Power Shift FINAL REPORT February 2020

Power Shift FINAL REPORT February 2020

3 Energy Consumers Australia Power Shift Final Report February 2020

Contents

Foreword...... 6 SECTION ONE: THE POWER SHIFT JOURNEY...... 8 A. Power Shift transformed our understanding of household decision-making ...... 9 The need for a Power Shift...... 10 Power Shift in a transforming energy market...... 11 B. Power Shift findings...... 12 Information should be tailored...... 12 Consumers can and do change energy use...... 12 Use a trusted voice to provide information and tools...... 12 Energy is critical to health and wellbeing...... 13 There are wider benefits...... 13 C. Power Shift has changed our advocacy...... 14 The Power Shift audience...... 15 D. Power Shift activities and outputs...... 16 E. Power Shift outcomes and impacts...... 18 Stakeholders actioning Power Shift research...... 18 Dialogue on the research...... 19 Linking energy, housing and health...... 20 Avoiding ‘silent’ hardship...... 20 Housing performance is critical...... 21 Building health and wellbeing into services design...... 21 SECTION TWO: RESEARCH INTO THE DRIVERS AND BENEFITS OF CHANGING ENERGY USE...... 22 A. Power Shift’s foundations...... 23 A deep dive into the outcomes for low-income households...... 23 What helped households save energy...... 23 LIEEP insights into household decision-making...... 25 Understanding the target households...... 26 A trusted voice...... 27 B. Link between energy, housing and health...... 27 C. Household sentiment and behaviour...... 28 D. Other behavioural research...... 30 E. International research...... 31 International findings...... 31 Implications and recommendations for energy policy...... 32 F. Capturing the wider benefits...... 33 Helping policymakers build a better business case...... 35 G. Energy and housing...... 37 H. How Power Shift helps navigate market transformation...... 40

4 SECTION THREE: OPPORTUNITIES FOR EMPOWERING CONSUMERS...... 42 A. Opportunities for innovation in energy services...... 43 Barriers to innovation in energy services...... 43 Building a dialogue around change...... 45 Developing an industry guideline for better engaging households in energy management...... 45 Improving their relationships with customers ...... 46 Information provision ...... 46 Avoiding ‘silent hardship’...... 47 Make energy management information more accessible ...... 47 Working together ...... 47 B. A framework for targeting energy services and programs...... 48 Demonstrating the value of consumer-led design...... 52 Power Shift workshops...... 52 New resources for consumers...... 53 SECTION FOUR: RECOMMENDATIONS AND CONCLUSION...... 54 Recommendations ...... 55 Conclusion...... 58 Appendix A Selective bibliography...... 59

This work by Energy Consumers Australia is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/. Where you wish to use the Report in a way that is beyond the scope of the above Creative Commons Attribution 4.0 International License, you must seek permission from Energy Consumers Australia. Requests for permission or any other enquiries relating to this copyright notice must be addressed to [email protected] © Copyright 2020 Energy Consumers Australia

5 Energy Consumers Australia Power Shift Final Report February 2020

Foreword

Power Shift is a body of research providing evidence about how to design better targeted, more effective, and innovative energy management services and programs that will enhance the ability of consumers to manage their energy use and costs.

Power Shift demonstrates that power circumstances and lifestyle, giving needs to be in the hands of consumers them relevant options for how to so they choose, through their own manage their energy use. This is a actions, to take control over their long-overdue shift from the old world, energy use and costs. If energy use where the main interaction with the and costs cannot be managed, energy company was a quarterly paper people’s health, wellbeing and ability bill, and where understanding how to fully participate in the community much energy different appliances in are at risk. But consumers face the home were using (and costing) was barriers to managing their energy guesswork, to the new world of energy use, including in the poor quality of choices tailored to household needs. Australian housing. The impacts can be particularly significant for low- Second, we need to design for income or vulnerable consumers. diversity– we will need a range of choices in how people manage energy To help address those barriers, we production, storage and use, across a mined the rich evidence base built range of climate zones, energy options through the Australian Government’s and potential uptake of new energy Low-Income Energy Efficiency Program technologies, including generation, (LIEEP), which engaged with over storage, electric vehicles and home 20,000 households from 2016 to energy automation. 2019, and commissioned additional new research. And finally, we need to build and deepen trust. Consumers are telling At the highest level, the lessons us - in our Energy Consumer Sentiment for policymakers, regulators and Survey and when we meet with them industry can be distilled into three in their communities - that they core findings. do not have confidence that the energy market is working in their First, we need to meet people where interests. We have a unique and they are – developing information, important opportunity right now to tools and assistance that suit their work with consumer and community

6 organisations, industry, government Power Shift was funded through an and regulators to re-build people’s Australian Government grant to confidence and trust. Without it, we support our research over three years will not realise the potential benefits from July 2016. We would like to thank of people participating in an optimised the Department of the Environment and affordable energy system. and Energy for the opportunity to undertake the Power Shift research. Power Shift has provided us with new evidence to support change, based I would like to particularly on the lived experience of consumers acknowledge the contributions of and a deeper understanding of the Departmental officers Ginny Hoy, drivers of their behaviour and choices. Kevin Chadwick, Sarea Coates and As this report demonstrates, it has Veronica Westacott, with whom we profoundly transformed how we worked closely over the time of Power advocate for affordable, individualised Shift, and who have been valued energy services for everyone – not colleagues through the project. I just people on low incomes who were would also like to thank Department the focus of LIEEP. Power Shift has executives Rachel Parry and James uncovered significant opportunities White, who oversaw Power Shift and for consumers to participate in whose counsel helped us bring the energy markets in a way that project to a successful landing. works for them in a continually transforming energy system. We also acknowledge the thousands of consumers who participated in all As energy prices have gone up and the projects detailed in this report, affordability has become a major issue and our research partners, without for households and small businesses whose commitment Power Shift across Australia, the imperative to would not have been the outstanding give people the information, tools and success that it has been. services to control their energy use and costs has only become stronger. Rosemary Sinclair AM Chief Executive Officer

7 Energy Consumers Australia Power Shift Final Report February 2020

SECTION ONE: THE POWER SHIFT JOURNEY

8 A. Power Shift transformed our understanding of household decision-making

Energy Consumers Australia’s Without the energy they need at an Power Shift has shown that Power Shift research – affordable cost, people cannot live while people value highly the in healthy and comfortable homes, outcome of their energy use (light, delivered under a $1.8 million and our small businesses cannot heat, entertainment, comfort), three-year grant from the be competitive. This puts people’s communication with them about Australian Government - health and wellbeing at risk, as well energy is primarily limited to ‘cents per as undermining social and economic kilowatt’. represents a ground-breaking inclusion, national productivity and and transformative shift in living standards. Power Shift has also demonstrated understanding households’ that people make decisions about the There are unique challenges energy they need in different ways. The role in the energy market. associated with the diversity of the sector’s focus on the ‘bill-payer’ as the Australian context. Our continent has economic agent ignores that the use multiple climate zones, there are wide of energy in the home is the result of differences in degrees of urbanisation a series of lifestyle choices made by from inner city to remote, households adults and children, in the absence of range from the wealthy to those highly any meaningful or useful information vulnerable to cost-of-living pressures, that links these decisions to energy and there are varying levels of costs. competition between energy suppliers across states and territories. As a result, policies and measures to date have focussed more narrowly Against the background of these on people’s decisions in choosing an challenges, Power Shift has changed energy supplier rather than developing the way Energy Consumers Australia a deeper understanding of people’s understands how consumers use and energy needs and usage patterns. make decisions about energy and provided a robust and persuasive Power Shift’s research underlined the evidence base that demonstrates how critical role of inefficient housing and we might address the diversity that appliances in negating even the most exists. energy efficient behaviours. When appliances are intensively using power Power Shift’s longer-term objective and homes are leaking warm or cool can be expressed in simple terms: air, they have a direct and material impact not only on energy costs, but That people are confident that the energy rationing impacts on people’s actions they take will make their health and wellbeing. home comfortable while having control over their energy bills. The overarching lesson and implication of the Power Shift research is that That goal was simple but remains there are real opportunities to improve an aspiration – there is substantial the design and development of cultural and market change required measures to assist people in managing to achieve it. their energy costs.

9 Energy Consumers Australia Power Shift Final Report February 2020

These opportunities would see an for people’s flexibility in energy energy market evolve that meets use, in real-time, and channels for people’s expectations. The future engagement and communication. energy market needs to go beyond a focus on reactive decision-making informed only by a monthly or The need for a Power Shift quarterly energy bill (in arrears) Electricity prices over the past decade and instead provides a range of have grown much faster than other rewards, information and tools, and a costs of living and wages, thereby framework for active decision-making intensifying pressure on household that is based on the opportunity and budgets. motivation for unlocking the potential

FIGURE 1: CPI FOR ELECTRICITY COMPARED WITH OTHER SECTORS AND WAGE GROWTH

220

200

180

160

140

120 Index March 2007 = 100 March Index

100

80 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Electricity Wages CPI (all)

Source: ABS, Consumer Price Index 6401.0 and ABS, Wages Price index 6345.0, Australia

10 The poor energy performance of most Power Shift in a People are being asked to think Australian homes means too many transforming energy about their energy use in new ways people are living in homes that are – to monitor it at different times, to damp, and/or too cold in winter and market understand the impact of individual too hot in summer. appliances, to consider placing the Power Shift’s research not only appliances in their homes under Whether to save money or reduce points us to empowering people as smart controls able to be activated emissions, consumers are already consumers in today’s energy market automatically, and to enter into energy taking action to manage their but also how we can assist them in a deals that might offer incentives to energy use. People are switching off future energy system enabled by the use less at certain times. Consumer appliances and lights when they’re not emergence of new technologies and protection, privacy and just and fair in use, using off-peak hot water, as services. terms are all issues that will need to well as buying more energy efficient be addressed and shaped into fit-for- appliances, and installing solar panels. What have been termed the ‘3 D’s’ purpose frameworks. – decentralisation, digitisation and At the same time people are telling decarbonisation – are fundamentally Innovative services and technology us in the Energy Consumer Sentiment transforming energy markets. have the potential to deliver better Survey that they are not satisfied with energy management to households, the value for money of electricity, The decentralisation of the electricity but people must be treated as partners and that they lack enough easily system is well underway, with over two in the transforming energy market. understood information and useful million households with solar panels tools to achieve better outcomes from on their roof, and government policies This also means working together to their decisions. continuing to encourage investment ensure that people are resilient in their by households in generation and energy use behaviours, in an energy In the current energy market where storage technologies. But there is system where there is a much more mass-market solutions have been a need to coordinate and leverage need to dynamically balance supply implemented - by governments, that generation capacity, signifying with demand. With greater resilience, regulators and industry - to help new ways in which households will there is an opportunity to minimise the people manage their energy needs, interact with the energy market and be need for costly, additional investment they have not helped everyone to rewarded for their behaviour. in long-lived generation assets and the same degree. the ‘poles and wires’ that make up the We are seeing the emergence of new electricity network. Instead in the future `handcrafted’ connected digital technologies to help solutions, which are enabled by new manage energy use and bills – lighting There are some people in our technologies and applications, have and appliances that connect with each community who cannot afford the the potential to empower people to other, and apps or services that help energy they need, while others are manage their energy use and unlock people use energy at the cheapest potentially able to be rewarded greater flexibility. This will underpin time, and participate in demand for using no more than the energy both sustainable gains in affordability reduction at times when it matters the they need – potentially using less or and a more optimised energy system. most for keeping the power on. changing when they use energy. For the community to be willing to adapt The challenge of reducing energy and change how they use energy, it emissions affects not just the way is essential that we do not widen the energy is generated, but also the way energy divide – a divide that leaves we build and maintain our houses and some people behind without the appliances. energy they need while others are able to access and benefit from technology and services that make their energy more affordable.

11 Energy Consumers Australia Power Shift Final Report February 2020

B. Power Shift findings

The Power Shift project can The key findings of Power Shift, drawn People are looking for information, inform a step-change for from the body of evidence gathered tools and services that meet their over the life of the project, are needs, and suit the way they live. energy decision-makers and summarised below. policymakers. The findings have Consumers can and do changed the way we advocate Information should be change energy use for Australian households, tailored People are already trying to manage to a broader focus on energy To be effective, information must be their energy costs but are not management rather than using tailored to people’s circumstances and confident they’re getting the right lifestyle. There is no one size fits all tools and information. Messages less (energy efficiency). We also solution. and assistance that are targeted now know that no amount of and personalised to households energy information, tools and All households, including those are far more likely to be effective. that are vulnerable to cost-of-living Communication that focuses on their services will adequately help pressures, have diverse needs and specific goals works well: `If I do this, I vulnerable people living in poor- preferences in relation to energy, save that’. quality homes that leak heat in depending on their personal circumstances and lifestyle. The tone of communication is winter and cannot be cooled in important. It needs to be helpful and summer to afford the energy • A retired couple who spend most of supportive, not dictatorial. Where they need. their time in their home depend on possible, a two-way conversation with that being a comfortable space, but households achieves results. However, their fixed income will make them a good understanding of the audience acutely aware of the cost of energy is the critical step in communicating in and stressed about their bills. a meaningful way.

• A young tenant may be able to Use a trusted voice to rely on their workplace to provide provide information and a comfortable living space during the daytime, but use cheap, high- tools cost appliances to heat their home People are confident in their ability at night. to make good decisions about their energy use, but lack enough easily • A person with a chronic illness who understood information and useful requires a constant temperature to tools. manage their symptoms might eat, live and sleep in one room so they With a lack of trust that the market is can maintain it at that temperature. working in their interests, people are looking for trusted channels to deliver • A family with young children information and tools that they can may have limited capacity to use rely on to manage their energy use and energy differently at bath and costs. There are trusted voices - such bedtime, but is happy to look online as community organisations – that for advice on energy after the kids have proven to be effective as a way of have gone to bed. engaging with households.

12 Energy is critical to health There are wider benefits and wellbeing We have historically measured the Too little heating or cooling can impact of energy efficiency programs endanger health and also result in on how much energy was saved, much greater-than-expected levels of whether the bill reduced, or whether social and economic exclusion. there were fewer emissions.

Improved thermal comfort is the single Power Shift has made clear that we most significant health and wellbeing have under-estimated the benefits benefit that helps reduce mortality – there is robust and persuasive and chronic disease. evidence indicating the significant health and wellbeing impacts from Taking the multiple benefits energy efficiency could in fact be framework developed by the greater than energy savings. International Energy Agency1, Power Shift has developed a framework that Our Multiple Impacts of Energy is uniquely adapted to the Australian Efficiency framework provides a guide context to measure and identify to policymakers and industry on how these wider consequences on health they might measure all the impacts. and wellbeing from improved energy management.

1 International Energy Agency, Capturing the Multiple Benefits of Energy Efficiency, 2014, https://www.iea.org/publications/freepublications/publication/Multiple_Benefits_of_Energy_ Efficiency.pdf

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C. Power Shift has changed our advocacy

As transformative research, It has shown us that helping households manage their energy bills and usage is Power Shift has changed the way a necessary step in preparing Australian households for the new energy future. People need better tools, information and services to manage the new devices we understand consumers. and appliances emerging in the energy market.

Accordingly, Energy Consumers Australia has embedded Power Shift into our advocacy for households – leading to a paradigm shift where consumers are at the centre of policy, program and product design.

We see better consumer outcomes relying on three principles:

• affordability – customers are paying no more than they need

• individualised – customers are able to access information and services on their terms

• optimised – consumers are confident that the market is working in their interests, where system decisions include rewarding consumers and their assets.

FIGURE 2: ENERGY CONSUMERS AUSTRALIA ADVOCACY PRINCIPLES

$ Affordable

Optimised Better consumer outcomes

Individualised

14 The Power Shift audience Households are ready and willing to motivations, abilities and engage, but they need more useful opportunities. At the beginning of Power Shift, our information and more effective target audience was government assistance to allow people to To develop effective information, tools and industry, to help them design understand how they need to change and services, government and industry programs and services that delivered their habits in order to have more must therefore better understand better outcomes for households, control over their energy bills and households’ motivations, abilities and particularly vulnerable households. usage. opportunities, and communicate with households accordingly. Our research has reaffirmed that was Power Shift research has underlined the right approach. the diversity of households – that We identified three main audiences for households can have different Power Shift’s research.

TABLE 1: POWER SHIFT AUDIENCES

Organisations talking to Government officials and agencies running customers directly programs to encourage energy efficiency/ conservation; reduce emissions; greater access to solar and batteries; and developing measures to assist consumers make decisions. Energy retailers and networks developing energy efficiency programs, and/or considering new energy management products and services. Consumer and community organisations who are influencing the design of policies, programs and products. Other service providers – such as financial counsellors and welfare agencies - that are providing information and assistance to energy consumers to help them manage their energy. New intermediaries (aggregators, microgrids, Virtual Power Plants (VPP), embedded networks).

Organisations informing Market bodies policy and regulatory Ombudsmen settings Other regulators

Organisations driving new Researchers ways of thinking about OECD Behavioural Insights energy management tools and services (change agents) International Energy Agency (IEA) New technology companies

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D. Power Shift activities and outputs

As outlined in Schedule 2 As a research project, Power Shift was of the funding agreement, necessarily adaptive – the research findings and recommendations Energy Consumers Australia informed the development of further undertook research through work and short-term priorities. the Power Shift grant. Our research and activities were also influenced by the substantive We identified two outcomes, with the and innovative complementary project successfully delivering on both. research being undertaken around customer behaviour3, as well as major The first was to improve our evidence- government and regulatory reviews based understanding of what really that occurred during the project. works in supporting vulnerable2 consumers to manage their energy Energy Consumers Australia not only bills (the research outcome). undertook the work required under the conditions of the funding agreement Section 2 in this report provides more but has integrated the research detail on the body of research that into our own advocacy strategy analyses the drivers and benefits of and built links with key researchers, people changing their energy use governments, behavioural insights behaviours. units and other organisations in Australia and internationally. The second project outcome was to identify opportunities for market- The Project Steering Committee, led solutions and other initiatives comprising Energy Consumers to support vulnerable consumers Australia and the Department of the to manage their energy bills (the Environment and Energy, approved the empowering consumers outcome). Power Shift work program each year, which outlined in detail the proposed Section 3 in this report provides project phase goals (activities and frameworks for developing outputs). We reported regularly to the opportunities to empower people to Department of the Environment and manage their energy use, both through Energy, providing biannual reports market-led solutions and government that outlined the work done over the initiatives. These focus on delivering reporting period, tracking progress fit-for-purpose measures in the against the work program, and context of the energy choices available flagging any changes. to consumers, and the motivations, barriers and opportunities they Table 2 summarises the major outputs experience. against our obligations in the funding agreement. Copies of all the reports are published on the Power Shift page on Energy Consumers Australia’s website4.

2 Vulnerable is used here as a term to include low-income households and those households that could be considered to be at risk of cost-of-living pressures or financial stress, with energy bills persistently making up a significant proportion of their budget. 3  Appendix A outlines the research we found particularly influential. 4 https://energyconsumersaustralia.com.au/projects/power-shift/ 16 TABLE 2: POWER SHIFT ACTIVITIES AND OUTPUTS

ACTIVITIES OUTPUTS

Review the findings and data from the Low- • Driving Change Report Income Energy Efficiency Program (LIEEP) • Multiple Impacts of Energy Efficiency Report projects to improve our evidence-based understanding of what really works in • Consumer Services in Electricity Markets Report supporting vulnerable consumers to manage • Effectiveness of Energy Efficiency Interventions in Advanced Economies their bills and related consumer behaviour and opportunities for market-led solutions • Power Shift Final Report

Improve our understanding of related • Energy Consumer Sentiment Survey findings on consumer behavior and consumers’ attitudes and experiences in energy activity markets, including through the findings of • Consumer Sentiment and Behaviour Report ECA’s Energy Consumer Sentiment Survey and complementary behavioural research

Use the findings from LIEEP to assist the • Empowering Low Income Households Report development of a best practice voluntary • The Supporting Households Framework Report guideline, information and related toolkits • Toolkits and related information products in collaboration with for service providers working with vulnerable consumers (NEPP Measure 4), and work closely • Financial Counselling Australia with market service providers and stakeholders • Indigenous Consumer Assistance Network to support effective implementation • Council of the Ageing • Tenants Victoria, Shelter Tasmania, Better Renting • Scoping an effective voluntary industry guideline for helping households manage their energy bills Report • Housing Summit 2018 and Housing Summit 2018 Background Paper

Support the ongoing work of LIEEP researchers • GEER workshops and symposia (collectively known as the Group of Energy • Improving Residential Energy Efficiency Conferences 2017 and 2019 Efficiency Researchers Australia (GEER)), to ensure their ongoing input from LIEEP and related findings into market led solutions to support services for vulnerable consumers

Engage wider researchers and stakeholders in • A Policymakers Guide to the Supporting Households Framework these findings and undertake complementary • Foresighting Forum 2018 : Take Charge – Shifting power to consumers research to contribute to wider efforts to in the using, making and trading of energy ‘make choice easier’ for all consumers (NEPP • Innovation in Energy Services Workshops with international speakers Measure 3). Dr Fereidoon Sioshansi (Menlo Economics) and Dr Ahmad Faruqui (The Brattle Group) • Engagement with ARENA, AEMO, energy companies and electricity distribution businesses on demand response programs • Engagement with COAG Energy Council, State and Territory Governments on energy efficiency schemes and sustainability programs, and improving housing energy performance • Presentations to the International Energy Agency and the OECD

17 Energy Consumers Australia Power Shift Final Report February 2020

E. Power Shift outcomes and impacts

In seeking to have a longer-term Stakeholders actioning • the NSW Office of Environment and impact on people’s ability to Power Shift research Heritage’s development of energy efficiency projects; manage their energy use and The first achievement was that control their bills, so they can government and industry started • the Essential Services Commission live in comfortable homes, it is tailoring their programs and products Victoria in its consideration of in response to Power Shift’s research. new information and assistance important at this stage of our measures; Power Shift work to reflect on We found that many stakeholders were the outcomes and impacts so far. open and receptive to the evidence • the Consumer Policy Research being made available through Power Centre in the design of information Thinking about what we have Shift and to apply it in their work. resources for community and welfare learnt about the opportunities for workers; and change (the highlights and break- The research was more influential when it was able to provide insights • an important input to the throughs) and the difficulties in into meeting an immediate need - development of the Queensland bringing about change will inform improving the design of an energy Government’s energy efficiency how we shape the next stage of efficiency program, understanding strategy. how best to talk to consumers, or our Power Shift, as part of Energy informing the design of tools to assist Energy companies were interested Consumers Australia’s ongoing consumers and community workers. where they were already seeking to work program. understand their customers better Power Shift’s frameworks have been – for example, we consulted with a used by many stakeholders, with major retailer on the development of examples including: a product providing households with better feedback. Energy companies’ • the Australian Government opportunity to innovate in this space Department of the Environment tended to be limited to where there and Energy to inform the review was smart meter data – there remains and design of policies; work to be done to encourage those stakeholders to prioritise and dedicate - in response to the Finkel resources to building the capability Review recommendation of their customers to manage their 6.3 aimed at improving access energy. Section 3 discusses that in for vulnerable households to more detail. energy efficiency services and distributed energy resources; Events such as the Foresighting Forum 2018, briefings and presentations, - relating to the Trajectory for and our webinars helped inform the Low Energy Homes; sector of the research findings. But an important project learning was that • the Victorian Government in engaging strategic communications designing and developing energy expertise is helpful in engaging more efficiency programs for low-income systematically with stakeholders, to households; help develop strategies to cut through.

18 Energy Consumers Australia will Power Shift was centred on energy use, continue to communicate the Power but we now have a framework that Shift research findings as part of its helps with a range of energy decisions. advocacy strategy and have included Grid modernisation is supported by this in our current work plan and future providing households with better business planning. tools to manage their growth, as that will unlock flexibility. Achieving the We also identified an opportunity to level of interoperability required to share the learnings and lessons of knit devices and appliances together government programs more effectively requires a level of coordination around – through Power Shift, we often standards. played the role of connecting program managers in different jurisdictions or Dialogue on the research alerting them to work underway. We spoke widely in Australia and Networks such as GEER provide a internationally on the research platform for researchers to share findings, and what we were learning information and learnings. We think about consumer behaviour and there would be value in a similar decision-making: platform at the government level, to help officials – particularly those that • convening webinars on the release of might sit in agencies outside COAG each of the major frameworks; Energy Council processes - that have been tasked with program and policy • presenting the research to a range of delivery to share information and industry and academic events; learnings.

FORESIGHTING FORUM 2018

Energy Consumers Australia convenes a Foresighting Forum each year to bring the whole energy sector together to work collaboratively on consumer issues, from the consumers’ perspective.

The 2018 Forum theme was Take charge: Shifting power to consumers in the using, making and trading of energy.

Power Shift’s research was at the heart of the Forum agenda, which focused on the immediate challenge of affordability for residential and small business consumers, while encouraging the participants and the sector more broadly to rethink the frameworks it currently uses to guide longer-term reform.

The Forum gathered over 130 consumer advocates, government and industry, with 41 speakers leading discussions about the issues which require attention in the interests of residential and small business consumers.

Discussions focused on the challenges facing consumers, as well as how the next generation of tools and services will help consumers manage their energy use.

The Forum provided a platform for the sector to consider consumer needs and behaviour and encourage government and industry to put those needs at the centre of their strategies.

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• referencing Power Shift learnings in regime relies heavily on financial our briefings to industry, including hardship as the primary indicator of at the Board and CEO level; vulnerability – those people are for the most part invisible. • tailored individual briefings to multiple stakeholders, including Acting on those findings, Energy New South Wales, Queensland and Consumers Australia identified Victorian Government officials, three areas where the evidence Australian Renewable Energy base indicated how the experience Agency, Australian Energy Regulator, of vulnerable consumers could be Australian Energy Market Operator; improved through helping them manage their energy bills. • presentations to consumer and community groups; and Avoiding ‘silent’ hardship • presentations at the OECD and the There is a need to ensure that International Energy Agency. programs or services that are intended to encourage energy conservation or We found that stakeholders were emissions reduction actively consider open to new ways of thinking about the potential health and wellbeing consumers. There has been a long- impacts on households, to ensure that standing assumption in this market they are not inadvertently encouraging that consumers are apathetic people into silent hardship. and disengaged – Power Shift has definitively demonstrated that The learnings from LIEEP and consumers are ready to participate, complementary research but that we need to deliver that demonstrated how particular engagement in a way that suits the households (the elderly, the ill) were way they live. particularly vulnerable.

Linking energy, housing We found stakeholders to be responsive to that risk but are and health conscious that it is a message that will The evidence base built through need to be repeated, particularly when Power Shift, and supported by other a program’s benefit is not defined in complementary research, made clear terms of the customer – for example, the links between energy, housing and the need to reduce peak demand or health. reduce CO2 emissions.

It also highlighted the circumstances Section 3 outlines a potential strategy of people in ‘silent’ hardship – where to mitigate that risk, by encouraging a consumer is managing to pay their energy companies to be more energy bills but is rationing their proactive in identifying households energy use to an unhealthy level. Older that are rationing their energy use to households, who are price sensitive an unsafe level, including the potential and very receptive to messages about for the strategy to be actioned through being frugal and avoiding ‘waste’, are The Energy Charter.5 particularly at risk. Our regulatory

5 Information on The Energy Charter is available on the website https://www.theenergycharter.com.au/ 20 Housing performance is critical we convened a Housing Summit energy deal, replacing inefficient in September 2018, drawing appliances for low-income households, The second area was to highlight together nearly 100 stakeholders and subsidising or providing loans to the integral role of the energy from consumer and community households to install solar panels. performance standards of housing, organisations, government and which includes fixed appliances, in industry. Through the Housing The objectives of those schemes household health and wellbeing. Summit, we established a coalition however can differ – they may focus on of consumer and community addressing affordability for particular The LIEEP projects underlined the organisations that continues to work households or on reducing CO2 impact of poorly designed housing on together. In Section 2 of this report we emissions. As such, jurisdictions and household health and well-being, as provide more detail on that on-going programs record and report on the well as their energy bills. process. impact of these programs in different ways. We saw that the Australian Building health and wellbeing Government-led Trajectory for Low A key lesson from LIEEP was that Carbon Homes process offered a into services design the co-benefits of these programs real opportunity to improve energy The evidence base outlined the are substantial, and in fact are likely performance standards for residential need to capture all the benefits of to outweigh savings in energy and housing. energy management in program emissions. As such, those impacts design and build better platforms for should be tracked and recorded, to We knew that only a few consumers collaboration. make sure that we capture the full have been actively engaged in building benefit from those programs. standards codes, and that previous There is constructive work being attempts to improve standards had undertaken by Australian, State Through Power Shift, we developed been undermined by claims that and Territory governments to help the Multiple Impacts of Energy Efficiency consumers didn’t care or weren’t consumers manage their energy. All framework, to help government and asking for energy efficient houses. jurisdictions run programs to promote industry quantify and measure those the efficient use of energy – examples benefits. Section 2 provides more To ensure the voice of the consumer include providing information and detail on this framework. was heard by COAG Energy Council, tools to help consumers get a better

21 Energy Consumers Australia Power Shift Final Report October 2019

SECTION TWO: RESEARCH INTO THE DRIVERS AND BENEFITS OF CHANGING ENERGY USE

22 Funded through Australian • a carer for a person with a disability A. Power Shift’s Government grants, the program may be unable to offer advice on supported 20 pilot projects, trialled 44 energy efficiency due to other more foundations different interventions and collected pressing health and well-being data on 20,000 low-income and priorities; and The foundation for Power Shift’s vulnerable consumers across Australia. research was the Low-Income • a retired couple on a pension may Energy Efficiency Program (LIEEP) While the origins of LIEEP came from be reluctant to use on-line energy a desire to test emission reductions comparison sites due to concerns which trialled and assessed the initiatives, the rich data generated about marketing or a lack of digital effectiveness of a range of energy from the pilot projects delivered know-how. efficiency measures. far-reaching insights into consumer behaviour and energy management. A deep dive into the outcomes for low-income The pilots were run by consortia, comprising community groups, local households governments and not-for-profit The meta-analysis of the outcomes organisations working with a research produced through the LIEEP pilots was partner with relevant expertise. They provided in the report, Driving Change.6 used a range of methods ranging from The report was authored by the Group in-home visits for older households to of Energy Efficiency Researchers online interactive educational games Australia (GEER), a network of for young renters. researchers that was established through the LIEEP pilots. Participants were drawn from across Australia. The pilots covered What helped households metropolitan, rural and remote regions, and eligibility to engage in the save energy program was focused on household There were 44 initiatives trialled income. The projects covered a diverse through the LIEEP pilots. range of households (elderly/young, homeowners/renters, Indigenous, and Initiatives included combinations refugees). of information, training and audits delivered directly to households This program was ground-breaking in their home, and retrofitting of because it showed that targeted, the house. Major retrofits included rather than `mass market’, initiatives insulation and replacement of major are needed to help those who need it appliances, while minor retrofits sealed most. For example: draughts and replaced lightbulbs.

• a single parent family in a rental Some pilots trialled a range of property is most unlikely to benefit different ways to provide feedback from subsidised solar panels; to the participant – a couple of trials provided an in-home display, and some built champions within their local community to give participants easy access to advice and assistance.

6 Available on ECA’s website at https://energyconsumersaustralia.com.au/wp-content/uploads/Driving-Change- Identifying-what-caused-low-income-consumers-to-change-behaviour.pdf 23 Energy Consumers Australia Power Shift Final Report February 2020

Pilots also trialled digital technologies to engage and communicate with FIGURE 3: REDUCTION IN AVERAGE DAILY HOUSEHOLD customers, including sending text ELECTRICITY USE PER INITIATIVE messages or emails, and building online communities. A truly innovative High Touch approach was the use of gamification – using games to engage and educate consumers about energy efficiency. -12% EE Training -10% HEV + Retrofit: Major Overall, most projects reduced average daily household use by between -7% HEV + IHD + Retrofit: Major 2-12%. Pilots were classified as either high touch – where there was face to -6% HEV + Retrofit: Minor face contact with the participant - or -6% HEV high tech, depending on whether digital channels were used to reach -5% IHD households. -4% Retrofit: Major

The digital engagement results are -0.6% HEV + EE Workshop interesting and seem to offer the most potential for scaling up quickly. Reduce -0.5% EE Workshop Your Juice7 – a game developed for young renters – reported reductions of household energy use of around 11%. High Tech

-11% Gamification + Digital Engagement -8% Digital Engagement + Retrofit: Major -5% Digital Engagement

Key: HEV – home energy visits; IHD - in-home energy monitor displays; EE – energy efficiency

7 For more information, see https://www.citysmart.com. au/showcase/reduce-your-juice/ 24 The pilots were diverse and using averages does not paint a complete picture of household experiences. But the evidence base built through LIEEP indicates where there is likely to be most impact.

The most successful pilots demonstrated clear potential benefits. The initiatives that achieved the greatest reduction in electricity TABLE 3: MOTIVATIONS AND BARRIERS TO ENERGY EFFICIENCY consumption focused on training (one project, -12%), gamification TOP FIVE MOTIVATIONS WERE: TOP FIVE BARRIERS WERE: with digital engagement (one project, -11%) and a home energy visit with • Awareness – people wanted to • High perceived costs – where major retrofits (two projects, -10%). understand how to manage their replacing appliances or in-home The latter impact is unsurprising given energy modifications were seen as that major retrofits typically involved a unaffordable • Low perceived cost – wanting to significant energy efficiency upgrade, reduce their bill • Lack of knowledge – people didn’t such as insulation or a new hot-water have a great understanding of what system. The Reduce Your Juice pilot • Incentives and rebates – extrinsic they could do and, perhaps more reduced energy usage by 11%, through rewards were used at different importantly, didn’t know how to gamification and building a digital stages and in different amounts, access that information community where participants could but some consumers were also share their results. motivated by altruism • Lack of trust – participants had low trust in industry and government • Comfort LIEEP indicates where there are clear • Split incentives (for example, • Improved health and wellness, and opportunities to roll out at scale between renters and landlords) improved measures to help low- reduced stress income households manage their • Low literacy energy bills and usage.

LIEEP insights into Driving Change outlines a program household decision-making delivery framework to guide other energy management programs The 20 pilots generated a wealth of through recruitment, engagement, information. education and outcomes. It details the factors that contributed to the By aggregating the data across the 20 effectiveness of a pilot – noting that pilot programs and analysing common projects were more likely to succeed themes beyond just changes in energy where they were tailored to fit the use and bill outcomes, we have better lifestyles and values of participants, insight into the reasons why low- were trusted by participants, drew income consumers changed their from an evidence base, balanced energy behaviour, and the reasons why project with participant needs, and they did not. were appropriately resourced.

Crucially the researchers found these motivations and barriers did not correlate with age or other demographic factors.

25 Energy Consumers Australia Power Shift Final Report February 2020

Understanding the target face to face wherever possible. communications through digital households channels, so they could get help at a Newly arrived migrants – with time convenient to them. The most effective initiatives were little or no experience of energy where information was tailored to the delivered through a market - required The meta-analysis of the LIEEP data consumer’s circumstances and needs information and education about how in Driving Change grouped low- – for example, for elderly customers, to engage in the market, and how their income participants into three broad that meant approaching them usage was tied to their bills. categories: ‘New to Energy’, ‘Energy through trusted networks, providing Without Effort’ and ‘Stressed by information in digestible amounts, and Families with young children liked Energy’.

FIGURE 4: CONSUMER SEGMENTS AND ATTRIBUTES

Legitimacy Cultural Information High-Tech Convenience

New to Energy Energy without Effort

Relationships Community Wellbeing Connections Entertaining and Fun

Worry High -Touch Stressed about Energy

Affordability Support

26 These broad consumer segments provide government and industry B. Link between energy, housing with guidance to better understand vulnerable households and how to and health reach them. Driving Change also provided crucial insights into the The LIEEP pilots provided evidence can impact on mental as well as physical types of energy management of the relationship between health costs. programs best suited to them. energy, housing and health. It should be noted that LIEEP We commissioned GEER to identify the participants volunteered to engage A number of LIEEP pilots reported that co-benefits, and its report Empowering in the pilot – households who are not some housing stock was so poor, the Low Income Households outlined the 12 so motivated might require additional energy efficiency initiative simply had no co-benefits captured by LIEEP, including efforts to engage. impact. knowledge, empowerment, control/ self-efficacy, confidence, competency, A trusted voice While LIEEP pilots were focused on financial control, interest, positive energy efficiency, 19 of the projects attitude, financial stress, general stress, The program underlined the value underlined the significant co-benefits (or perceived comfort and thermal comfort. of delivering information through a impacts) of consumers managing their The areas of most notable improvement trusted voice. energy use to live comfortably in their were confidence, knowledge, homes, as energy is critical to health and competency and thermal comfort. A common theme across all pilots wellbeing and social inclusion. was that these households responded The experience of LIEEP participants best when information or offers of Health costs can be impacted by people also highlighted the need to ensure that assistance were delivered through an living in homes that are not protected a focus on energy efficiency does not organisation or individual that was against extremes of temperature and encourage unhealthy or unsafe rationing considered a trusted - and typically where homes are damp, while social – and this is particularly true for older independent - voice. exclusion because of energy rationing households who are already frugal.

FIGURE 5: ENABLERS OF IMPROVED HOUSEHOLD ENERGY EFFICIENCY

Appliances

Information

Behaviour Change Home Ownership Status Housing Structure

27 Energy Consumers Australia Power Shift Final Report February 2020

C. Household sentiment and behaviour While the focus of Power Shift was Through our biannual Energy Consumer on vulnerable and low-income Sentiment Survey (ECSS), households have told us that more can be done to consumers, we realised early on improve their confidence in achieving that there were lessons for how better outcomes from energy markets. all households could benefit from As our understanding increased, we managing their energy use and built questions into the ECSS about controlling their costs. energy management and behaviour, to ensure that we captured a complete picture of Australian households’ experience in the energy market.

We commissioned an analysis of the ECSS data with the aim of further unpacking what it tells about the capacity and willingness of households, including those in financial stress or with low incomes, to manage their energy use.

FIGURE 6: HOUSEHOLD CONFIDENCE IN MANAGING THEIR ENERGY COSTS8

67 65 64 67 62 61 60 60 62 56 57 53 54 52 52 54 50 49 50 50 49 51 45 47 48 45 42 42 42 38 38 36 35 37 31 31 30 29

17 18

B H NSW Vic Qld SEQ WA SA Tas ACT Ability Information Tools In the market

8 Source: Energy Consumers Australia Energy Consumer Sentiment Survey June 2019 https://energyconsumersaustralia.com.au/projects/consumer-sentiment-survey 28 Back2Back Consulting synthesised the ECSS data and research to develop profiles of Australian consumer energy use, behaviours and attitudes. That analysis in Consumer Sentiment and Behaviour9 provides further insight into the diversity of Australian households.

FIGURE 7: AUSTRALIAN CONSUMER ENERGY USE, BEHAVIOURS AND ATTITUDES10

9 Back2Back Consulting (2019) Consumer Sentiment and Behaviour https://energyconsumersaustralia.com.au/wp-content/uploads/Consumer-sentiment-and-behaviour.pdf 10 Ibid. 29 Energy Consumers Australia Power Shift Final Report February 2020

D. Other behavioural research

Power Shift also drew on other The level of research on energy Figure 8 shows the research we found relevant research unpacking consumers – in Australia and overseas the most influential – the following – has grown exponentially and was a depicts the different dimensions, and how Australian households make valuable input to Power Shift over the how it informed our thinking. Details of decisions on their energy use. life of the project. a number of these research reports are provided in the selected bibliography in Appendix B.

FIGURE 8: COMPLEMENTARY RESEARCH TO POWER SHIFT

Diversity of households - Russell-Bennett et al 2017, Nicholls & Strenger 2015

Helping consumers Household's response change their habits to new technology - - OECD Behavioural Nicholls & Strengers Insights, BI Team 2015, Hargreaves & WIlson

Consumer behavioural insights

Tools and information Ensuring vulnerable that help consumers households aren't - AGL customer left behind - DEFG, insights, BI Team, RMIT, ACOSS and BSL, BETA, Jemena Power QCOSS, VCOSS Changes

Relevant pilots and trials - Jemena Power Changers, ARENA work on demand response

30 E. International research The challenges faced by International findings The Group of Energy Efficiency Australian consumers in Researchers (GEER) found over Some of the key findings in the report managing energy use and costs 1,000 energy efficiency projects in are: are similar in other countries. Australia and across the world over the past decade. This means there • most energy management The International Energy Agency is a significant evidence base for interventions achieve their aim, but frames energy efficiency as policymakers and industry to draw it can be difficult to directly compare the ‘first fuel of a sustainable upon for future policies and initiatives the results; in a number of countries. energy system’, contributing to • there can be unintended climate change mitigation and Assessing the outcome of these energy consequences for some energy security, and has created initiatives targeted at households interventions. For people living below can be challenging because their the poverty line, their low-energy use 11 resources to help policymakers. format can vary widely and involve a does not indicate energy efficiency. combination of engineering retrofits Instead they are sacrificing their to the home, energy audits, in-home health and wellbeing to ensure a displays, education, changes to lower energy bill; and energy tariffs, incentives, and even influencing social norms. • interventions can backfire. Most commonly seen in home audits, To test the findings from Australia’s smart meters/in-home displays and experience with household energy pricing interventions, customers can management programs against do the opposite of what is expected. international experience, we partnered It could be because they `do not want with GEER on their literature review to be told what to do’ (also known as to identify the type and features of `consumer reactance’) or consumers energy efficiency interventions that compensate for `saving’ in one area are most effective. by `spending’ more in another.

The review Effectiveness of Household Energy Efficiency Interventions in Advanced Economies12 reinforced many of the findings from LIEEP, and most importantly consolidated the evidence that consumer-centred design must be the focus of energy management programs.

11 See https://www.iea.org/topics/energyefficiency/ 12 Russell-Bennett, R., McAndrew, R., Gordon, R., Mulcahy, R. and Letheren, K. (2019). Effectiveness of Household Energy Efficiency Interventions in Advanced Economies – what works and what doesn’t. Final Report. Brisbane: Queensland University of Technology. Available at https://energyconsumersaustralia.com.au/wp-content/uploads/Effectiveness-of-Household- Energy-Efficiency-Interventions-in-Advanced-Economies.pdf 31 Energy Consumers Australia Power Shift Final Report February 2020

FIGURE 9: ENERGY EFFICIENCY INTERVENTIONS – WHAT WORKS AND WHAT DOESN’T13

What works Program features What doesn’t

• Taking a tailored • Using a cookie-cutter approach approach

• Applying mutliple • Applying theory relevant theories Design without considering (region, population) appropriateness

• Fitting choices to the • Having a poor fit of outcome sought outcome and approach

• Planning well • Failing to take a systematic approach • Knowing that more is Process (often) better • Underestimating the (method, choice of elements, unintended consequences theory, feedback)

• Measuring it (accurately) • Measuring on an if it matters ad-hoc basis

• Never assuming one • Relying on self-reports positive outcome leads to another Evaluation (measures and outcomes)

Implications and • energy policies and intervention recommendations for must be consumer-centred; energy policy • clarity of aims and objectives will GEER identified useful directions for help achieve desired impact; energy policy and advocacy, including: • good evaluation is the key to • successful programs recognise the demonstrating success; and complexity of energy behaviour; • be mindful of unintended • context really matters – ensuring that consequences – plan carefully policies and programs appropriately to ensure that the program is support the segmentation, tailoring appropriate for the target and targeting of interventions; households and in that location.

13 Ibid, p. 14 32 F. Capturing the wider benefits

There are benefits to consumers FIGURE 10: IEA CO-BENEFITS OF ENERGY EFFICIENCY14 when they use energy more efficiently – both how much they use and when they use it – in Energy savings the form of lower bills, as well as Energy Economic wider system benefits. security

These benefits will only increase as technology unlocks the potential for Public Energy prices consumers to be more flexible in their budgets energy use, and as changes are made to the built environment in the form of lower energy operating costs of housing and major appliances. Energy efficiency Productivity Energy access Paradoxically though, it remains the improvement case that mechanisms and reforms that will enable the potential for greater consumer participation in managing energy use, at times when Asset value Health and it can have the most value, remains wellbeing under-utilised.

There are some lessons that can be drawn from the experience with energy Household Air quality savings efficiency. Energy savings Internationally, to focus governments’ attention on what should be considered the least-cost option, the International Energy Agency (IEA) developed a framework to identify the range of potential benefits delivered by using energy more efficiently.

The IEA describes energy efficiency as the ‘first fuel of a sustainable energy system’, encouraging governments to scale up actions to encourage more efficient use.

The IEA framework captured the range of benefits – to the individual, to the energy sector, and to society – of using energy more efficiently.

14 Source https://www.iea.org/topics/energyefficiency/ 33 Energy Consumers Australia Power Shift Final Report February 2020

In Australia, Power Shift’s research Engagement in the LIEEP trials indicates that helping people manage reduced participants’ stress and their energy has impact far beyond anxiety levels, and they reported reduced greenhouse gas emissions or positive improvements to their levels cost savings to households. of knowledge, confidence and self- efficacy. Empowering Low Income Households, GEER’s analysis of the LIEEP outcomes, The GEER analysis also highlighted identified a range of ‘co-benefits’ for other, broader benefits to giving which they had no common measure. households more control over their bills, detailed in Figure 11 below.

FIGURE 11: CO-BENEFITS REPORTED IN LIEEP PILOTS15

• Social inclusion • Physical, mental and emotional health and wellbeing Household • Increased disposable income Co-Benefits • Quality of life • Overcoming physical barriers

• Employment opportunities • Health care system Social • Building family harmony Co-Benefits • English language improvements for CALD • Ethical recycling • Cultural awareness and understanding

• Experience Consortia Co-Benefits • Network establishment • Boost to the industry

15 Source GEER (2018) Empowering Low Income Households https://energyconsumersaustralia.com.au/wp-content/uploads/Empowering-Low-Income-Households-delving-into-LIEEP- co-benefits.pdf 34 GEER also highlighted another issue guzzling heater. The household’s of Energy Efficiency framework also – that the way in which LIEEP pilots ongoing electricity cost saving is then provides links to where there is an reported on the co-benefits was spent on heating their damp home evidence base, or where further inconsistent, making it difficult to to a more comfortable temperature. research would be useful. compare different results. This improved their health and wellbeing, reduced financial stress and The Framework includes the impact The lack of a common lexicon to allowed their children to concentrate on: measure and describe impacts was more effectively while doing their noted, as was our need to move homework16. • household health and wellbeing, away from the language of ‘energy including direct and indirect impacts efficiency’ which tends to be heard as Power Shift sought to understand of improved thermal quality, reduced an energy conservation message, and these additional benefits to dampness; instead consider ‘energy management’. households, and the best ways industry and policymakers could measure • other participant benefits, including Helping policymakers build them when assessing the success at the household level greater of household energy management empowerment and social capital, a better business case programs. and at the organisational level Energy Consumers Australia new partnerships and business commissioned ACIL Allen to develop Multiple Impacts of Energy Efficiency opportunities; a framework to quantify and define framework assists government and the full range of benefits for Australia industry to place a value on all the • energy system impacts, including - a large continent marked by impacts of efficient energy use, so deferred investment in generation extreme differences in temperatures, that any future cost-benefit analysis and networks, reduced peak demand; population concentration and of energy efficiency programs more and household wealth. accurately reflects the true benefits to consumers, society and the economy. • macro-economic impacts, framed Policymakers have conventionally either through the impact’s source, measured the success of a household It points to the considerable body of or the nature of its economic effect – energy efficiency program in a simple evidence indicating that the non- they include higher business profits way: did energy use or energy costs go energy benefits (such as increased and increased disposable income as down? home comfort and better health) could the result of reducing energy costs, be of greater value than the energy with consequent impact on GDP. One of the most dramatic insights savings. provided by Power Shift research Figure 12 maps the framework. is that the physical and social The Multiple Impacts of Energy Efficiency Impacts presented in a darker shade consequences of inefficient energy framework describes each impact, are underpinned by a more substantial use are much greater than previously encouraging the development of a evidence base. Interrelationships thought. Until now the benefits have common lexicon. It gives us a better between impacts are indicated by not been well understood or measured. understanding of the materiality of connecting arrows - a solid line the impact, and where there is an indicates a stronger causal link, while For example, a household received existing validated survey instrument a dashed line represents as weaker assistance to replace an old electricity- for capturing it. The Multiple Impacts causal link between impacts.

16 ACIL Allen (2017), Multiple Impacts of Energy Efficiency, p7 35 Energy Consumers Australia Power Shift Final Report February 2020

FIGURE 12: ENERGY EFFICIENCY IMPACTS LOGIC MAP

Energy efficiency program implemented Intervention

Improved knowledge Improved Improved of energy efficiency empowerment positive attitude behaviours and and self- towards energy strategies efficacy efficiency attitudes Householder Householder knowledge andknowledge

Reduced household energy Improved Reduced thermal damp and consumption and comfort mould bill savings response behavioural Householder Householder

Increased Reduced Improved Reduced Reduced family property financial physical mortalilty tensions and values stress health social isolation round impact round Householder first Householder Reduced Fewer days

private health off work or spending school Reduced Improved Improved disconnection diet mental costs wellbeing impact Householder Householder second round second

Utility costs Lower costs from reduced from reduced impacts energy arrears and Energy retailer retailer Energy consumption disconnections

Avoided health Reduced Reduced CO2 Reduced costs related Avoided Deferred Reduced Increased emissions expenditure human Increased to air pollution generation network public health services economic from energy employment from electricity costs investment on energy spending and justice output generation generation concessions spending

Societal impact Societal impacts from reduced energy consumption Public budget impacts Macroeconomic impacts

36 G. Energy and housing The LIEEP projects demonstrated That is powerfully demonstrated the impact of homes with poor in Figure 13, which measured the temperature in the loungeroom of a thermal efficiency on energy LIEEP household in Hobart in winter usage. For the people living in – the green line is the temperature those houses, their lives can be outside, and the purple the temperature in their loungeroom. The grim. spike in loungeroom heat was when they knew a visitor was coming – the rest of the time, the temperature of their loungeroom was between 10-15 degrees.

FIGURE 13: IMPACT OF POORLY HEATED HOMES: MISSION AUSTRALIA GET BILL SMART 17

17 Source: AusIndustry presentation to IREE 2017 37 Energy Consumers Australia Power Shift Final Report February 2020

When homes leak warmth or cool Government officials were talking air, no amount of information or about housing in a new way, assistance will help. And shame identifying it as critical to energy and embarrassment about living affordability. At the same time State conditions can be significant barriers and Territory Governments were taking to seeking assistance. new approaches to housing programs and pilots, responding to issues raised Given the nexus between energy, by consumer advocates about energy housing and health, we sought to costs and affordability. take advantage of the opportunity to address the energy performance of In partnership with consumer housing as a priority for Power Shift advocacy organisations Renew and the over the final 18 months of the project. Australian Council of Social Service (ACOSS), Energy Consumers Australia developed a comprehensive housing strategy.

38 In the housing strategy we went first to the evidence base, emphasising the critical link between energy performance and household health and wellbeing. We commissioned ACIL Allen to develop a short background paper18, based on the Multiple Impacts of Energy Efficiency framework, to make clear that the status quo was resulting in bad outcomes for consumers and was more expensive for government. We built into our strategy the recommendations of a substantive report by ClimateWorks and the Australian Sustainable Built Environment Council which demonstrated that improvements were achievable and affordable. (L to R) Alison Rowe, CEO, Australian Energy Foundation; Donna Luckman, Working with a coalition of CEO, Renew; Rosemary Sinclair, CEO, Energy Consumers Australia; Cassandra stakeholders, we convened a Housing Goldie, CEO, Australian Council of Social Service Summit19 in September 2018, inviting consumer and community organisations as well as industry and government who had been working on those issues in their jurisdictions to come together. Success was achieved when in At the Summit, the CEOs of February 2019, Energy Ministers a number of consumer and agreed to a trajectory that aims to community organisations called for raise energy performance standards a comprehensive national strategy for new housing from 2022, with to improve the energy performance built in review points. In July 2019, standards of all Australian homes. the Building Ministers’ Forum agreed to the development of enhanced Building on the communique, energy efficiency provisions for new a joint statement signed by 36 residential buildings. consumer groups and 21 supporting organisations urged COAG Energy The coalition of agencies built through Council to commit to action at its the Housing Summit continues to work meeting in December 2018. together, ensuring the consumer voice is heard, and is now engaging in the processes that have been initiated to improve the energy performance of some 10 million existing homes.

18 ECA (2018) Healthy and comfortable homes for all Australians available at https://energyconsumersaustralia.com.au/wp-content/uploads/Power-Shift-Housing- Summit-Background-Paper.pdf 19 See https://energyconsumersaustralia.com.au/news/housing-summit-2018-publications-resources/ 39 Energy Consumers Australia Power Shift Final Report February 2020

H. How Power Shift helps navigate market transformation

Power Shift has played an Power Shift has been informed by the research and policy discourse underway, important role in Energy exemplified by the IEA’s work on digitalisation20. The emergence of digital technologies providing consumers with timely, accurate feedback and greater Consumers Australia’s framing control over their use has brought us to the point where we are now seeing the of the role of consumers in a behaviour of individual consumers having direct and immediate impact on transforming energy market, and energy supply systems. the challenges they face. We have reached a pivot point – where there is now the technological capacity to give consumers greater control over their usage and bills. This creates the opportunity in a transformed energy system for consumer participation in demand-side solutions, that mitigate the need for costly investment in long- lived assets on the supply side.

FIGURE 14: HOW DIGITALISATION POTENTIALLY CHANGES TRADITIONAL CONCEPTIONS OF ENERGY EFFICIENCY AND DEMAND-SIDE FLEXIBILITY21

Digitalisation

Demand-side Demand-side end-use efficiency flexibility

System energy efficiency

Multiple Increased energy system cost savings benefits of Variable renewables integration end-use + efficiency Energy consumer empowerment

20 See https://www.iea.org/topics/energyefficiency/digEE/ 21 ibid 40 Power Shift’s insights into consumers People may still choose to conserve • the work by the Smart Electric Power underlines the need for those energy for altruistic and community Alliance (SEPA) on autonomous home solutions to be described in terms that reasons – indeed our research energy management24; customers will value, and to which they indicates that is a strong motivator. can respond. But just as we should endeavour to • the work by Dr Tom Hargreaves25 capture the full range of benefits from on smart home control, which is How we frame that discussion is energy management, we should also similarly being explored by Dr Sarah important. be able to describe both the individual Pink and Dr Yolande Strengers at and the systemic value to a consumer, the Emerging Technologies Lab26 at Energy efficiency has traditionally recognising that different consumers Monash University; been presented to customers in may have different motivations. normative terms. Households are • the work being done through the asked to stop ‘wasting’ energy, or to The energy management services UK’s Energy Systems Catapult27, use it ‘responsibly’. to connect and package digital in their Living Lab, and as another technologies in a way that works example The Green Village28 in the The LIEEP evidence base demonstrates for consumers are yet to emerge Netherlands; that those messages have caused at scale. Consumers will not see unintended consequences – customers good outcomes unless we can knit • the International Energy Agency’s who place value on frugality and are devices and appliances together, and Technology Collaboration Program stressed about their bills are more reward consumers for the flexibility on Demand-Side Management29 likely to ration to unhealthy levels. in their energy use through ‘prices to User-Centred Energy Systems Power Shift and behavioural research appliances’. Technology Collaboration Program, makes clear that different households Social license to automate project have different constraints –a family In this context, a key factor will be being led by Australia; and with young children will find it very engaging with consumers on the hard to use less at bath, dinner and permissions and trust that they • the Digital Energy Futures Project30, bedtime (‘feral o’clock’ as one parent require to engage as partners in how which is being led by Monash described it)22. appliances in their home are activated University in partnership with as part of the energy system. We are Ausgrid, Ausnet Services and Energy And digitalisation adds another beginning to see this conversation Consumers Australia. dimension – making it easier to emerge in a number of contexts and monetise avoided or deferred studies both internationally and in The lessons from Power Shift energy demand. When a number of Australia, in particular: demonstrated powerfully that a new households or consumers can be way of thinking is required to design aggregated, their individual choices • the work by Carnegie Mellon tools and information that will be about when and how to use energy University and Argo AI research effective in empowering all consumers, have real value in the energy market. partnership on autonomous including those that are vulnerable A consumer should know when that is vehicles23; to cost-of-living pressures, to take the case and be rewarded accordingly. control of their energy bills.

22 Nicholls and Strengers (2015) Changing Demand: Flexibility of energy practices in households with children https://energyconsumersaustralia.worldsecuresystems.com/grant- archive/623-energy-practices-in-larger-households 23 For more information, see https://www.cmu.edu/news/stories/archives/2019/june/argo-center.html 24 See https://sepapower.org/knowledge/the-4-levels-of-autonomous-home-energy-management/ 25 See https://people.uea.ac.uk/tom_hargreaves 26 See https://www.monash.edu/it/our-research/strengths/chic/research/emerging-technologies-lab 27 See https://es.catapult.org.uk/ for information about their research, including the Living Lab 28 https://www.thegreenvillage.org/ 29 For information about the program overall, see https://www.iea.org/tcp/dsm/ and for information on the project, see http://ceem.unsw.edu.au/sites/default/files/event/documents/ TCP%20DSM_Presentation_monash-unsw%20final%20web.pdf 30 See https://www.monash.edu/it/our-research/strengths/chic/research/emerging-technologies-lab/digital-energy-futures 41 Energy Consumers Australia Power Shift Final Report February 2020

SECTION THREE: OPPORTUNITIES FOR EMPOWERING CONSUMERS

42 A. Opportunities for innovation in energy services

A key focus of Power Shift was We developed our work in this area manage their energy use and reduce identifying the opportunities for in three stages: their bills. market-led solutions. • a scoping study with The Brattle However, the energy management Group to identify the barriers to services to connect and package these innovation in new energy services, new technologies in a way that works and subsequently convened two for consumers is yet to emerge at scale Innovation in Energy Services and it remains very difficult for most workshops; households and small businesses to track and understand their energy use, • working with the Australian Energy let alone take steps to manage it. Foundation to scope the content and structure of a voluntary industry To understand the factors holding back guideline; and the delivery of innovative customer services and technologies, Energy • working with ACIL Allen to develop Consumers Australia commissioned a segmentation framework that The Brattle Group to do a scoping focused on the needs of customers. study to review similar markets where those services are already in place, and Barriers to innovation in to talk to a small group of companies energy services offering innovative energy services, who are currently active in, or had Innovative new technologies for sought to enter the Australian market. generating, storing, and managing electricity are emerging which change The report, Consumer Services when and how we use electricity – and, in Electricity Markets31 provided consequently, the entire electricity new insights into the obstacles system. Solar panels allow homes and encountered by energy service small businesses to generate their providers. own power, while home batteries or electric vehicles with vehicle to grid The Brattle Group found no technologies allow us to store it. insurmountable barriers to entry, but significant roadblocks that require Smarter, more efficient appliances a considered and cohesive policy are emerging that can give us better response. information about how and when they are drawing power, while allowing Foremost was the role of culture. consumers or other third parties a The Brattle Group found a system host of pre-programmed and dynamic marked by inertia. They heard about smart controls. Taken together these an industry resistant to change, with new technologies hold out the promise a ‘can’t do’ mentality. That culture is of individualised services, helping acting as a hard brake on innovation. households and businesses to better

31 Available at https://energyconsumersaustralia.com.au/wp-content/uploads/Consumer-Services-in-Electricity- Markets-A-Scoping-Study.pdf 43 Energy Consumers Australia Power Shift Final Report February 2020

FIGURE 15: COMMON BARRIERS TO INNOVATIVE RETAIL SERVICES

Unfavourable Culture

• Current barriers are mostly cognitive • There is a sense of inexperience or lack of comfort with new ideas/technologies • Regulators have become far more reactive than proactive

Future of the Status Quo Glacial Change Industry

• The current ruleset is • Customer driven change • Lack of clarity, lack of too complicated is outpacing regulatory certainty, and lack of change agreement over the • Difficult to access future of the industry value stack • There is no clear leadership • Too many institutions creating and enforcing the rules

• Lack of standardisation for equipment and products

The companies interviewed also countries will not ‘cut and paste’ into said that it is difficult to access the the Australian context – we need to full value stack of energy services identify and develop incentives that in the Australian market - retailers suit this market. have an incentive to help customers understand and manage their bills, And finally, a lack of standardisation but not to help the network manage of household appliances and its costs. The companies interviewed infrastructure can make it difficult noted that integrated utilities find to create standardised products and it easier to realise the full value. In services, limiting customer reach. Australia we have disaggregated retail In other markets, there are clear and networks, meaning that it is not definitions for energy efficiency and clear that anyone in the Australian demand response programs, allowing supply chain has the incentive to firms to create standardised products. deliver energy management services Lack of equipment standardisation that optimise customer outcomes. drives up costs, while the lack of access That also means that the policy to real-time data on energy use was and regulatory solutions in other also cited as a major issue.

44 Building a dialogue around Developing an industry Stakeholders expressed a strong change guideline for better preference that any guideline should engaging households in be delivered through The Energy Recognising that the balance of Charter35 – an initiative through power in the energy sector is shifting energy management which energy businesses across the to consumers, the opportunities to energy supply chain have committed aggregate and manage consumer To enable a dialogue with energy to progress the culture and solutions assets behind the meter becomes companies about ‘better’ energy required to deliver energy in line with not just feasible but increasingly management services, we community expectations. Around compelling. commissioned the Australian Energy 85% of customers are supplied by Foundation (formerly Moreland Energy energy companies (retailers) who are To continue the sector’s discussion on Foundation) to develop an approach signatories to The Energy Charter. those issues that gained momentum to an effective voluntary industry through our 2018 Foresighting Forum, guideline with the objective of helping AEF recommended for industry the we convened two workshops with households (including vulnerable following five areas of focus that would international experts, focusing on households) to manage their energy improve the customer experience and innovation in energy services. usage and take control of their bills. make a significant contribution to re-building trust and confidence in this Dr Sioshansi from Menlo Energy AEF drew on Power Shift’s research, market. Economics, based in California, reviewed existing programs and discussed key questions including hardship programs, and consulted the potential for individuals, groups a range of organisations including or communities of consumers to be energy retailers. Their logical, simple, aggregated so their assets (such as and practical recommendations solar panels or batteries) can be better are intended to provide a benefit to utilised and rewarded, and how those everyone involved, if delivered34. larger pools of assets can be used to balance load and demand32. While they are consumer-focused, each recommendation provides a In the second workshop, Dr Ahmad benefit to everyone within the sector Faruqi, a principal with The Brattle through more efficient (less costly) Group, also based in California, interactions, improved reputation, outlined some of the harms being greater consumer retention, reduced perpetuated by current pricing debt levels, fewer complaints and early approaches, and how those could action, reducing the need for larger be ameliorated by moving towards scale intervention. modern pricing approaches that engage consumers to reduce demand. Dr Faruqi points to other countries that have successfully made the transition33.

32 To see the workshop presentations, go to https://energyconsumersaustralia.com.au/news/innovation-energy-services-workshop-1-resources 33 To see the workshop presentations, go to https://energyconsumersaustralia.com.au/news/innovation-energy-services-workshop-2 34 Australian Energy Foundation, June 2019 Scoping an effective voluntary industry guideline for helping households manage their energy use and bills available at https:// energyconsumersaustralia.com.au/wp-content/uploads/Scoping-an-effective-voluntary-industry-guideline-for-helping-households-manage-their-energy-usage-and-bills.pdf 35 See https://www.theenergycharter.com.au/ for information about the Charter 45 Energy Consumers Australia Power Shift Final Report February 2020

1. Improving their • develop simpler bills through co- relationships with customers design – this requires regulatory review, but allowing customers to Energy companies know little about ask for the information that is of their customers outside their billing most relevance and utility to them arrangements with them. If retailers would seem to be a logical next step, are to provide customers with the least knowing what we now do about the resources with the best energy service, diversity of households36 ; the AEF recommends that energy companies need to: • develop other communication options – noting that the bill is • build a trusted relationship with too often relied on as the only their customers – including through point of contact between a retailer co-designed approaches to improve and a customer and that digital on the information, programs and technologies offer alternatives, services; there is the potential to review all communications with the customer • collect relevant information to to offer it at the time and in the provide a better service that medium that the customer prefers; could include the customer’s preferred language and means of • Provide services to help consumers communication and understanding with forms where possible – for how many people live in the house. customers who need additional help Improved understanding of the and are eligible for a government household means that the retailer grant, retailers could not only alert can tailor information; them to the grant, but also pre- populate forms; and • provide tailored solutions based on that enhanced understanding. • proactively identify and apply eligible concessions – we continue to see instances of consumers who are not 2. Information provision accessing all the concessions and The second area of focus is how energy rebates to which they are entitled37. companies communicate with their For example, knowing the age of their customers. A significant proportion customer means it is easy to check of stakeholders noted how ineffective that the customer is receiving the the bill was in helping customers government assistance to which she understand their usage. That has been or he is entitled. This would provide a complicated by regulations that also win for the consumer financially and implicitly assume a quarterly bill is the a win for the retailer through good main mechanism for telling consumers service delivery. about their rights and responsibilities. The AEF report therefore recommended that a guideline could focus on the following actions:

36 It should be noted that there has been work to improve bill information, including the pilot run by BETA and the Department of the Environment and Energy, looking at simplified bills – ‘ways to save’ information increased confidence but did not translate into an intention to look for a better offer - see https://behaviouraleconomics.pmc. gov.au/projects/electricity-information-fit-bill-redesigning-electricity-bills-support-consumer-engagement 37 Australian Energy Regulator (2018) Annual report on compliance and performance of the retail energy market 2017-18 (https://www.aer.gov.au/system/files/Annual%20Report%20on%20Compliance%20and%20Performance%20of%20 the%20Retail%20Energy%20Market%202017-18_0.pdf ); 46 3. Avoiding ‘silent hardship’ 4. Make energy management information more accessible A key learning of Power Shift was that a range of households are living in ‘silent The AEF research found that all energy hardship’ – those who are managing companies provided information to pay their electricity or gas bills, but about how to manage energy usage, only by rationing their energy use to and the programs in place. However, an unhealthy level or going without the information and programs were other essentials38. The AEF noted not easy to access, were online only that energy companies are required and almost exclusively in English. to have systems in place to identify Recommendations to improve customers in financial hardship and to the customer outcomes therefore have programs that will assist those included: customers. Those in silent hardship are to all intents invisible and to address • make energy management this the AEF report recommends the information easier to find – retailers following priority areas for action: offer energy management advice to customers in their hardship • explore technology solutions to programs, so why not offer it to all identify people in silent hardship – households?; smart meters provide retailers with the means to identify customers who • make information available in are using too little energy on very hot different languages; and or very cold days; • promote appliance replacement • improve communications with programs – replacing inefficient consumers – being able to provide appliances can have a significant targeted information to customers impact on reducing energy bills. who may need additional assistance; Easier access and more visibility to those programs (offered by retailers • improve terminology to encourage and government) would be valuable participation – consider where assistance to households. language may be a barrier. Customers may not think of themselves as ‘in 5. Working together hardship’, particularly if they perceive this to be a short-term problem, but Industry and community organisations could still benefit from assistance; each play an important role in and improving the customer experience. The report recommends that better • take recommendations from collaboration will rebuild confidence community groups – AEF saw value and trust in the market. in letting community and welfare workers make referrals to retailers’ hardship programs.

38 This has been supported by other similar research. See for example: Queensland Council of Social Service (2019) Living affordability in Queensland (https://www.qcoss.org.au/publication/affordability-in-queensland-report/ ); and Victorian Council of Social Service (2018) Persistent Energy Hardship (https://vcoss.org.au/wp-content/ uploads/2018/11/Persistent-Energy-Hardship-FINAL-Web-Single-Page.pdf) 47 Energy Consumers Australia Power Shift Final Report February 2020

B. A framework for targeting energy services and programs

In response to the complex and The result was the report, The factsheet will reach and help every varied needs of households, Power Supporting Households Framework39, household. a sophisticated multidimensional Shift asked ACIL Allen to develop consumer segmentation framework to To be effective, assistance and a framework for targeting energy help industry, community groups and information must be delivered in a services and programs, with government deliver highly targeted format and channel that suits the way programs tailored to the diverse needs consumers live. policymakers in mind as a primary of households. audience. The Supporting Households Framework As Power Shift’s research found, there outlines the choices a household can is no ‘one size fits all’ solution. No make that will help them manage their single website, single mainstream energy bill or their energy usage. media TV campaign or solitary

FIGURE 16: CHOICES AVAILABLE TO HOUSEHOLDS TO MANAGE THEIR ENERGY BILLS

Choose to use less Choose a better energy at peak times energy deal

Choose alternative Choose to change the energy sources way energy is used (including solar panels and batteries)

Choose more efficient equipment Choose to improve (including plug-in and building fabric and fixed non-fixed appliances) appliances

It then looked at how a household might approach that decision, through identifying motivation, barriers and opportunities.

39 ACIL Allen (2018) available at https://energyconsumersaustralia.com.au/wp-content/uploads/Supporting- Households-to-Manage-Their-Energy-Bills-a-Strategic-Framework.pdf 48 TABLE 4: SUMMARY OF FACTORS THAT INFLUENCE A HOUSEHOLD’S MOTIVATION, ABILITY AND OPPORTUNITY

• Motivation • Ability • Opportunity

• Attitude towards the behaviour, • Literacy, numeracy, problem • Type of housing for example, the perceived costs solving and research skills and benefits, the importance of • Home ownership status energy, and cultural considerations • Language barriers • Scope to manage the energy • Alignment with choices made • Ability to self-advocate, negotiate bill - for example, to choose a within the household's circle of better energy deal, to improve influence • Belief in the ability to succeed the building fabric, to install more energy efficient appliances, to • Likelihood of success • Trust in others change the wa energy is used

• Unwillingness to create • Ability to influence behaviour • Access to liquid funds disharmony/conflict of all household members

• General interest in, and capability using, technology

Source: ACIL ALLEN CONSULTING

Mapping households against their • timing also has an impact on a motivation, ability and opportunity household’s capacity – once a to manage their bills produces nine household has chosen a better different ‘household types’. energy deal, that opportunity may no longer be available to them, at The analysis made very clear that: least in the short term. A family with teenage children may choose family • a household’s motivation and harmony over trying to encourage opportunity can vary for each of the them to use less energy, but once six choices – for example, a tenant they have left home, there is greater cannot put solar panels on his/her opportunity to change behaviour to roof, or insulate the house, but can reduce energy use. switch to a better energy deal, or use less energy at peak times whereas a homeowner on a fixed income Having understood where households might be very keen to replace their can or cannot act, The Supporting inefficient hot-water system, but Households Framework provides an unable to afford it; and indication of which tools and services are most likely to help that household.

49 Energy Consumers Australia Power Shift Final Report February 2020

FIGURE 17: SEGMENTATION MODEL FOR HOUSEHOLDS MANAGING THEIR ENERGY BILLS40

TYPE OF HOUSEHOLD MOTIVATION ABILITY OPPORTUNITY

Enthusiasts

Completers

Dependent

Stuck

Middle Australia

Complacent

Competent

Cautious

Hard to help

High-Medium Medium Low-Medium

40 We note that any classification or labelling system can be fraught – the names given to household types in this Framework was intended to convey the type of assistance each household might need to make a decision. But they might not be read that way by all audiences. While the segments can be re-named to suit your audience, we strongly caution against reassigning motivation, ability or opportunities between the segments as that will undermine the capacity of the Framework to identify effective tools and information. 50 FIGURE 18: TOOLS AND SERVICES TO HELP HOUSEHOLDS MANAGE THEIR ENERGY BILLS

Incentives Regulation

Information, advice and Financial Support non-financial support services support

• Awareness campaigns • Feedback on • EPCs, loans • Minimum performance • Access to • Word of mouth outcomes - general, • Grants, subsidies standards community communication / role specific and timely • Government • Information provision, services that / models / exemplars • Control of devices investment in public schemes (e.g. can support and • General / tailored by third party housing upgrades energy efficiency), assist households / personalised • Incentivise desired / • Fund community technologies taking action information penalise undesired organisations to • Remove market, policy, • Market-based tools choices provide services regulatory barriers & services

Note: EPC = energy peformance contract SOURCE: ACIL ALLEN CONSULTING

The benefits for policymakers and • put the needs and preferences of decision makers using the Framework households at the front and centre is that they can: of decision making and provide a common frame of reference for • arrive at an evidence-based solution understanding how decisions are to consumer needs, which can be being made in the best interest of used to assess the likely effectiveness consumers. of different solutions or ideas that are being floated for consideration; A Policymakers Guide to the Supporting Households Framework41 was also • remove the `guesswork’ of what will developed to assist and support or won’t work when giving advice or policymakers in using the Framework, designing and implementing new to think outside the box and embrace a tools and services; and tailored consumer-centric approach.

41 Available at https://energyconsumersaustralia.com.au/wp-content/uploads/A-Policymakers-Guide-to-using-the- Supporting-Households-Framework-Jul2019.pdf 51 Energy Consumers Australia Power Shift Final Report February 2020

Demonstrating the value of Power Shift workshops consumer-led design Working with the strategic To transform the innovative The communications agency 89 Degrees Supporting Households Framework East, we facilitated six face to from the conceptual to the practical, face workshops and two national the Power Shift project team engaged online workshops with a total of the energy community to develop 89 participants working in this real-life applications that could be space from across governments, used by policymakers, industry and energy regulators, energy industry, community groups. Resource and time Ombudsman’s offices, advocacy constraints meant that we focused organisations, service providers and on delivering information tools (the consumer support organisations. first of the five categories of tools and services identified), but The Supporting The workshops provided participants Households Framework provides with an overview of The Supporting guidance on the full range of tools Households Framework before working and services most likely to support through the practical application of consumers. this framework.

These applications were specifically State and Federal jurisdictions aimed at: have already started applying the framework to their policy • identifying consumer segments that deliberations. Agencies such as are impacted by market or regulatory the Federal Department of the failures; Environment and Energy (DEE), the Victorian Department of Environment, • identifying policy options to address Land, Water and Planning (DELWP), the impact of market or regulatory Essential Services Commission of failures on consumers; Victoria, and the Victoria-based Consumer Policy Research Centre have • identifying the gaps in the existing all reported using the framework. sources of assistance to consumers; and As a result of co-design workshops across March 2019 in Brisbane, • guiding the design of exemplar Sydney, Melbourne, Hobart, Cairns resources and tools across four and Bathurst, and two national consumer groups, to showcase how online forums, we were able to the segmentation framework assists identify immediate demand for new with tailored communications from information and tools that apply the trusted sources/partners. framework to connect with hard-to- reach households.

52 New resources for consumers

A strong consensus across all Power Shift workshops led to four consumer groups being chosen for partnering with Energy Consumers Australia in developing exemplar resources. Trusted sources for each group were enlisted as partner organisations, and then specific sections of the consumer groups were targeted for the resources. The outcome was 20 exemplar resources as outlined in Table 5.

TABLE 5: SUMMARY OF INFORMATION RESOURCES TARGET GROUP OF FOCUS DELIVERY PARTNER CONSUMERS

Low Income Households Low income homeowners Financial Counselling Australia

Low Income Renters Younger and first time renters Tenant advice organisations

Low digital literacy skills and/ Older People Council of the Ageing or not engaged

Regional and remote Indigenous Consumer Indigenous Australians communities Assistance Network

The resources were tailored in content, These tools and products are `white- design, format and distribution labelled’ - or unbranded - and channels. They include a series of step produced specifically for use by third- by step brochures/fact sheets, videos party stakeholders who are invited to for social media, an online training use their own branding to distribute module for frontline workers, train the material. Any consumer-facing the trainer presentations and the organisations looking to utilise and distribution of kits containing practical co-brand these resources can contact tools to assist with home energy Energy Consumers Australia. savings (such as energy saving light bulbs, draught stoppers and gap seals).

53 Energy Consumers Australia Power Shift Final Report February 2020

SECTION FOUR: RECOMMENDATIONS AND CONCLUSION

54 A. Recommendations

Power Shift started with the As this report demonstrates, through to listen and act on them. premise that empowering the body of work and engagement undertaken through Power Shift The ACCC recommended consumers enables them, if they in the last three years, we are now (Recommendation 38) in its Retail choose, to actively take control better informed about what works in Electricity Pricing Inquiry that: over their energy costs. shifting the power to consumers. We are also more aware of the barriers to In addition to existing funding, consumers being confident that the the Australian Government and actions they take will allow them to the relevant state or territory make their home comfortable while government should fund (to a having control over their energy bills. value of $5 per household in each NEM region, or $43 million NEM- There are opportunities to now take wide, per annum) a grant scheme the work of Power Shift further. for consumer and community organisations to provide targeted support to assist vulnerable TARGETED SUPPORT FOR consumers to improve energy LOW INCOME HOUSEHOLDS literacy. This grant scheme should be modelled on the approach Through Power Shift, and through our taken by the Queensland Council of regular Energy Consumer Sentiment Social Services in administering the Survey, it is evident that there is Switched On Communities program. currently a lack of information and This targeted support will assist tools to empower consumers to vulnerable consumers to participate manage their energy use. We are on in the retail electricity market and the cusp of realising the significant choose an offer that suits their potential for digital technology circumstances. and applications to provide new opportunities to communicate with Energy Consumers Australia sees consumers in a way that enables this as a priority: to provide tailored, and supports active decision relevant and timely assistance to making. However, as Power Shift has vulnerable households, and help shown, households are diverse and rebuild consumers’ trust in this engagement needs to be bespoke market by engaging and resourcing and targeted if the benefits are to trusted voices to provide consumers, be realised on any scale, including particularly hard to reach consumers, by households facing additional with advice and help. barriers (such as low-income, English as a second language, or inability to RECOMMENDATION 1 make modifications to their building COAG Energy Council should agree envelope). to implement Recommendation 38 of the Australian Competition Consumers have told us that they and Consumer Commission’s are not confident they have the Retail Electricity Pricing Inquiry, information, advice and tools required by establishing a grant scheme to to make the changes required – but provide targeted support for low if we provide these things through a income households to manage their ‘trusted source’ they will be more likely energy bills.

55 Energy Consumers Australia Power Shift Final Report February 2020

EXTEND SUPPORT FOR SMALL BUSINESS

The work we undertook through Power Shift showed how energy management for all consumers, not just households experiencing cost- of-living pressures, is an opportunity to both address affordability and the challenges of managing an energy system that is more flexible, in both demand and supply. Our stakeholder consultation has identified that if small businesses are to remain competitive, and continue to be the engine for employment growth, there is an opportunity to undertake a similar EFFECTIVE COLLABORATION DEVELOP NEW MEASURES research program as Power Shift for AND INFORMATION SHARING TO EMPOWER CONSUMERS the small business sector. It has been evident throughout Power Shift has demonstrated that As the Australian Competition and the Power Shift project that measures to empower consumers to Consumer Commission (ACCC) found there is a wide range of research, manage their energy use and take in its Retail Electricity Pricing Inquiry, programs and service delivery being control over their costs are more small businesses consistently over- undertaken throughout Australia and effective when they are designed using pay for energy, being on higher priced internationally. That work is being evidence of the diversity of consumers offers with a significant proportion not done by researchers and officials who in their motivation, ability, and switching energy provider in the last may not be working within the energy opportunity when making decisions. 2-4 years. A first step has been taken sector. Energy Consumers Australia The Supporting Households Framework with the introduction of the Business has benefited greatly from being able is a holistic approach that informs how Energy Advice Program in August to share and collaborate with a range measures might be better targeted 2019. However, as Power Shift has of stakeholders about their work. to reach a wider group of consumers, shown, energy choices are more than We see value in this being continued beyond narrow segments such as early choosing an energy provider but also through establishing networks, to adopters or households being assisted having some control over how much both share information and program through energy concessions and safety energy is used and when, and having learnings more generally, and to nets. opportunities to use technology and collaborate and extend the framework improve the built environment. for targeting consumers developed RECOMMENDATION 4 through Power Shift. Given the Australian Government’s active involvement in the RECOMMENDATION 2 development of The Supporting COAG Energy Council, together RECOMMENDATION 3 Households Framework, that it lead a with Small Business Ministers, COAG Energy Council could network of officials within the COAG should consider options for how establish an ongoing workstream Energy Council Working Groups the research from Power Shift could or platform for sharing information to demonstrate the value of the be applied and extended to benefit and collaboration on energy Framework, encourage its use in small business. management research, programs and the development of measures to services. empower consumers in managing their energy use and taking control of their bills , and continue to develop an understanding of household needs and preferences.

56 CAPTURE THE WIDER IMPROVE ENERGY EFFICIENCY FURTHER DEVELOP AND BENEFITS OF ENERGY IN AUSTRALIAN HOMES IMPLEMENT A VOLUNTARY MANAGEMENT GUIDELINE ON ENGAGING Power Shift has shown that the HOUSEHOLDS Australia is the first country to have energy performance of Australian built on the IEA co-benefits framework homes, and major appliances used to tailor it to the Australian climate for heating and cooling, have The Energy Charter is an initiative and energy market, to enable an a significant impact on energy of energy businesses across the assessment of the wider benefits of affordability and household health energy supply chain to progress the energy efficiency. The adoption of a and wellbeing. There is scope to for culture and solutions required to shared approach to the capturing of all governments to work with the deliver energy in line with community the wider benefits of energy efficiency building industry, major retailers expectations. The work through measures, such as the Multiple Impacts and consumer bodies to make even Power Shift has demonstrated the of Energy Efficiency framework, is greater in-roads into reducing energy importance of culture in achieving an opportunity for governments to demand (and use) through making innovation and better outcomes for communicate the value not only in all Australian homes more energy consumers in managing their energy improving affordability but reducing efficient. costs. the societal costs of poor health and social exclusion. The AEF scoped the potential RECOMMENDATION 6 elements of a voluntary guideline for As we move to a more flexible energy COAG Energy Council, through its better engagement with households system, where consumers are active Trajectory for Low Energy Homes, in energy management, through participants that may not only use less should continue to engage with dialogue with stakeholders including energy, but shift when they use energy industry and consumers to prioritise energy companies. into off-peak periods, there would the need for measures to address be value in extending the evidence the high energy costs that are the The Energy Charter could be an base in the Multiple Impacts of Energy result of poor energy efficiency of appropriate forum in which to Efficiency framework to include energy Australian homes. collaborate to fully develop a voluntary management. guideline to be adopted widely by energy businesses, who have customer facing services and programs that RECOMMENDATION 5 encompass energy management. COAG Energy Council members should adopt a shared approach to capturing the wider benefits RECOMMENDATION 7 of energy management, building The Energy Charter consider the on the foundation provided by Power Shift work on developing a the Multiple Impacts of Energy voluntary guideline for engaging Efficiency framework. The Australian households on energy management, Government should continue to be and how it could be further a participant in the International developed and implemented. Energy Agency’s dialogue for considering the opportunities and barriers to energy management, through sharing the Australian experience.

57 Energy Consumers Australia Power Shift Final Report February 2020

B. Conclusion Energy Consumers Australia developed we will investigate the opportunity the seven recommendations in this to use the survey to gain greater report as opportunities at a national insights into consumer behaviour and and international level to embed and decision-making by asking households extend the Power Shift research that and businesses about their drivers has been undertaken over the last and experiences. This will be linked three years. To achieve the long-term to our participation in the three- outcome of empowering consumers year Australian Research Council to manage their energy use, all Linkage Grant Digital Energy Futures governments (including through the research project, which is being led by COAG Energy Council) and industry Monash University in partnership with (including through The Energy Charter) Ausgrid, Ausnet Services and Energy must continue taking action to Consumers Australia. support consumer-centred decision- making. The potential benefits in both Our next stage of the Power Shift affordability, and in securing a low work will also be informed by the emissions future, are immense. Foresighting Forum to be held in February 2020, which is focusing on a Energy Consumers Australia continues consumer vision for the future energy to take the work of Power Shift system. forward. We are in the process of developing a new work program that As we have done throughout the will include a focus on consumers with Power Shift project, we will continue the least resources being provided with to engage in dialogue and research in the best energy services. collaboration with stakeholders and look forward to this next stage of the We continue to adapt our Energy journey. Consumer Sentiment Survey. In 2020

58 Appendix A Selective bibliography

The period in which Power Shift ran coincided with an abundance of new research in Australia and internationally looking at similar issues.

The following list is not exhaustive, but highlights the research we found particularly influential, through building a better understanding of consumers, and the challenges and opportunities in designing tools, information and services to help households manage their energy use.

AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS

DIVERSITY OF Russell-Bennett, R., Mulcahy, • Demonstrated – in a new and engaging way - how different HOUSEHOLDS R., McAndrew, R., Letheren, households make decisions, gather information and use technology. K., Swinton, T., Ossington, R., & Horrocks, N. (2017) Taking advantage of electricity pricing signals in the digital age: Householders have their say. A summary report. Brisbane: Queensland University of Technology. https://energyconsumersaustralia. worldsecuresystems.com/grant- archive/821-changing-needs- energy-consumers • An ant colony has a single person making decisions but work together. A beehive household work together, with everyone bringing expertise. A flock of geese is an adaptable household, where leadership may rotate. Wallaby households resist rules and share decision-making. Domestic cat families value comfort and independence and are all engaged in the decision. Lions like to figure things out by themselves – unlike cats, they will seek out information. • Survey of 1345 households across Australia, and face to face interviews with 45 households (118 people).

DIVERSITY OF Nicholls, L & Strengers, Y • To understand what changes larger households have made to their HOUSEHOLDS (2015) energy use, and how inflexible household energy practices are at Changing demand: Flexibility different times of the day, researchers conducted in-depth interviews of energy practices in with 44 households with children in NSW and Victoria and surveyed another 547 households with children nationally. households with children, Final report • Most respondents identified the typical peak period as the same time Centre for Urban Research, as homework, bath time, preparation for dinner, and preparing for RMIT University, Melbourne, bed. Parents described it as ‘feral o’clock’ or ‘crazy time’. Australia. • Many household routines are fixed, and not likely to change. Moving https://energyconsumersaustralia. activities to later in the night wasn’t seen as practical. Just under half worldsecuresystems.com/grant- the parents surveyed who were on a time of use tariff were already archive/623-energy-practices-in- shifting their usage. larger-households and https://cur. • Households also said they would disrupt their routines occasionally in org.au/blog/feral-oclock-families- response to a ‘peak alert’ – 85% of those surveyed would do so with struggle-shift-energy-use/ no financial penalty or reward. 59 Energy Consumers Australia Power Shift Final Report February 2020

AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS HOUSEHOLDS Nicholls L, Strengers Y & • Forty households in Victoria and South Australia were given a smart RESPONSE Tirado S (2017) switch and two smart light bulbs to install. Households reported TO NEW a higher level of difficulty, and limited benefits – of the forty, 24% Smart home control: TECHNOLOGY tried to install at least one of the devices, but couldn’t. Another 24% exploring the potential for installed them but didn’t use them. 26% of households didn’t take enabling technologies in them out of the box and only ten were actively using the devices on vulnerable, disengaged and an ongoing basis. regular households • Six Victorian households were given a smart plug to install and test Centre for Urban Research, while being observed. All of them encountered difficulties and only RMIT University, Melbourne, half completed the installation process. Australia. • The research found technology enthusiasts, men and vulnerable https://energyconsumersaustralia. households were more likely to successfully install and use the worldsecuresystems.com/grant- devices. Some expressed concern about more digital technologies archive/788-smart-home-control in their home, and most participants over 55 years did not use the device. • For the smart control to work smoothly, all household members needed a smartphone and internet to access the app. That is simply not possible or is unaffordable for some vulnerable households.

HOUSEHOLDS Hargreaves, T and Wilson, C • Smart homes collect and analyse data, relay information to users RESPONSE (2017) and service providers, and enable the management of a home’s TO NEW appliances, lighting and heating. Smart home technology allows that Smart Homes and their Users TECHNOLOGY management to be automated, and controlled remotely through SpringerBriefs in Human- smartphones or computers or wall-mounted controls. Computer interaction, • Allowing an energy company to respond to real-time information Springer about the household enables a household’s demand to be managed, https://www.springer.com/gp/ shifted or curtailed in response to supply and network constraints. book/9783319680170 • The research underlined the need for industry to understand households’ habits and routines as they design smart home technologies, not just to fit in with their everyday lives, but also in ensuring inter-operability across appliances. Households also needed support, requiring training of electricians, engineers and plumbers, who are critical to shaping the household experience. • Hargreaves and Wilson found little evidence to suggest that the technology was generating significant energy savings or encouraged households to change their daily routine. They recommended three possible strategies to ensure that the household and systemic benefits of smart home technologies are realised – first is clear policy guidelines to ensure smart home technologies can talk to smart meters and to utilities during peak periods. Second, there need to be energy optimisation design features that mitigate any energy intensification – for example alerting households when a certain threshold is reached. Third, there need to be clear messaging to users that the technology alone will not result in energy and cost savings: unrealistic expectations will undermine consumer trust in the technology.

60 AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS HOUSEHOLDS Nicholls L, Strengers Y & • Forty households in Victoria and South Australia were given a smart ENSURING DEFG, February (2018) • Built on survey data of over 1000 low-income Americans, conducted RESPONSE Tirado S (2017) switch and two smart light bulbs to install. Households reported VULNERABLE with members of the Low-Income Energy Issues Forum. The Long Struggle Continues: TO NEW a higher level of difficulty, and limited benefits – of the forty, 24% HOUSEHOLDS Smart home control: Improving Service to Low- • Majority of low-income consumers have taken actions to reduce TECHNOLOGY tried to install at least one of the devices, but couldn’t. Another 24% AREN’T LEFT exploring the potential for Income Customers in the Utility their energy bills, contrary to the abiding assumption that those installed them but didn’t use them. 26% of households didn’t take BEHIND consumers are disengaged. enabling technologies in them out of the box and only ten were actively using the devices on Sector • The challenge is not engagement, but the programs and policies to vulnerable, disengaged and an ongoing basis. http://defgllc.com/publication/the- assist these households. regular households • Six Victorian households were given a smart plug to install and test long-struggle-continues-improving- • Majority of these consumers were interested in additional types of Centre for Urban Research, while being observed. All of them encountered difficulties and only service-to-low-income-customers-in- payment assistance or arrangements, with most (39%) opting for a RMIT University, Melbourne, half completed the installation process. the-utility-sector/ Australia. flat bill that offers a guaranteed monthly bill amount. The next most • The research found technology enthusiasts, men and vulnerable popular (21%) was rewards-based, to save money and lower bills. https://energyconsumersaustralia. households were more likely to successfully install and use the • Nearly half (45%) nominated email as their preferred format for daily worldsecuresystems.com/grant- devices. Some expressed concern about more digital technologies account information. archive/788-smart-home-control in their home, and most participants over 55 years did not use the device. ENSURING Australian Council of • Electricity prices have increased by 117% (or 76% in real terms) over • For the smart control to work smoothly, all household members VULNERABLE Social Service (ACOSS) and the last 10 years. Gas prices have gone up by 89% (or 53% in real needed a smartphone and internet to access the app. That is simply HOUSEHOLDS Brotherhood of St Laurence terms). not possible or is unaffordable for some vulnerable households. AREN’T LEFT (2018) • Households on lower incomes are more likely to experience energy BEHIND stress, spending disproportionately more of their income on energy. HOUSEHOLDS Hargreaves, T and Wilson, C • Smart homes collect and analyse data, relay information to users Energy Stressed in Australia RESPONSE (2017) and service providers, and enable the management of a home’s • While the percentage of income spent on energy has increased https://www.acoss.org.au/wp-content/ across all household quintiles, middle and higher income households TO NEW appliances, lighting and heating. Smart home technology allows that uploads/2018/10/Energy-Stressed-in- Smart Homes and their Users have been able to better manage increases, through installation of TECHNOLOGY management to be automated, and controlled remotely through Australia.pdf SpringerBriefs in Human- smartphones or computers or wall-mounted controls. solar PV or purchasing more efficient household appliances. Computer interaction, • Allowing an energy company to respond to real-time information • People on Newstart and similar allowances pay disproportionately Springer about the household enables a household’s demand to be managed, more of their household income on energy, as do people on lower https://www.springer.com/gp/ shifted or curtailed in response to supply and network constraints. incomes – despite using less energy on average. book/9783319680170 • The research underlined the need for industry to understand • Low-income renters are particularly vulnerable – coupled with their households’ habits and routines as they design smart home housing costs, those households are under immense financial stress. technologies, not just to fit in with their everyday lives, but also • The report recommends immediate action to reduce energy prices, in ensuring inter-operability across appliances. Households also and more effective measures for assistance, including increasing needed support, requiring training of electricians, engineers and Newstart, investing in energy efficiency measures, and introducing a plumbers, who are critical to shaping the household experience. grant scheme for community and consumer organisations to provide • Hargreaves and Wilson found little evidence to suggest that the targeted support to vulnerable consumers. technology was generating significant energy savings or encouraged households to change their daily routine. They recommended three possible strategies to ensure that the household and systemic benefits of smart home technologies are realised – first is clear policy guidelines to ensure smart home technologies can talk to smart meters and to utilities during peak periods. Second, there need to be energy optimisation design features that mitigate any energy intensification – for example alerting households when a certain threshold is reached. Third, there need to be clear messaging to users that the technology alone will not result in energy and cost savings: unrealistic expectations will undermine consumer trust in the technology.

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AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS ENSURING Queensland Council of Social • Report outlined several barriers to participation in the energy market VULNERABLE Service (2017) faced by renters, including: HOUSEHOLDS • Access to information - renters have little or no information about Choice and Control? The AREN’T LEFT the energy performance of their dwelling; experiences of renters in the BEHIND • Controlling their energy costs - renters are unable to easily make energy market changes to the fabric of the house or change major appliances, https://www.qcoss.org.au/publication/ and as they perceive little benefit, landlords have little incentive to choice-and-control-the-experiences- improve energy performance; of-renters-in-the-energy- • Accessing consumer protections - renters are more likely to market-primary-tabs-viewactive- tabeditrevisions/ encounter non-standard supply arrangements, such as embedded networks (in units or caravan parks). Intersection between energy and tenancy legislation creates complexity and confusion. • Those problems are exacerbated by tight rental markets, where tenants, particularly those on low-incomes, may be unable to take energy features of a property into account. • The needs of tenants as a distinct consumer cohort must be considered, and the interaction between energy/tenancy regulation. Addressing these issues requires coordination between national and state stakeholders in housing and energy.

ENSURING Victorian Council of Social • The research looks at the experience of low-income households who VULNERABLE Services (2017) are struggling to stay connected, and for whom payment of their HOUSEHOLDS utility bills means going without food, or reducing heating, cooling Power struggles: everyday AREN’T LEFT and lighting. battles to stay connected BEHIND • Researchers interviewed 10 households in Victoria. http://vcoss.org.au/policy/power- • Key themes included: struggles-everyday-battles-to-stay- connected/ • Sole adult and sole parent households particularly vulnerable; • Poor housing added to energy bills; • The nexus between energy and health – most of the interviewees had health issues that were exacerbated by inadequate heat or cooling; • The trade-offs made to maintain connection to energy included restricting heating or cooling, and limiting cooking and food purchases; • People did not trust the energy sector – households expressed feelings of frustration, anger, disadvantage and/or powerlessness; • Vulnerability to financial shocks – people had little capacity to absorb unexpected costs, relying on credit through formal and informal (family/friends) arrangements, or assistance from community organisations. • To address these challenges, VCOSS recommended: • Increased income support; • Minimum energy performance standards for private rental housing, expansion of retrofits, long-term energy efficiency programs, review of tenancy legislation; • Review of concessions; • Market reform including better retailer assistance, improved price transparency in Victoria, introduction of an independent energy broker for residential consumers.

62 AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS ENSURING Nicholls L., McCann H., • The research highlighted that people in poor quality housing have VULNERABLE Strengers Y. & Bosomworth K. limited capacity to manage extreme heat: HOUSEHOLDS (2017) • Renters are particularly affected; AREN’T LEFT Heatwaves, Homes and • Older consumers can underestimate the risk of exposure to BEHIND Health: Why household extreme heat; vulnerability to extreme heat • Extreme heat can exacerbate problems for people with chronic is an electricity policy issue health issues. • Worry about high bills leads to unhealthy rationing of electricity, Centre for Urban Research, particularly in older households. That is a rational concern for RMIT University, Melbourne households already struggling with high bills. https://energyconsumersaustralia. • Current concessions are not sufficient to mitigate adverse impacts. worldsecuresystems.com/ grant-archive/813-electricity- • Recent public debate on energy issues has caused distrust and pricing-and-managing- confusion, limiting the effectiveness of public messaging. The most heatwaves-at-home-mitigating- vulnerable may restrict usage to an unhealth level in response. health-and-financial-risks-for-hea • Electronic billing and direct debits can further limit household engagement with their energy bills, and communications. • CALD households face additional challenges, that are not well understood.

ENSURING Willand, N (2019) • The research took place at a time when there was a public debate VULNERABLE around three intersecting issues: quality of care for older people to Integrating energy efficiency HOUSEHOLDS stay in their homes; the poor energy efficiency of Australian housing and hardship improvements AREN’T LEFT stock; and rising energy prices. into the Care at Home system BEHIND • The research focused on the potential for the Care at Home system to help deliver support to older Australians. • About 285,000 Australians over 65 years are in energy hardship, meaning they’re unable to provide basic energy-related needs around heating or cooling. • Their problem is exacerbated by poor housing, rising energy prices and low incomes. • Home care providers do not currently provide any advice or assistance on energy hardship. • The researcher consulted with energy and health agencies, mapping a consumer’s journey through the aged care system, and noting that there were opportunities to identify symptoms of energy poverty. • Healthcare providers have limited capacity and knowledge on energy issues, so the research proposed appropriate ways of assistance.

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AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS HELPING OECD (2019) • Behavioural insights (BI) provides a methodology to generate CONSUMERS evidence on how people behave, enhancing the analysis, design Delivering Better Policies CHANGE THEIR and delivery of public policies. It also provides a cost-effective Through Behavioural Insights: HABITS methodology to test multiple policy responses at once. New Approaches • Governments and organisations are increasingly using BI. https://www.oecd-ilibrary.org/ • Key insights for policymakers included: governance/delivering-better- policies-through-behavioural- • Understanding individual decision-making, noting the need for insights_6c9291e2-en longer-term monitoring and research on how households are responding to new initiatives such as smart meters. • The role of organisational culture in decision-making. • How BI could be applied more widely to test and trial initiatives to understand what will be effective.

HELPING The Behavioral Insights Team • NEST Home Energy Management achieved gas savings overall on CONSUMERS (various) average between 6-7% of heating systems, and 4.5-5% of total CHANGE THEIR annual household gas consumption. Savings were achieved with no Over Power Shift, the BI Team HABITS perceived loss of comfort. published a range of reports • Scaling up though would require a more sophisticated model of that informed our thinking, energy use, including dynamic assumptions about what a household including would need. Evaluating the Nest Learning • BI Team’s trial with OFGEM to encourage disengaged consumers to Thermostat (2017) consider switching to a better deal saw customers who switched after https://www.bi.team/wp-content/ receiving a letter save £50. uploads/2017/11/311013- Evaluating-Nest-BIT-Exec-Tech- • Government officials are themselves influenced by the same Summaries.pdf heuristics and biases that they are trying to address in others. • The report unpacks how officials notice information and ideas, how BI Team Annual Update they consider policy ideas (deliberating), and how policy intentions Report (2017-2018) are translated into action (executing). https://www.bi.team/publications/ the-behavioural-insights-team- annual-report-2017-18/

Behavioural Government (2018) https://www.bi.team/publications/ behavioural-government/

64 AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS TOOLS AND AGL (2018) • AGL, one of the big three Australian retailers, announced a $300m INFORMATION customer experience transformation program in August 2016. TO HELP AGL Energy Insights • One of the customer services developed was their Energy Insights, CONSUMERS available to customers with smart meters, that provides customers Chris Clarke and Teresa Lee with feedback on energy use by appliances. from AGL presented on the • AGL ran a pilot, beginning with asking customers to help understand findings from the pilot at the the problem – they heard that customers: 2018 Foresighting Forum – • find energy bills complex and hard to understand; the presentation and slides • want to know which of their appliances used more energy – can be downloaded from customers have no way of knowing whether an hour of lighting https://energyconsumersaustralia. uses the same amount of energy as an hour of TV; com.au/news/foresighting-forum- 2018-multimedia-publications • seek control, but don’t know where to start; • do not see value for money. For information about the • A pilot was conducted with 3000 customers which were sent a $300m customer experience personalised report, created from smart meter data as well as other transformation program see inputs, including a home profile and contextual information such as https://thehub.agl.com.au/ weather. articles/2018/11/how-energy- • The report was sent to customers midway through their bill-cycle and retailers-can-be-disruptors-too a few days after they’d received the bill. Communications included tips on how to manage energy in their highest cost appliances, as well as information about weather and how they compared to similar homes. There were multiple iterations to seek customer feedback. • The customer response was overwhelmingly positive – over 90% of customers reported they found Energy Insights useful. Those customers valued transparency – the reports helped them identify what was ‘waste’, and opportunities to save energy. • About a third of customers indicated they would take action on the receipt of the report. • Customers were very engaged, more interested and found the reports useful ways to engage the household. • AGL has now rolled out the product to smart meter customers.

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AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS TOOLS AND BETA • The first research project looked at the impact of energy labelling on INFORMATION consumers’ decision to purchase an energy efficient appliance. The Behavioural Insights TO HELP team in the Australian • Recognising that inefficient appliances cost more to run and CONSUMERS Government undertook two contribute greater emissions, BETA partnered with the Australian Government Dept of the Environment and Energy and Appliances research projects that were Online to test what could encourage consumers to buy more energy- relevant to Power Shift. efficient appliances online. Energy labels that make cents • BETA conducted a Randomised Controlled Trial to assess the impact (March 2018) of the current label and designed an alternative energy label using https://behaviouraleconomics. behavioural insights – particularly to overcome a propensity to pmc.gov.au/projects/energy- discount future benefits, and the difficulty in comparing multiple labels-make-cents-randomised- options with multiple attributes. The alternative label was therefore controlled-trial-test-effect- simpler and focused on the money they could avoid losing by buying a appliance-energy-rating more efficient appliance, expressed in dollar terms. • BETA found that energy labels have positive effects. The alternative label had similar impact as the current label – a possible explanation Saying more with less: may be the way information was presented, where framing Simplifying energy factsheets information as ‘avoided costs’ may have been confusing. to improve consumer understanding (March 2018) • The second research project Saying more with less was conducted with the Australian Energy Regulator to test whether a fact sheet improved https://behaviouraleconomics.pmc. people’s engagement, likelihood to switch, and confidence in making gov.au/projects/simplifying-energy- a decision. fact-sheets-improve-consumer- understanding • BETA designed five energy fact sheets – around 4500 respondents in an online survey preferred all five BETA fact sheets to the existing AER fact sheet. Participants found the BETA fact sheets easy to understand, helpful in comparing plans and making decisions.

RELEVANT Jemena • Jemena owns energy and water networks across northern Australia, PILOTS AND and the east coast of Australia. It owns an 11,000 km electricity Power Changers Pilot TRIALS network in north-west Melbourne, delivering electricity to more than For more information, see 343,000 homes and businesses. As a regulated network, Jemena has https://jemena.com.au/about/ limited contact with those customers – the customer would typically innovation/power-changers- go to the retailer to talk about energy. community-connections-program/ power-changers-pilot • Power Changers was a demand response trial that ran over four months, beginning in December 2017, and provided incentives to consumers to reduce their consumption on very hot days (when households can use three times more electricity than usual). • Power Changers used a customer’s smart meter to set individual household targets, deliver electricity consumption data to participants and monitor savings. Participants were given a new smart phone app and web portal. • Participants engaged in multiple ‘learn and earn’ challenges (quizzes or watching videos) that delivered information about how to manage their energy use and costs. • On average, households reduced peak electricity consumption 26- 35% in Demand Response (DR) Challenges on hot days. Participants in each DR challenge ranged between 43-53%. • The pilot trialled community incentives and cash rewards – the latter were most effective but attracted a different segment of participants.

66 AREA OF RESEARCH AUTHOR AND URL KEY FINDINGS RELEVANT Australian Renewable Energy • Australian Renewable Energy Agency (ARENA) and Australian Energy PILOTS AND Agency (ARENA) Market Operator (AEMO) piloted a demand response initiative, TRIALS trialling a series of initiatives over three years to see how innovative Demand response projects sources of demand response could be delivered in emergency The reports for each situations – when there was insufficient supply in the National pilot can be accessed in Electricity Market to meet demand. ARENA’s Knowledge Bank at • 10 projects were funded over three years, to test different Australian Renewable Energy approaches. Three of the projects responded to a call on 24-25 Agency (ARENA) at January 2019: https://arena.gov.au/knowledge- • EnelX curbed energy use over 50 commercial and industrial sites; bank/?technology=demand- • United Energy slightly reduced the voltage at substations, response providing a load reduction without any noticeable impact on See also ThinkPlace’s report customers; in 2018 on the pilots’ • PowerShop used its ‘Curb Your Power’ program to encourage its experience over the first customers to reduce their energy use – when they hit a reduction summer Demand Response target, they were rewarded with a power credit. Customer Insights Report, • ThinkPlace’s assessment of customer responses included: available at • Demand response competes with other family priorities; https://arena.gov.au/ • Short, event-based demand response does not assist customers assets/2018/08/demand-response- with their concern about costs overall; consumer-insights-report.pdf • People are keen to learn how to save energy; • People were keen to contribute to the greater good; • Demand response programs are not well-known – people were often confused. • ThinkPlace recommended that energy providers diversify the types of feedback, including to indicate the collective impact, and fine- tune the reward system.

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