Consumers want flexibility watchdog

Independent scrutiny and the ability to obtain redress in the event of problems have been identified as priorities for consumers by research undertaken as part of a project to develop a code of conduct for the domestic flexibility market.

The HOMEflex project, which has received £310,000 of funding from Ofgem’s Network Innovation Competition, is seeking to develop a code of conduct for domestic flexibility services, among other things, covering sales and marketing, contracts, terms and conditions, complaints and redress.

The two-year project is being led by Scottish and Southern Electricity Networks (SSEN) Distribution in partnership with the Centre for Sustainable Energy (CSE) and Flex Assure. Flex Assure is the voluntary code of conduct for flexibility providers established by the Association for Decentralised Energy (ADE) in 2019.

As part of the project, CSE held two rounds of focus groups with a total of 19 consumers to understands their priorities for a code of conduct for domestic flexibility.

According to its report, one of their main priorities was the ability to hold companies to account in the event of any problems, suggesting the need for service providers to submit to independent scrutiny and accreditation, rather than just sign up to a voluntary code of conduct. They said they also want to see standard terms and conditions, again scrutinised by an independent party.

Participants said they were less concerned about data security, expecting companies to follow existing regulations. They instead wanted providers to be proactive in how their use their data, creating tailored recommendations and cost estimates to enable them to compare offers and make informed decisions, as well as providing ongoing support once they have opted in.

The project partners noted growing public awareness of flexibility following the launch of National Grid Electricity System Operator’s new Demand Flexibility Service (DFS), which held its first live demand turn down events earlier this week.

They said flexibility markets for domestic consumers and micro-businesses are still in a state of infancy when compared to industrial and commercial markets and warned the absence of standards and assurance mechanism risks limiting uptake due to a lack of trust, ultimately leading to negative outcomes and publicity.

“The cost of energy crisis has propelled public interest in new products and services like domestic flexibility trading, which means we must work fast to ensure the rules are in place to support a fair, transparent marketplace,” Simon O’Loughlin, HOMEflex project manager at SSEN said.

“HOMEflex is listening to consumers to embed their concerns and priorities in a code of conduct that can offer structure and protection for all flexibility trading participants. The potential financial benefits of a smart and flexible energy system are considerable but without public confidence in the new market, they will remain unrealised.”

ADE chief executive Lily Frencham said: “Domestic flexibility has proven to be crucial already this winter and will continue to be an important part of reducing costs and increasing security on our journey to net zero.

“This research carried out by CSE will be extremely valuable in our development of a code of conduct that will work for both consumers and providers, while helping us to better understand the future direction of the flexibility market following the launch of National Grid ESO’s DFS this winter.”

Charlotte Johnson, head of research programmes at CSE said: “The timeliness of this report is evident. Currently the National Grid ESO’s Demand Flexibility Service has 26 providers all using their own terms and conditions, offering different routes to sign up, and passing on different proportions of incentive to consumers.

“This creates a very complex market for domestic consumers to navigate. Our research will help industry and government think about the consumer protections needed as the UK domestic flex market develops. This will be vital to build consumer confidence in this growing market.”