How Can Open Energy Drive a Smart Data Revolution?
Why Open Energy Could Kickstart a £2 Billion Smart Data Revolution
In February, two thinktanks which try to drive tech policy and global change respectively – The Startup Coalition and the Tony Blair Institute – issued a new report that backs the idea of Open Energy.
What is Open Energy and How Does It Work?
Open Energy is the concept of securely sharing customers’ data, such as information on their energy consumption from smart meters, with authorised third parties. These third-party providers then use the data, with consent from the customer, to offer customers personalised products and services, such as flexible energy tariffs.
Unlocking a £2 Billion Smart Data Revolution
The new report was released soon after the UK Government announced a call for evidence running until 10 March as part of a roadmap “to repair Britain’s broken energy market and put bill payers back at the forefront of the sector’s priorities”. We wrote about this at the time.
Minister for Energy Michael Shanks said at the time, “Following the world-leading example of open banking, energy smart data could help consumers find the best tariff based on their actual consumption, providing personalised solutions, better services and greater choice, whilst saving them money.”
The authors of the report call for the creation of a standardised, interoperable data framework across smart meter providers to make the most of Open Energy.
They write: “Without such a standard, integrating and sharing data at scale becomes complex, fragmented, and inefficient.”
“Today, this gap is solved by the existence of a handful of data aggregators, which provide access to aggregated and enriched datasets, usually for a fee. Electralink and Smart DCC provide access to electricity and Smart Meter data, Elexon aggregates settlement data, Xoserve aggregates gas datasets, and the Retail Energy Code Company (REC Co) holds datasets necessary for supplier switching.”
“These providers offer a key service today and without them it would be extremely challenging to enable users to access their data, either directly or through service providers like startups who do not have the resources, time and money to aggregate disparate datasets themselves. Consequently, when designing a smart data scheme in the energy sector, the Government must account for this reality.”
Three Approaches to Implementing Open Energy
The report says there are three possible implementation models of a smart data scheme that could work:
-
- Access through the underlying service providers
- Through the existing data aggregators, including Smart DCC.
- Through a new super-aggregator body, which would sit above the data aggregators in option two.
It concluded: “Each of these options would have trade-offs, and none are perfect. The priority is, therefore, exploring the merits of all three.”
The government clearly sees a potential financial upside in opening up the energy sector in the same way that Open Banking has done in finance.
The new report shows just how dramatic the rise in investment in fintech startups has been with investment in Open Banking/Finance startups shown in blue, Open Energy in red and Open Property in yellow.
[IMAGE]
Source: Making Smart Data : Happen – A Startup Coalition x TBI Project
Open Banking vs. Open Energy
The graph shows that annual investment in Open Banking and Finance firms reached a peak of £836m in 2022 while annual investment in Open Energy startups over the period of study has never exceeded £16m.
The spectacular rise of fintech startups in the UK started in 2014, the year in which the Competition and Markets Authority announced its plans to introduce regulated Open Banking. Over the next six years, more than 10 new startups entered the market every year.
Since 2014, £2.45bn has been invested in Open Finance startups compared to £91.6m in Open Energy. If Open Energy gets the green light, this could create a more than £2 billion bonanza.
Procode and the Future of Smart Data
Procode is well placed to participate in this £2 billion smart data revolution. Over the past two decades, we have grown from a small consulting company into a trusted technology partner helping the energy and utilities sector by creating innovative technology which has helped improve customer experience and deliver lower cost-to-serve through process automation.
We have experienced the startup journey ourselves, culminating in our acquisition by the Luxion Group in 2022. We have also recognised the importance of the value of startups in the smart data sector through the acquisitions of assisted living provider Canary Care, property environmental snapshot company Ecofit and Trust Power, the company behind energy efficiency app Loop.
At Procode, we are firmly committed to a smart data future and know that innovation can unlock benefits for consumers, businesses, suppliers and the economy.