Can big data solve big challenges in the energy system?

The energy system faces some major challenges, from climate change to the cost-of-living crisis. To tackle these issues we’ll need to use all the tools available including innovative green technology and political and regulatory intervention. Data can help us to understand these problems by providing a holistic picture of the energy system. Data also has a role to play in making solutions more effective. This could mean using data to better target fuel poverty schemes or to identify a battery’s real time storage capacity.

With data becoming a more crucial part of the energy system it’s important to keep track of who benefits from that data use, and who might be losing out. Data is a valuable commodity and it’s important that its value flows to consumers not just to companies. To get the balance right, we need the Government and Ofgem to make sure people aren’t left behind in the move to a data driven energy system. Ofgem’s recently published call for input on consumer consent marks a significant step in the right direction.

What data are we talking about?

There are many data sets that are relevant to the energy system, but we’re interested in data that relates closely to consumers and their needs.

This includes:

1. Household Demand Data — this is the data found on smart meters. It includes information on how much energy is used, how much a meter is topped up by (smart prepayment meters) and the location of each meter
2. System/Metadata — this data includes information on disconnection, when a top up is sent (smart prepayment meters) and when consumers reach credit limits
3. Asset Data — this data shows where assets are located and how much generation or storage capacity they have. This could include assets that are owned by energy companies (like wind turbines) and those owned by individual households (like rooftop solar panels)

3 ways that Data can solve key challenges in the energy system

1. Unlocking the benefits of the flexibility market for consumers and network operators

Household demand data is necessary for a range of products and services that are central to the future energy market. These include: time of use tariffs, energy as a service models, bundled products and marketplace models. These innovations have the potential to reduce energy consumption, save consumers money and make homes more comfortable. We will also need detailed usage data for comparing prices and switching plans. Many of these uses have the potential to enable load shifting which in turn would reduce the amount of reinforcement work required for the grid.

2. Targeting investment and making energy cheaper

Energy network operators require data on electricity generation and usage to make informed investment decisions and avoid using costly peak-time power plants. Peak-times are when demand for electricity is at its highest. Gas fired power plants are often used to meet this high level of demand which, given the high cost of gas, costs more for both consumers and the energy system.

Asset data will give energy network operators insight into how much electricity is being generated and stored at any time in a particular location. They’ll also need data on energy usage to help them balance the grid. This data can come from monitoring electricity usage at substation levels and from household demand data. Electricity network operators will be able to match up data on generation with data on usage to avoid unnecessary excess capacity in the grid. By reducing the need for additional cables, lines and transformers energy networks will make significant savings.

3. Identifying and supporting households in fuel poverty

Using data creatively can help to support vulnerable consumers in new ways. Systems data can be used to identify consumers in fuel poverty particularly when combined with other data sets. If organisations providing support — whether energy networks, suppliers or local authorities — also have access to geographic data they will be able to target support to the households that need it most.

The more data the merrier?

Unfortunately it’s not that simple. Data is going to play a key role in facilitating the transition to net zero and unlocking financial benefits for consumers. But using data — particularly household demand data — comes with risks. We found that 89% of consumers think that being able to opt-out of sharing their data with parts of the energy market is important. Almost a third of consumers who currently want a smart meter would not want one if they didn’t have choices over how they share their data. There’s a risk that if consumers aren’t given choice and control over how their data is used there could be a backlash against the transition to net zero. These consumer attitudes present the energy market with a significant challenge. However, if done well, consent and control processes could help the energy industry to rebuild consumer trust.

Finding the right balance between industry and consumers when it comes to data use is not a new challenge. The data access and privacy framework (DAPF) first outlined how consumer data should be accessed in 2012. While the DAPF was reaffirmed by the government in 2018 the market has been moving quickly ever since. The Data and Digitalisation task forces brought together a wide range of stakeholders from across the energy sector to argue that the use of data and digitalisation must expand to meet the needs of the future.

Our program of work

As the statutory advocate for consumers in the energy market we have a unique perspective that allows us to take a whole system approach to data and digitalisation. It’s important that consumers have a right to control who has access to their data. We also recognise the key role that consumer data will play in unlocking the benefits of net zero. Our program of work on data and digitalisation will be based on a foundational commitment to protecting consumers’ data rights. We will engage with Ofgem’s most recent call for input and will build on our longstanding call for a consumer data dashboard. Our work will also go further and try to understand how data can be used in innovative ways to maximise the benefits for consumers and ease the transition to net zero.