Empowering electricity consumers in retail and wholesale markets

9 March 2017

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Policy-makers should not expect the majority of energy consumers to become active market players – even when consumers are equipped with smart meters and given the opportunity to save money. This is one of the key findings of this CERRE report, which provides fresh analysis on how the role of consumers in electricity markets can be expected to develop. Among other things, savings may be too low to warrant participation by many consumers.

The report examines Europe’s experience to-date in encouraging consumers to engage with energy markets. The report finds that overall response rates (based on the experience with consumers changing energy suppliers) are, in the main, disappointingly low. Moreover, consumer disengagement is driven by numerous factors, meaning that policies to address this will need to be complex and multi-faceted.

Building on this, the report concludes that ‘automating’ the process of engagement – for example through third-party intermediaries such as aggregators – may offer a greater chance of success. However, even these options are likely only to be of interest to medium-sized consumers and the business model of such intermediaries is still developing.

The report should provide valuable input to European policy-makers, as they seek to create an energy system based on active, engaged consumers.

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Author(s)

Claude Crampes

CERRE Honorary Research Fellow
Toulouse School of Economics

Claude Crampes is a CERRE Honorary Research Fellow. He is Professor emeritus at the Toulouse School of Economics (TSE). He is also a senior researcher at the Institut D’Economie Industrielle (IDEI). Mr Crampes previously served as a member of the economic council of the Electricity Regulatory Commission (1999-2001) and as consultant for the World Bank (1995, 1998, 2005). During his time at IDEI, he was mainly involved in partnerships with Iberdrola (1993-2000) and EDF (since 2001).

His research interests include network economics, industrial economics and the economics of intellectual property.

In the field of energy conservation, his works have been published in Resource and Energy Economics, The Electricity Journal, Energy Economics, the Journal of Network Industries, The Energy Journal, the Oxford Review of Economic Policy, the International Journal of Industrial Organization and in the Revista Española de Economía. Mr Crampes holds a doctorate in economics from the University of Toulouse in 1975

Catherine Waddams

CERRE Honorary Academic Director
University of East Anglia

Professor Catherine Waddams is a Research Fellow at CERRE and a faculty member of the Centre for Competition Policy and Professor at the Norwich Business School of the University of East Anglia.

She is also a board member of OFWAT, the water regulator in England and Wales. Her research interests are in Industrial Organisation. Professor Waddams has published widely on privatisation, regulation and competition in energy markets.

She holds a PhD in Economics from the University of Nottingham.

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