In our third article highlighting consumer barriers to the transition to renewable energy, we move from the landlord/tenant barrier to a lack of flexibility in the energy grid and the need to unleash demand side flexibility.
What is demand side flexibility (DSF)?
Put simply, DSF is when a household can change its energy consumption based on external signals – such as charging their electric vehicle or running their heat pump when electricity prices are at their lowest. The advantages of this are obvious – particularly if consumers run a product that uses a lot of electricity, they can make significant savings on their bill by switching on at the right time. Shifting electricity consumption also helps to prevent grid congestion.
How can consumers get on board with it?
From the perspective of the CLEAR-X project, one of the best ways to engage consumers in DSF is through dynamic price contracts. In contrast to fixed tariffs where the price of a kilowatt-hour is always the same, under a dynamic tariff the price varies every hour, following the ups and downs of the wholesale electricity market.
In order to choose a dynamic tariff, however, the consumer first needs a digital meter that can communicate with suppliers and grid operators. Unfortunately, such smart meters have only been installed in half of all homes in the EU and dynamic price contracts are only currently available in ten EU countries. This is despite the Electricity Directive (2019/944) mandating them for all EU countries.
“The EU law is already in place for dynamic price contracts,” commented Jörg Mühlenhoff, senior energy policy officer at BEUC, the European Consumer Organisation. “But smart meter roll-out has been too slow in many EU Member States, and retail suppliers are hesitant to offer dynamic tariffs as an alternative to expensive fixed price tariffs. Member States, grid operators and electricity suppliers should not lag behind anymore, and should allow consumers to benefit from significant savings, along with reducing pressure on the grid.”