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Modernising The Energy Market: Mapping a new future for Code Governance

Technology is moving fast, creating a system where the consumer has more desire and ability than ever to engage with the energy market. They will need increased control over not just where their energy comes from, but when and how they use it and store it.

Mapping a new future for Code Governance

Technology is moving fast, creating a system where the consumer has more desire and ability than ever to engage with the energy market. They will need increased control over not just where their energy comes from, but when and how they use it and store it.

Gemserv occupies a special position at the heart of the energy market. We draw unique insights and energy market experience gained in our capacity as a central code governance body, overseeing market interoperability and consumer protection, spanning over 15 years. For some time we have been seriously giving thought to the nature of codes and the need for reform. In January 2016, we published a thought leadership paper. Whilst many of the ideas still hold true e.g. code consolidation and a standard code model, it is now questionable whether it goes far enough – the rapid growth of new technology, proliferation of data and hunger for reform is creating a perfect catalyst for change.

Now, more than ever, we need to deliver a well-functioning highly adaptable energy market with low costs for consumers. It must be framed as an enabler for change, promoting competition, driving innovation and, of course, protecting and supporting consumers as they themselves engage with new devices and providers. We need to ask fundamental questions such as: what is the future of the Supplier Hub Model and its role with respect to consumers? In what way and to what extent do codes act as barriers to innovation and what might be the future system of market assurance? How do we proactively facilitate new challenger brands and disruptive business models? How will the needs of the prosumer1 evolve?

In November 2017, BEIS triggered its Call for Evidence: Cost of Energy Review2. This was closely followed by Ofgem’s Call for Evidence3 on the Future Energy Supply Market . Both delved into some of the more fundamental aspects of energy market arrangements. Our responses are here: consultation-responses

Over the next few months we shall be busy crystallising what we understand are the driving principles and the reform building blocks. We shall be asking what needs to change, how and over what timescale. Our evidence suggests:

  • Developing a well-functioning market, one which delivers services efficiently and cost-effectively, should be based on stimulating competition and using proportionate regulation, governance and market assurance to support competition and protect consumers;
  • New business models and new technologies need to enter the market without unnecessary barriers;
  • We need less siloed energy market thinking and a more ‘whole of market’ approach to ensure reforms do not result in trade-offs in one part of the energy market only to then have negative outcomes in another;
  • The supplier hub model has for the past 20 years been successful in helping to ensure that consumer responsibility is not forgotten. However, it is clear there will be future market innovations which this model may struggle to adequately support;
  • As we consider the energy market of the future, we must place the consumer at the reform epicentre, making sure the consumer does not slip between the ‘service’ and ‘consumer protection’ gap; and
  • The retail market should work for all, including those consumers that choose to be actively engaged and those that do not.

Please come join us at our Breakfast Session on 18th April 2018, targeting innovators and challenger brands. We want to learn from you about the difficulties you face, to explore the challenges and ideas that may help frame a new market governance future. If you are interested please contact us at: Transformation@gemserv.com

 

  1. Christopher, D, “Consumer vs Prosumer: What’s the Difference?,” Energy.gov, May 2017. [Online]. Available: https://energy.gov/eere/articles/consumer-vs-prosumer-whats-difference. [Accessed February 2018]
  2. BEIS (7th November 2017) https://www.gov.uk/government/news/call-for-evidence-on-how-to-reduce-the-cost-of-energy-launched
  3. Ofgem (14th November 2017), https://www.ofgem.gov.uk/publications-and-updates/future-supply-market-arrangements-call-evidence

 

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