DEBATE

Energy prices in Europe are very high and volatile, and there are no signs that this situation will change in the near future. But if you put the conversion possibilities in the hands of consumers instead of paying out support for increased electricity use, you can relieve the pressure significantly, writes Johan Söderbom from EIT Innoenergy.

Ever since October 2021, European households have been affected by high, fluctuating energy prices. And the future looks bleak: The high prices are here to stay.

But there is an upside. Although the current energy situation is tough, it also means a great opportunity to speed up the energy transition. We also don’t have to delve as much into the new technology as one might think. By taking advantage of a number of already available solutions, end customers can make a significant contribution to reducing carbon dioxide emissions from the EU’s energy sector, impacting the strained electricity market while lowering their own energy bills.

These existing technologies address the immediate need to offer more control over individual electricity consumption and consumer bills, while driving electrification forward and accelerating the transition to clean, fossil-free energy.

The EU common electricity market model that is today being questioned, and is being revised, has actually worked during the turbulent conditions of recent times. The implantation we have in Sweden with the possibility of total price transfer all the way down to the end customer has in turn paved the way for new business models and suppliers that offer hourly electricity services for end customers.

As fluctuating prices create an incentive for flexibility, several simple app-based energy management solutions such as Tibber, Greenely and Ngenic have become profitable for residential customers in recent months. In addition to savings for the end customer, these apps also adapt consumption patterns to the availability of renewable generation, enabling further reductions in carbon dioxide emissions.

Since energy prices will not stop fluctuating, the business models that exploit this fact will remain, which is completely in line with the intentions behind the electricity market model.

However, such pricing models are only useful when consumers can also be flexible with their electricity use. Fortunately, more and more of the heaviest electricity consumers in the home are connected and can be controlled via their mobile phone, connected to the internet, this applies not least to electric cars and heat pumps. What only a few years ago were quite complex and often company-specific solutions, is now widely available, which means that more and more devices in the home can be connected.

This in turn opens up a greater overview, easier adaptation to price variations and lower bills for household energy consumption. Units can be set to automatically adjust consumption to the current price situation via energy management platforms. It also results in a generally better overview of one’s own electricity consumption.

If only a small part of these funds were set aside to introduce and help end customers to invest in the new technology, we could quickly influence at least the price spikes on electricity.

As more connectivity is no longer expensive or complicated to integrate, this will expand to even more uses in the home, including other devices such as washing machine and dishwasher water heating.

Sweden has come a long way both when it comes to heat pumps compared to many other parts of Europe. We are now seeing a rapid conversion from gas to electricity as an energy carrier for heat. This will result in a large, controllable, often Wi-Fi enabled load making it suitable for integration through energy management platforms.

In the same way, we also see a rapid and increasing uptake of electric vehicles. Their charging systems are extremely well suited to control and shift charging to the times when this is cheapest.

Also increasingly common are the solar cell installations that are part of the local production system. Through these, production and consumption can be optimized to avoid fluctuating prices.

If we in Sweden take advantage of the rapid innovation and development that is now taking place, we have a fantastic position for exporting new products.

But heat pumps, electric cars and solar cells sound like technologies that exclude those hardest hit by current energy prices: low-income households. That makes it all the more important to support low-income households with access to electricity.

We already see today that large sums are paid out in various “electricity subsidies” in Europe, not least in Sweden, which of course relieves the stress of high prices. But if only a small part of these funds were set aside to introduce and help end customers to invest in the new technology, we could quickly influence at least the price spikes on electricity.

Residential support systems for installing electric charging stations or switching from gas to heat pumps already exist in large parts of Europe. Adapting such programs so that support is paid to devices that are also connected so that they can potentially contribute flexibility depending on the connectivity of devices would put control directly in the hands of consumers without much additional cost. Distributing support in this way also opens up innovations and start-ups that create new jobs.

We should not underestimate the power of the individual customer to take advantage of existing technologies that can save money. Given Europe’s urgent need to transition to clean energy, strategies that enable both consumer savings and steps towards a low-carbon system should be favoured.

Johan Söderbom,

theme leader for smart grids and energy storage EIT Innoenergy