BYODERComparison Tools

“Nothing Compares 2 U”? Comparison Tools 2.0 for Active Consumers & Prosumers

Consumers turn from extras paying the same price for one kWh 365 days a year to “Active Consumers” monetizing their consumption flexibility through dynamic and time-of-use tariffs or Demand Response-schemes. Investing in distributed energy resources (DERs), the flexibility potential from their generation, consumption and storage assets gives prosumers access to all energy markets. In the fight FOR prosumers, incumbent and new utilities develop new prosumer tariffs with the flexibility potential replacing the supply of (residual!) electricity as main driver.

These promising prosumer tariffs come along with an increasing technical, economic and legal complexity that is impossible for prosumers to assess on their own. Comparison tools are key to ensure informed investment decision that meet the prosumers´ preferences. But the complexity and heterogeneity of prosumer tariffs poses huge challenges to the design and operation of comparison tools – and to quality assurance! Transparency, independence and completeness are (probably feasible) basics. But what about comparability considering the diversity of prosumers and tariffs?

Article 14 of the new EU Internal Electricity Market Directive (“Comparison Tools”), that is to be implemented by EU Member States by 31st December 2020, is (only!) a first step. There is a long way to comparison tools 2.0.

Exclamation mark from Australia: $8.5 million penalty, public comparator websites

There is harsh critics of current comparison tools regarding independence and completeness – as probably everywhere in the world. A current case in Australia is representative for many other countries in the world: The Federal Court has ordered comparison tool provider to pay a penalty for making false or misleading representations about its electricity comparison service. Actually, commercial arrangements with partner electricity retailers restricted the number of electricity plans those retailers could upload onto the iSelect systems, and therefore the recommended plans were not necessarily the most suitable or competitive. But it is not representative that the provider had to pay $8.5 million in penalties! Is there any example of such a penalty from other parts of the world? And it is neither representative that there are a number of comparator websites operated by states and the Australian Energy Regulator! In this regard, Australia is a pioneer in consumer protection.

The lull before the storm: clouds, communities, BYODER

Life is currently quite simple for comparison tool providers. Most offers are still static on the retail market: there is only one price for a kWh at any times. And there are only a few relevant criteria/filters: price, green electricity. The main feature of comparison tools: fast and easy switching process. Strangely, in most (EU) countries there are hardly any dynamic tariffs, yet. There is no linking of retail market and wholesale market. Consequently, only commercial customers benefit from the positive developments in wholesale market prices. Residential customers are not. But that will change … soon!

In addition to classic products such as PV systems, battery storage, heat pumps or electric vehicles, hardware manufacturers and utilities are developing new products as membership of “communities” or “clouds”. Incumbents face heavy competition by new players such as Octopus Energy (UK), Tibbit (Scandinavia) or Tesla (UK, soon Germany?). These products are normal electricity tariffs with special conditions for special customers (prosumers) as a supplement to the purchase of a prosumer unit.

First efforts show that comparing these “Cloud”- and “Community”-tariffs is very difficult if not impossible – even for experts. The benefits and costs of these tariffs often remain unclear to the customer due to a massive lack of transparency. Only after complex recalculation it turned out that most tariffs were not cheaper than “normal” tariffs. Some tariffs were not even “active” anymore although they were actively advertised on the company´s web pages. And just for the record: it is not a “cloud” nor a “community”. It is a bilateral relationship between utility and consumer. There is no link between the “members”.

In contrast to these “proprietary” tariffs for specific hardware the future will be so called Bring-Your-Own-Distributed-Energy-Resources tariffs (BYODER): prosumers register for a tariff with a prosumer asset of any manufacturer. This requires interoperability and standardization, of course.

Main battlefield: Terms & Conditions

Will comparison tools be able to manage all these new tariffs and “translate” them into easy consumer language? Will the comparison tools be transparent and independent? And do they have any chance to create comparability? Very tough job …

The Terms & Conditions are key to the quality of prosumer tariffs: rights and duties, costs, exclusions etc. In order to compare prosumer tariffs, comparison tools have to assess these T&Cs. Who will/can do that? And the T&Cs will be very complex, including many different aspects, not only electricity supply but also hardware and software (operation), smart grid and privacy aspects as all prosumer assets are connected to the internet (GDPR!).

Smart Meters – boost or show stopper?

The latter leads to the crucial question: what is the role of smart meters in this context: costs, features, ownership. This es especially relevant in countries with a mandatory smart meter-rollout like in Germany. For example, it is crucial for prosumers to know whether the prosumer tariff covers the cost for the expensive (60-100 €/year) metering system that is to be installed in households with small-scale prosumer assets, especially PV.

PHD in quantum mathematics? No, but …

“If you want people to take up dynamic energy tariffs – which is indeed part of the solution to energy transition – don’t ask them to have a PHD in quantum mathematics to understand the tariff structure: just make it simple & predictable!” (Monique Goyens, DG of European Consumer Body BEUC). This might be feasible, though still a huge challenge, regarding “normal” dynamic tariffs. But is not feasible regarding prosumer tariffs. There is no way that prosumers get more knowledge to better understand the tariffs. This means better communication on all levels!

Holger Schneidewindt

About Holger Schneidewindt

Holger Schneidewindt is an energy lawyer and policy advisor. He has a decade of experience in energy policy with particular interest and expertise in prosumer subjects, especially related to alternative and renewable energies. As consultant for a German energy consumer NGO, he worked on the “Birth and Rise of Prosumers” along Germany’s pioneering energy transition.

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