FEATURE: CEER consults on enabling energy digitalisation in the consumer interest
CEER has launched a new public consultation on Dynamic Regulation to Enable Digitalisation of the Energy System. The paper examines the implications of digitalisation for the energy sector and for consumers in particular. It considers the changes that may be needed to empower and unlock the benefits of digitalisation for consumers and to protect them against the risks. Views are sought on the regulatory proposals in this paper by Tuesday 14 May 2019.
What’s in the CEER Digitalisation Consultation Paper?
First, the paper sets out the background to CEER’s 3D strategy and defines digitalisation in the energy context. Digitalisation is one of the 3 pillars of CEER’s 3D Strategy for the period 2019-21. The two other strategic policy areas are decarbonisation at least cost and dynamic regulation. CEER sees digitalisation not as a goal in itself, but a means to deliver benefits for the energy system and ultimately for energy consumers. Indeed, digitalisation is a necessary tool to reach the overarching objective of a flexible and sustainable energy system. To deliver the strategy, key questions include: what does digitalisation mean for the consumer, and what is the role of energy regulators in stimulating change in a positive manner for the consumer?
Second, the paper considers the value proposition of digitalisation for energy consumers. It looks at the implications of digitalisation for the energy system in terms of the opportunities to increase productivity, enable new products and services as well as transform the way the sector does business via digital platforms or marketplaces. It considers what these changes in the energy sector mean for consumers.
Third, the paper explores the enablers to unlock the benefits of digitalisation for energy consumers, including new services and marketplaces. It also considers what might be needed to protect consumers from risks that may emerge from the changes that digitalisation brings. It looks at the potential measures relevant authorities could consider in unlocking the benefits and mitigating the risks.
Importantly, potential regulatory measures are set out for consultation and the paper seeks views on whether and in what priority they should be taken forward.
In the energy sector, information technologies have played a key role in the development of competition and in the reduction of transaction costs via a better coordination of network systems. With digitalisation, we can think of increased availability (lower cost) of data, which is more readily analysed (becoming information) and transmitted/communicated to give effect to actions. Digitalisation of the sector is the sum product of the changes made by companies and customers to utilise this. The key drivers of digitalisation include:
• Data being more readily available digitally due to falls in the costs of sensors;
• Analytics, which is the use of data to provide information and insights, which is advancing due to machine learning and artificial intelligence; and
• Connectivity, the exchange of information between humans, devices and machines, via digital networks.
Digitalisation – greater use of data and digital technologies – is bringing important changes to the energy system. It provides the opportunity for increased productivity of the existing energy system, new products and services that impact energy demand, and digital marketplaces that bring new participants and transform the way the sector does business. It also brings new challenges to ensure that consumers (including prosumers) are empowered and adequately protected, that data is secure, and regulation keeps up to date.
Aim of the Digitalisation Consultation Paper
The purpose of this CEER public consultation is to explore the value proposition of digitalisation for energy consumers, the enablers required to unlock the benefits of digitalisation, to identify risks and challenges in digitalisation and to recommend areas for further work to achieve dynamic regulation by relevant authorities, including regulators, CEER and the European Commission among others.
Energy regulators are keen to enable digitalisation that unlocks efficiency and value for consumers. Digitalisation facilitates the transition towards a more flexible energy system by a greater use of data. Consumer need to be both empowered through digitalisation and adequately protected against risks, and we want to mitigate against a “digital divide”.
There are important questions about how the new actors or arrangements interact with the existing model whereby energy suppliers have the main interface with consumers, and about how different groups of consumers will be affected in different ways. We raise questions about the role of regulators in a multi-product market and their ability to empower and protect inactive consumers as well as those who engage. This highlights a need to think about an integrated consumer approach. The paper sets out 14 potential regulatory measures. In this paper, CEER seeks input to help regulators prioritise the actions that they should take to benefit consumers over the course of CEER’s 3D Strategy for the period 2019-21. Views are sought to our digitalisation consultation via the online public consultation tool by Tuesday 14 May 2019.