How Australia's energy market can be a case study for data rights
FYI, this story is more than a year old
Article by Giovanni Polizzi, energy solutions manager, Indra Australia
Five years in the making - and now after the first year of full use - it is clear that Australia's Power of Choice reforms aren't working quite as they were intended.
Part of this is because Power of Choice was ahead of its time, offering Australian energy consumers a chance to own their consumption data and decide who else could use it for purposes such as managing bills or changing providers.
The same rights are now set to be conferred on consumers for their banking and telecommunications data as well as energy data, under a newer initiative called the consumer data right.
In other words, two more industries are set to go through what the Australian energy market has over the past six years, albeit in a vastly truncated timeframe.
They have an opportunity to learn from the energy experience, but equally, the energy industry should use the consumer data right as an opportunity to rethink and redo key parts of our own approach to the same information exchange challenge - because it remains a challenge for us.
Lesson one: Data portability is hard
In the first year of its operation, while we have seen that customers in more states and territories have smart electricity meters and access to and rights over the use of the data the meters generate, bottlenecks have emerged.
For example, Power of Choice should have made it easy for consumers to switch to a new electricity retailer.
In theory, if the consumer switches retailers, the new retailer communicates the change to all interested parties – the incumbent retailer, the metering agent and eventually the new metering agent as chosen by the retailer.
The incumbent retailer agrees with the existing metering agent over a final meter reading on the last day of their contract, to issue the final bill. The new retailer then starts to calculate consumption from this last reading.
That sounds straightforward, but in practical terms, that kind of information exchange is hard.
So far, we have seen errors and delays that can run into weeks, and there are substantial costs associated with that.
The data exchange isn't fully automated and as such is prone to human error (or worse). Numerous cases have been registered where customers were wrongly assigned to a new retailer, either by mistake or by the misconduct of marketers, and have incurred significant grief trying to restore their previous contract and energy supply.
Participants across the energy value chain also aren't seeing the benefits of all this new data because it is not easy to get permission to use it. That means providers aren't able to harness data when they develop new energy services and products.
The same data on how consumers use energy could, at an aggregate level, be very valuable to improve customer service, the operation of the distribution networks and to generate energy more efficiently. Again, these potential benefits are withheld when the data is hard to get.
Thus the entire system would benefit from a simpler and wider means of accessing data than that which exists today.
Lesson two: Five years is a long time
Since the energy sector came up with a way to implement Power of Choice, technology options and best practice approaches have changed.
While that's to be expected in a project run over so many years, it is clear that newer approaches could benefit the industry in key areas where the current information exchange model falls short.
There are clearly structural, workflow and trust issues at play with the current model, where all consumer data is brought into a central database called B2B eHub that is operated by regulator AEMO. Market participants connect with each other through the eHub in order to exchange data.
An alternative to the centralised eHub - and one which is currently being studied by a range of participants - could be a permissioned blockchain platform.
Blockchain is undergoing pilots in a range of critical infrastructure industries.
The technology is on track to underpin registry, settlement and clearing of funds by the Australian Securities Exchange (ASX), a project considered a breakthrough that shows the technology's credentials and potential.
Closer to 'home' - at least for our industry - BP, Shell and Statoil are joining banks and trading houses on a blockchain to improve trust and cut costs in oil trading transactions.
There is no reason why blockchain could not similarly underpin and transform the way all parties in the energy market communicate and exchange data.
Arguably, a permissioned blockchain platform to store and share energy consumption data of electricity customers in the Australian National Electricity Market (NEM) would bring about benefits for customers, the regulator and the entire energy sector.
Through the blockchain, customers would be responsible for their own data and for granting access to third parties, without any centralised authority accountable to route these requests.
Lesson three: There's still time to get it right
Through Power of Choice, Australia's energy industry became the pioneer of the consumer data right.
But to maintain that pioneer status, we cannot afford to treat this as a 'point in time' project. The sector must build on what it's accomplished to date, and initiate change where a need still exists.
There is clearly a need to rethink how electricity consumption information is exchanged. New approaches hold promise, and both the government and industry owe it to consumers to properly explore these new options if it means getting Power of Choice right.
The sector has come a long way in the past six years. Let's ensure that effort is not wasted.