IN SEARCH OF A NEW ENERGY SOLUTION

Recent shifts in the energy market have highlighted the remarkable inefficiencies of the current regulatory framework in this space – as the Big Six energy companies continue to exercise monopolistic tactics across the board.

A Broken System

Earlier this year UK households were faced with the unwelcome news that British Gas is raising its prices by 5.5 per cent. This is on top of a 12.5 per cent hike British Gas enforced as recently as September 2017. The price hike – which is set to affect four million customers – has obstinately been blamed on both rising wholesale costs and the adverse effects of government policy.

The fact that this change has triggered another round of price rises from other energy companies is a damning indictment of the state of the British energy market, with energy companies being encouraged to sell as much electricity as possible at the highest possible price to maximise their profits. Not only are energy prices on the rise, but the fundamentals of the market are clearly broken in a way that stifles competition, leaving the interests of the consumer to play second fiddle to corporate gain, and for environmental implications to be relegated to an afterthought.

A Regulatory Framework?

Markets thrive best when they work in harmony with consumers and act in accordance with governmental regulation. Decisive action must be taken to make the system fairer for consumers. If governments fail to take action, then the change must come from consumers themselves.

There has been little movement from the government to promote competition within the energy market, especially in terms of regulating the monopolistic practices of the Big Six. There is little sign that outrage at the price rises will yield any form of regulatory action from the government to protect consumers. This is sadly not the only problem, as the government has not only been inactive in its regulation but has also been slowing progress with regards to the generation of energy at the individual/local level. Such inaction means that the best solution for consumers is to search for less orthodox alternatives to the traditional energy suppliers.

 In Search of an Alternative

One such emerging solution that shows promise is peer-to-peer (P2P) energy exchanges, where independent producers of energy can sell the energy they produce to consumers without having to engage with the Big Six energy providers.

However, where the government was failing due to its inaction in the case of the Big Six – it is now failing to aid third-party energy producers. The 2016 cut to feed-in tariffs was initially explained as being in response to the falling costs of solar panel installation. For instance, in 2011, the typical cost of a 4kW domestic solar photovoltaic system was approximately £14,000 – in 2018 this has fallen as low as £4,000. But now, even with the drastically reduced costs for solar panels, there is a sizable body of evidence to demonstrate a causal link between the government cutting feed-in tariffs and a decrease in the number of solar panels being installed.

Previously independent energy producers – specifically those who had installed photovoltaic cells – could profit through selling their excess energy back to the National Grid, but the cuts to these feed-in tariffs neutered this highly effective method of incentivising the decentralised production of green energy. This has resulted in renewed interest in creating a peer-to-peer ecosystem for green energy. By avoiding the Big Six providers such a system allows sellers to get more for their energy, and for consumers to buy it for less.

A Third Way

Rather than relying on the government to pay third party providers – or to force the larger energy companies to give consumers a fairer deal – why not allow these providers to go directly to consumers?

We are now at a point where the technology exists to create a decentralised network based on a peer-to-peer exchange of energy. This would allow consumers to make financially and ethically conscious decisions regarding their energy bills, freeing them to choose providers who create energy from renewable sources at a lower cost than the energy giants. Recent innovations in blockchain and AI can now ensure that such a marketplace would be just as secure and efficient as the traditional energy providers. All that is left to do is unleash the disruptive potential of cheap renewable energy for consumers.

We are standing at a crossroads with regards to how we treat our planet. In an effort to try to heal our ailing environment, there seems no better way of going forward than to do so by providing consumers with better priced, cleaner energy.

 

About the Author

Omar Rahim is CEO Energi Mine, a blockchain and Artificial Intelligence energy solutions company based in Manchester. The company currently manages over $140 million worth of energy on behalf of its customers, looking after approximately 1,100 customer sites across Europe (UK, France, Belgium, Netherlands). For more information, see Energi Mine