Diving or dipping in the energy transition?

This contribution was authored by Monique Goyens, Director General of BEUC, the European Consumer Organisation.

Things are changing in the energy market. There’s a commitment in the EU to clean up our energy system following the ground-breaking Paris Agreement of 2015; a drastic drop in the price of solar panels over the past years; a realisation that we need to produce more of our own energy to rely less and less on unstable neighbouring countries. And finally, there are new technologies which can influence the way we consume energy. If people aren’t seeing the effects of these developments yet, they will soon.

There are several possibilities for consumers to save on their energy bills –insulate their homes, produce their own electricity or just consume electricity when it is cheaper. I’ll touch on only the last two aspects of this transition.

Solar panels on every rooftop?

Consumers producing electricity from renewable energy sources bring benefits to all of society: lower carbon emissions, lower costs of the energy system, and stronger security of energy supply. Consumers themselves also gain by lowering their energy bills.

But investments in solar plant installations in Europe have tailed off in the past few years. Why?

Put simply, it can often be a long, winding and risky road to set up your solar plant. Finding reliable information and getting a plan together is not easy. For people with a limited budget, when the investment will pay off is absolutely essential information. Consumers need to understand the economics of the project, information on the right product and installation and maintenance contract conditions. Part of the solution then is to provide tailored advice.

In a project called CLEAR, a consortium of 8 European organisations, including consumer groups, developed tools to help with these decisions and to team up for buying equipment. For instance, group purchases of solar panels or heat pumps led to significantly lower prices and proved very useful for consumers.

The project has so far triggered over 27,000 PV installations and more than €196m in investments in renewable energy technologies. Consumer organisations are now expanding these initiatives within a CLEAR 2.0 project[1].

Cost-benefits of solar power

These types of projects can make a difference on the ground and help people get up and running. They can also make a fantastic contribution to a more sustainable future for our society. But when consumers don’t have such help, they need the economics of the project to add up. Here, there are two particular points which can be limiting for consumers. The first is at what price and under what conditions consumers can sell to the grid the electricity they have produced but can’t consume, for example because they are not at home when the sun is shining.

These are decisions that are currently being debated at EU level. One argument is that the market should do its job and no special conditions should exist for consumers. But doing that is like sending a cyclist to a motorway. Consumers don’t have the time, energy or resources to find buyers for their electricity. Consumers need more favourable conditions. After all, they are making the investments and help to clean up the energy system.

The second point is taxes. In introducing a ‘tax on the sun’, Spain annihilated the rate at which solar panels were being installed. Spain went from being among the frontrunners in renewable energy to now languishing far behind leaders Germany or Italy. The conclusion: taxing something people produce in their own home can kill it. And it is deeply unfair.

The EU must look at these issues from the consumer’s perspective.

Smart energy use

A second aspect of this transition is the smarter use of energy, which might lead to lower energy bills for consumers and reduce strain on the energy system.

Until now, people consumed whatever electricity they needed or could afford and then received a bill for it. But new technology is opening up the possibility of moderating energy consumption when there’s a lot of strain on the grid. Consumers might be able to do this themselves with new in-house gadgets, or they might sign up to new ‘flexible consumption’ offers where a consumer gets rewards for having his or her consumption reduced at peak times. Reducing energy use at peak times is a huge advantage for the grid and society at large.

Lots of people might sign up to something which leads to lower bills. But others won’t be able to, or want to. Parents with young children are more likely to have their heating on all the time rather than having a staggered approach. Some people want comfort, others want lower bills. The market must cater for both.

Choosing a flexible electricity tariff or service cannot be forced on people; it must remain a choice and designed around consumer needs. It’s also very important that consumers who sign up to these flexible energy offers have the same rights as other consumers, like the right to easy and fast switching or to clear information. Consumer rights should not be waived for the sake of allowing innovation.

In just these two examples – solar panels and the generation of flexible electricity offers – new opportunities are opening up to consumers. It’s worth providing the right conditions for people so they dive into this transition and not just dip their toes in it.