Consumer protection regulations should be urgently updated and extended to households which want to exploit new flexibilities thrown up by the evolution of the energy market, suppliers have urged.
A new paper on flexible services, published by Energy UK, outlines a series of steps that should be taken over the next five years to facilitate the transition to a lower carbon and more decentralised power system.
It recommends the introduction of consumer protections across energy services in line with existing selling protections and the developing code of conduct for demand-side response.
It says: “For aggregation and bundled services to maintain market success, surrounding protections and arrangements will need to be established ahead of avoidable problems.
“As a matter of urgency, established consumer protections from other areas of the energy market should be expanded and adapted to ensure that, regardless of the business model, consumers are protected.”
It says that customers wishing to inject power into the system via energy storage or on-site generation, often referred to as “prosumers”, should not have to abide by generation licence conditions.
But once a number of these prosumers have been brought together by aggregator to create what it terms a “virtual power plant”, the latter would be required to follow licensing and codes in its operations.
Ofgem should be able to punish aggregators or energy service providers which fails to abide by the consumer protection framework, it suggests.
The paper also recommends better and more standardised network monitoring and transparency, particularly at the distribution level.
“Transparent and timely sharing of pertinent information across networks and market actors is increasingly important to enabling all energy actors to contribute to optimised network and system operation.”
Energy UK also urges a clarification of relationships, particularly for defining imbalances across the system, with Ofgem’s support.
“Competitive markets will continue to form the basis of efficient delivery of security of supply at lowest cost to consumers, but clarity across a range of system interactions will increase investment, innovation and, therefore, the rate of change across the energy market.”
The paper is a curtain raiser for Energy UK’s “Future of Energy” project, which is due to be published later this year. This will outline a strategic vision for the UK energy system, containing longer-term recommendations for government and industry across a number of areas.