New report on prepayment meter customers’ experience of demand-side flexibility

As part of my work with the Energy Demand Research Centre, I’m currently on part-time secondment at the innovation charity Nesta. In this post I’m mainly going to focus on research I was involved in looking at smart prepayment meter customers’ experience of the Demand Flexibility Service. But first, I thought it would be useful to say little about Nesta itself.

If you’re involved in the domestic energy space, chances are you will have been hearing quite a lot from Nesta in recent years. That’s because, in 2020, they tightly focused their work around three central missions, one of which is to reduce domestic carbon emissions by 30% (from 2019 levels) by 2030.

In the A Sustainable Future team, where I work, recent projects include the Visit a Heat Pump and Get a Heat Pump websites, a policy plan for clean heat, and work using an AI chatbot to help heat pump installers.

While our mission goal is framed in terms of carbon reduction, the team is increasingly focusing on who is included in delivering – and benefitting from – the low carbon transition. There are concerns that households who can’t afford, or otherwise aren’t able, to install low carbon technologies like heat pumps and solar panels could end up getting left behind.

I’m particularly interested in the capacity that different households have to provide demand-side flexibility, and benefit from the savings and rewards that it could enable. Many readers will be familiar with the Demand Flexibility Service, as part of which suppliers rewarded customers for reducing their electricity consumption at specified times over the past couple of winters.

We were interested in exploring prepayment meter customers’ experience of it because compared to credit customers, they are more likely to be on low incomes, renting, over 65, or have a disability – all things that might impact households’ ability to use electricity flexibly.

Working with the energy supplier Utilita, who focus on households with prepayment meters, we interviewed nine customers about what it was like to take part in Power Payback, Utilita’s DFS service.

You can read the executive summary of the report to get an overview of the main findings and recommendations, but here I want to share a few personal reflections on being involved in this work.

Firstly, as someone who is unusually interested in flexibility, my expectation is that most people will find the topic pretty dull. So it was great to hear about the different ways that participants creatively engaged with Power Payback. This could be by experimenting and learning where savings could be made, coming up with ways to get their children involved, or welcoming the invitation to mix up their routine and do something different.

Clearly our sample of participants opted to take part and may therefore be unusually keen on the scheme, but it was great to get a more personal and emotional insight into the kinds of motivations that people held.

Secondly, it was striking that while savings were small in the context of general energy spending (i.e. up to £10 over the winter), participants tended to view this in terms of “every little helps”, a welcome boost, especially if avoided energy costs were added in, as well as the potential value of new learnings about energy saving.

There are positive aspects to this, as it does provide some contribution when money is tight, and suggests that more could be made of non-financial motivations to provide flexibility. But there could be concerns about the extremity of some actions taken (such as turning off power at the fuse box) relative to the level of reward. Because the people we spoke to didn’t have access to flexibility-enabling technologies like electric vehicles or home batteries, all their savings came from changing their activities.

Finally, it was notable that the project ended up taking longer than expected due to the number of people who agreed to be interviewed (following sterling recruitment efforts by Utilita), but then didn’t (or weren’t able to) join their interview slot. I don’t have precise figures, but roughly a quarter of those who we agreed an interview slot with were actually interviewed. In some ways this isn’t surprising – it’s common for research projects to encounter challenges in recruiting participants. But there was an interesting parallel here with the subject we were studying.

The DFS rewards people for taking action to reduce electricity use at a specified time. Similarly, we provided an incentive to interviewees as a mark of thanks for speaking to us at agreed times. The incentive – £50 – was much larger than most households would receive for participating in the DFS. But the majority of people who agreed to take part ultimately missed the interview (and the incentive), disrupted by things like medical or childcare issues, or forgetting the slot.

Clearly taking part in an interview is very different to making often small, simple changes to electricity use. But it illustrates how easily life can get in the way of other plans, and again points to the limited role that financial incentives may have in prompting action.

If you would like to discuss any of the points raised in the report further, please feel free to get in touch with me. I’m continuing my secondment at Nesta and hope to update on other projects in future.