariffs already cater for consumers who can use energy at night when it is cheaper. But demand-side flexibility is set to go to a whole new level.
In theory, the system would work something like this. When demand is high around 19:30, electricity will be expensive. At midday, when solar power is peaking and most people are working or elsewhere out of home, electricity and its cost will be lower. So, in the future, as we are expected to have more electric cars, we could shift their charging from 19:30 to midday, and this should allow you to save money. This would be called a dynamic tariff, where what you pay depends on when you consumed your electricity.
If consumers decide to take part in this type of scheme, it is crucial that they are able to save money by doing so.
You might not need to be so radical: if you live in Athens in the summer, you won’t be able to shift your A/C use from 19:30 to midnight. But you could moderate it for short periods in ways that are barely noticeable to you but which will be noticeable for your wallet: a cash reward for 15 mins in low mode for a few days a month could make a difference!
It’s all about choice and money
Not everybody will be willing to sign up to these new types of tariffs or services, of course. Parents with young children are more likely to have their heating on all the time rather than having a staggered approach. Others might not be able to, or want to turn down their heating or cooling for short periods.
The market must cater for that. Choosing a flexible electricity tariff or service must be a choice, and not a fake choice which the market chooses for you because there is no alternative.
In the EU on average, electricity prices have risen by about 25% between 2008 and 2015. In Slovakia, energy bills account for as much as 14.5% of average household expenditure .
New technology and gadgets are hitting the market which allow us to monitor, and therefore moderate, our consumption almost in real time.
Anything that helps consumers spend less on electricity would be welcome. So if consumers decide to take part in this type of scheme, it is crucial that they are able to save money by doing so. They should not end up paying the same or even more than on a conventional tariff.
Rules needed to guide the market & protect consumers
The EU, as part of an overhaul of the energy market’s rules, is looking at how to make these kinds of flexible electricity offers more commonplace. It would make Europe’s energy system more efficient.
At BEUC, we think it’s very important the EU doesn’t just open up the market but that it also makes sure consumers have peace of mind when they sign up to these types of offers. We have principles we want the EU to bear in mind when it draws up this legislation.
Exciting changes in the energy market should not lead to unnecessary and additional complexity. If consumers take the time and effort to sign up to an offer, they should know it will be worth it financially and that they are not locked-in. Otherwise, our habits in consuming electricity simply won’t change much.
 See ‘Energy Prices and Costs in Europe’, page 10 .