Energy mix and choice; changing the power game for Australian consumers

Cassandra Hogan, National Power and Utilities Leader
Cassandra Hogan, National Power and Utilities Leader

“Empowerment” and “choice” are two of the current buzz words consumers are hearing every week as the electricity and broader power generation sector rapidly evolve.

Choosing to generate your own electricity via solar panels, investing in battery storage, owning electric vehicles, creating local area networks as well as selling electricity back to the grid are real opportunities in the here and now. These weren’t available as recently as two to three years ago.

Implicit in consumers being empowered and having the ability to take advantage of new technologies is the degree to which there is greater transparency and access to consumption and tariff data that assists consumers make informed decisions about their energy.

The Australian Competition and Consumer Commission (ACCC) Retail Electricity Pricing Inquiry final report makes several important recommendations that will impact both consumers and business. The overarching aim is to help improve affordability for both consumers and businesses.

But while policy makers have an important role to play in keeping a check on prices, careful consideration must now be giving to the impact of the ACCC’s recommendations on competition and innovation. Will the reforms cater for the customer of the future?

The expectations of Australian consumers are on the rise especially in regard to ease of doing of business as well as services that will allow them to optimise their choices and the value of their consumption profiles. In fact, this trend is common across all utility services, where consumers are demanding increased access to information, tailored technology solutions and flexibility.

These changes have three important implications in considering the appropriate way for energy market retail arrangements going forward.

The first is the need to enable consumer empowerment.

It is critical that any interventions in energy retail markets and changes to regulation support technology transformation and consumer participation. They should not curb the ability of energy retailers to innovate in services offered, and allow customers to capture the full value of new technologies.

Market arrangements should not curb the ability of energy retailers to innovate in services offered, and allow customers to capture the full value of new technologies.  The nature of electricity services will continue to change under this transformation and the potential of re-introducing regulation of prices through default offers may not adequately recognise the increasing value offered by retailers.

The second is supporting changing customer expectations.

Its true customers are wanting more from the market. Regulation has not always been sufficiently flexible or quick to recognise the changing customer expectations. This year, next year and for the more distant future, customers will want different options and introducing regulatory controls may act to discourage such choice

The third is to recognise diversity.

Not all consumers have the same buying power and access to technology. Different sectors of the Australian community have neither the means nor the inclination to invest in new technology. However, all of society must be provided for and so it is critical that customers who cannot afford to engage, or simply want access to low cost power, are not left behind as energy markets evolve.

While new arrangements may be warranted to improve trust in the market, there is a risk that increasing interventions may in the long term stifle much needed innovation and fail to provide safeguards for those customers most in need.  I would reinforce a key point about consumers and power: in addition to being a rapid evolution, empowerment of consumers is as much about equality of access as it is about innovation, flexibility and choice.

3 thoughts on “Energy mix and choice; changing the power game for Australian consumers

  1. It will be interesting to see how advancements in technology such as battery storage and the quantum battery being developed at the University of Adelaide affects power companies. Consumer choice could soon go far beyond the traditional power supply chain.

  2. The paragraph regarding diversity is very important as is simply using less. With technology available today the customer of one is achievable. There is merit in pushing awareness of thermally efficient housing, that is use less energy for heating and cooling. Maybe using less energy and pursuing the customer of one capability are not popular ideas yet being more digital means greater transparency to consumers.

  3. Interesting point about the equality of access. If more people opt out of the grid and self-generate power, what does that mean for the people who have to rely on the grid and the insfrastructure behind it? There are implications for pricing and what is the peak demand requirement on a cloudy and cold day.

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