By the end of the decade, the government wants all consumers to have smart energy meters. These can bring great benefits to consumers by helping them to better manage their energy. They’ll also do away with estimated bills by recording your exact usage and sending it directly to your supplier.
Together with changes to industry processes, smart meters open the door to far greater customer involvement in the energy market. Through this, we will have a more dynamic and competitive market. This paves the way towards more efficient energy use, and the offer of more innovative tariffs and services to consumers.
How will we get to a smarter market?
Ofgem is leading work over the next few years to make sure the smarter market becomes a reality. Our projects include:
We are leading work to improve the change of supplier processes to deliver fast, reliable switching for consumers.
Settlement arrangements work out how much consumers use in each half hour of the day and how much suppliers pay for that electricity. Currently, most consumers’ half-hourly consumption is estimated. As smart meters can record actual half-hourly consumption, this data can be used in settlement. This would encourage suppliers to offer tariffs that cut charges for consumers that use electricity when it is cheaper.
We’ve recently approved an industry proposal to settle larger businesses using their half-hourly consumption data and have been looking at how the same can be achieved for smaller businesses and households.
We’re looking at the benefits of changes to settlement arrangements in the context of our project on demand-side flexibility. Flexibility encompasses aspects such as energy storage and interconnection as well as demand-side response. We are developing a strategy to enable and enhance the efficient provision and use of flexibility sources across the supply chain.
We’re working to ensure that all consumers, particularly vulnerable consumers, are properly protected in a smarter market.
We’ve introduced reforms to make the retail market simpler, clearer and fairer for consumers. We also referred the energy market to the Competition and Markets Authority (CMA) for investigation last year. We will continue to evaluate progress of our reforms while the CMA review is ongoing.
Updates on our progress
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