For decades, consumers were the passive recipients of choices made by state monopolies in energy markets. Power plants were generating all the electricity that society needed, which was being supplied to consumers by the monopoly. Consumers only had access to a very limited number of contract offers.
This blog is part of our 60th anniversary series, tying the six decades of BEUC’s existence to current day concerns. This one focuses on the 2010s. For more, delve into our anniversary booklet.
BEUC has worked hard since the end of the last century to ensure energy markets better meet consumers’ needs. This work started to come to fruition in 2009, when EU legislation mandated the introduction of competition in the electricity sector, and consumers could now choose between more suppliers. But consumers’ choice remains limited both in terms of possibilities to engage in the market and in terms of hurdles to overcome.
The beginning of active participation
The 2016 Clean Energy Package is nothing short of a revolution as it has made it possible for consumers to truly become active participants in electricity markets for the first time. It means that consumers can now easily search the market for better electricity offers (be it about price, sustainability, etc.), thanks to independent comparison tools.
In addition, consumers can switch to a new electricity offer, free of charge, within a reasonable time-frame. In 2015, the time required for switching to a new electricity offer was on average 15 days. In some countries, this could take up to 90 days. Today, switching times are much lower and will not take longer than 24 hours in 2026.
The Clean Energy Package is also revolutionary because it allows consumers to support Europe’s energy transition. It grants consumers the right to produce their own renewable electricity with solar panels, to use it themselves or to sell it to the grid. This allows consumers to make significant savings, but also to directly contribute to Europe’s climate objectives.
The Clean Energy Package is…revolutionary because it allows consumers to support Europe’s energy transition
It has also meant further changes with increasing renewables on the grid. Since the wind does not blow and the sun does not shine all the time, and it is expensive to store electricity, the energy system benefits if consumers shift their consumption to when renewable power is generated. Thanks to the Clean Energy Package, consumers now have the right to sign up for offers rewarding them to do so.
How to put consumers firmly in the driver’s seat
But the journey towards an electricity system where consumers are truly in the drivers’ seat is still a long one.
First, many of these novelties unfortunately still only exist on paper. While consumers are entitled to sell the electricity they produce, in reality it can take up to three years to have a solar panel connected to the grid in countries like Bulgaria. What’s more, while consumers can sign up for offers rewarding them for their flexibility, these offers today are only available in fewer than half of all European countries.
The first step should be for national governments to truly enable consumers to enjoy the right to produce their own electricity, by properly implementing the Clean Energy Package. The second is to truly empower consumers to choose from flexible offers by making clear information and advice available for them.
Consumers are also still facing practical barriers. Most consumers still do not understand key features of their electricity offers. A survey by Norwegian consumer organisation Forbrukerrådet shows, for example, that 45% of consumers do not know whether they have a fixed price or a dynamic price contract. Legislation should require this to become much clearer to ensure that consumers can make informed choices.
Consumers are also not energy experts and often need support to switch to renewable energy. This should be provided by independent one-stop-shops, established, for example, by municipalities.
Consumers are…not energy experts and…need support to switch to renewable energy
To really put consumers in the driver’s seat of electricity markets, the European Commission and national governments need to ensure that rights that exist on paper become a reality and that people are empowered to make more informed choices. What’s more, to address in the short term the energy crisis and achieve in the long term our climate goals, policymakers and the industry should make it easier for consumers to generate their own energy and to use energy flexibly. This is now more urgent than ever.