In 2018, the Federation of Small Business commissioned Fingleton Associates to undertake a report into the use of open APIs and other open data standards in the energy sector, with a particular focus on the SME energy market.
Our report argues that smart meters will substantially increase the volume of data available, but that the value of that data will be limited if energy customers cannot share their usage data with third parties. As time-of-use tariffs are introduced and the energy market becomes more differentiated, energy customers will need to be able to access market information more easily and compare their own usage against it, and without reforms that make this possible the market may deliver worse outcomes for many customers.
Opening the market up in this way, we argue, should also expand the scope for new entrants offering software products that help customers to manage their energy use, including using ’smart’ products that draw electricity from the grid when it is cheapest.
We believe that automating the switching process through third party intermediaries could significantly increase the number of energy customers switching to better tariffs for them, driving increased competition and efficiency gains in the market and improving distributional outcomes.
Use cases discussed in the report include:
- Account management services that allow businesses and domestic customers to predict bills and adjust their energy use in line with their budgets.
- Better price comparison services that can match time-of-use tariffs to individual customers’ historical demand.
- Utilities platforms that manage all of customers’ utilities bills and contracts for them, for example through a banking app.
- Decentralised balancing and supply functions that allow individual electricity customers to participate in the balancing functions of the grid, for example being paid to consume electricity at certain times.
Recommendations
The report argues for a three-pronged approach:
- Standardising tariffs and other relevant market information in machine-readable formats to allow automated comparisons of energy tariff offerings.
- Making smart meter data available through a secure standardised API to approved third parties.
- Allowing energy customers to delegate contract switching powers to third party intermediaries.
It recommends a common standard be imposed across the industry and for REST APIs and Oauth 2.0 security to be used.