How can innovation deliver a smart energy system that works for low income and vulnerable consumers?

Published: 18 June 2021

The UK’s Net Zero target will drive radical changes to the energy system between 2020 and 2050. A smarter, more flexible energy system will be required and could help create savings for consumers and the wider electricity market.

Government, Ofgem and industry are pursuing this in a range of ways, whilst maximising the potential for all consumers to participate in this smart, flexible energy market of the future. This could result in new technologies and appliances in consumers’ homes, access to smarter tariffs, interaction with a broader range of service providers and new infrastructure in their local area. Specifically, this could include smart metering, demand-side flexibility, electric vehicles, electric heat pumps and domestic energy storage.

These changes to the energy system raise a core concern about whether low income and vulnerable consumers could be less willing and less able to access, purchase and use smart energy products and services.

The Department of Business, Energy and Industrial Strategy (BEIS) commissioned this report to review how innovation could enable low income and vulnerable (LIV) consumers to participate in a smart, flexible energy market.

This review summarises evidence to answer the following questions:

  1. How do low-income and vulnerable consumers participate in a smart energy market? What barriers prevent their participation?
  2. Does existing innovation activity help them engage in this market?
  3. How will new innovation activity ensure they are engaged in this market?
  4. How could innovation put them at the forefront of the smart energy transition?
  5. What risks could emerge when, and how could innovation prevent them?
  6. Where should future innovation focus?

Key points

The findings of the report revealed a limited amount of evidence about how LIV consumers could participate in smart energy products and services of the future. The evidence reviewed showed the majority of existing innovation projects with LIV consumers have focused on accessing and using products and less on how these consumers could purchase or pay for them.

Projects typically try to persuade LIV consumers to trial existing technologies rather than finding out what consumers want and designing technologies they find appealing and useful. Whilst some LIV consumers did participate in these projects, the reason that LIV consumers did not want to participate as they did not think the technology fitted into their everyday routines and the way they wanted to live in their home.

Each project reviewed had developed its own way of working with LIV consumers, including recruiting participants, developing consumer protections and communicating about using in-home devices. The project teams’ experience delivering projects changed their views on how best to work with LIV consumers. However, each project had to learn these lessons from scratch, rather than building on others’ experiences.

Of the energy innovation projects with LIV consumers reviewed, most did not follow all the steps in what some consider best practice innovation processes used in other sectors. This involves working with consumers to understand the problem space (discovery), co-creating solutions with them (alpha) and trialling at increasing scale (beta), before going live. Future innovation would maximise its potential by taking a human-centred design approach. This would design products and services that addressed consumers’ needs and solved their problems.

The review identified 6 risks that could emerge as a smart energy market develops:

  1. LIV consumers may not be able to afford to purchase smart products and services
  2. LIV consumers may not benefit from smart products and services
  3. LIV consumers face greater risks if the product or service fails to work as expected
  4. Lack of data access reduces how much LIV consumers benefit
  5. Unequal distribution of system costs
  6. LIV consumers experience problems that may impede the emergence of a smart energy market

Recommendations

As a result of this review, there are 6 key recommendations for future innovation to enable LIV consumers to participate in a future smart energy market. Figure 1 illustrates how these recommendations can enable ideas to become products and services that LIV consumers can use in a smart energy market.

There are two main principles that would have a long-term impact on all future innovation projects which involve LIV consumers:

  1. Encourage relevant innovation projects to follow best practice, human-centred innovation processes
  2. Create a publicly funded innovation ecosystem that supports LIV consumers

There is one recommendation to build a comprehensive discovery evidence base to discover what LIV consumers need from energy and the problems they may face to focus smart energy innovation on meeting their needs and solving their problems:

  1. Commission a comprehensive and practical discovery evidence base

There are three low-regret recommended projects that would address obstacles, allowing LIV consumers to access, purchase and use smart energy products and services:

  1. Enable tenants to access smart energy products and services
  2. Provide affordable payment options for LIV consumers
  3. Enable people with energy-related health conditions to benefit from smart energy products and services

Figure 1. Diagram of main InvoLVe recommendations