Smart energy must address enshittification risks

Michael Fell, Will McDowall

Increasingly, the energy services we use are delivered through digitally connected devices such as heat pumps and electric vehicles (EVs). As energy systems electrify and decentralize, their stability will depend on ever more sophisticated coordination of distributed devices. At the same time, consumers may become less able to opt out of these connected ecosystems.

This raises a question for the energy transition: could digitalization introduce new forms of market power and consumer vulnerability? Some have warned of ‘enshittification’ in the energy sector1. Coined by Doctorow2, the term describes the shift by platform owners from attracting customers to exploiting market power, leading to worse services — a decline familiar to users of many social networking services.

How far is energy truly vulnerable? As a heavily networked and essential service, it is already subject to robust regulation to curb monopoly power and is an accepted target for intervention in ways other sectors may not be. Yet we see room for enshittification to creep in, whether through declining service quality, reduced access to the best-priced offers, or increasing demands for personal data. Understanding these risks will be important if smart energy systems are to maintain public trust.