Energy Transition: The Role of Consumers

One of the major difficulties confronted by the energy industry is that of providing consumers with a new role so that they feel like an active part of the change.

With the transition of the system towards a decentralized model, consumers turn out to be crucial. They take on a crucial role, given that they are no longer an ordinary beneficiary of energy or services, but instead can now be a producer or a stocker.

The new energy policy encourages placing consumers in the middle of the energy system to enhance industries' competitiveness and decision-making in households.

In what areas does the consumer's role translate?

In this transition, technology has been the key, but technology does not create behaviour change. To bring about this huge behaviour change in the energy sector, we need the collective drive to do so, and that’s where consumer engagement comes in.

Consumers can make reliable and conscious decisions on energy products and services, apply new technologies to inspect their consumption, lower their monthly bills, and even produce their own electricity. To make this a reality, the customer should be active and willing to participate in the energy transition, making use of services such as home energy management.

This "active consumer" role in energy requirements must promote the incorporation of a higher volume of renewable energy and provide the flexibility that this type of intermittent generation requires. In addition, by receiving incentives to respond in times of system shortages, it is anticipated to accomplish an increase in consumption efficiency.

What can be done to expedite this empowerment?

The first measure for fulfilling consumers' activation is to provide them with adequate information about their energy consumption and cost. Hence, it is important to provide consumers with adequate technology so they can understand and manage their installation, for instance, by rolling out smart meters, as well as clarifying and regularising the information included in bills and energy service provision offers. Energy producers, transporters, retailers and policymakers require to formulate services and policies that empower consumers and ascertain the energy transition is fair and accurate. For example, the formation of energy communities, surge pricing, onsite energy production and storage, and electric vehicle services allow consumers to make their own choices and encourage engagement in the energy transition. Furthermore, utilities need to escalate their pace of digitalization and business transformation to keep pace with consumers’ digitalization and demand for sophisticated services, such as 24/7 self-serve web portals and chatbots, which can make a positive contribution.

To reiterate, the major task will be the information management by consumers and the emerging market design that generates clear incentives to participate within, with adequate expertise on the impact they have in the global energy system. As discussed above, information management will be closely connected with the growth of the digitalization of the energy sector. Moreover, with increasing awareness, consumers are willing to pay more attention to environmentally friendly products, and utilities need to escalate their pace in digitising operations; this will enable consumer participation and engagement to deliver the energy transition.

To ensure demand management operates correctly, it is essential to develop stable regulatory frameworks and market designs that enable participation, whether directly or through consumer aggregators, and that also generate the relevant economic incentives to popularise their use. The new legislation will create opportunities for companies to provide consumers with more and higher-quality services. This will allow innovation and digitalization to help companies achieve energy efficiency.