Imagine a world in which an ordinary energy user, inspired by decarbonisation efforts, requests their energy data be shared with their chosen solar installer. That installer analyses the data for consumption patterns for daily and seasonal trends, and sizes a personalised package specific to the consumer’s household. The installer then combines the consumer’s banking data, also made available with consent, and produces safe and affordable finance options. This data sharing helps create a self-funding solar installation personalised to the user’s unique needs. Win-win!
This is one scenario envisioned by Consumer Data Right’s Data Standards Body Chair, Andrew Stephens during the development phase of Consumer Data Right (CDR) in Australia in 2018. It provides a very realistic example of what we can expect to see in our industry in the coming years.
CDR was first introduced in Singapore and the UK in 2018 and provides a framework for consumers to consent to their data being shared between registered parties. It’s now active in the Australian banking sector where it’s expected to encourage competition and portfolio flexibility between financial institutions. But Australians are taking the policy one step further; they intend to roll it out through other sectors, notably energy and telecommunications, over the next three years. In New Zealand, the government’s cross-sector Consumer Data Right is currently under consultation on the draft law. The trend toward an open economy should be on the radar of all major energy retailers.
What does Consumer Data Right mean for customers?
Consumer Data Right enables consumers to choose what happens to data about their usage that’s collected on their behalf.
Current privacy policies prevent organisations from sharing personal consumer data with other parties. For this reason, the onus lands on the consumer to gather and share data with a potential new service provider to get the best product or service. Making the transfer of data from one provider to another easier means the consumer isn’t responsible for gathering and delivering the information they need if they want to switch to another business. CDR may also enable a consumer to build a portfolio of providers for different services within a sector. On top of this, with more information at hand, organisations are better enabled to design more personalised, data-driven products and experiences for their users, encouraging differentiation and product specialisation. Consumers should also enjoy improved user experiences as a result of companies sharing usage data. When businesses understand how their customers use their products, they can tweak them accordingly.
What does Consumer Data Right mean for energy retailers?
Data privacy and the right to access and utilise personal data is increasingly in the limelight thanks to new technology and tracking opportunities like smart meter technology, IoT devices and home generation and storage. For many businesses, the ability to track, collect, and analyse consumer data provides a competitive advantage through customised products and services.
However, it’s important that businesses recognise their role as custodians, rather than owners, of personal data. The role of a business is to collect, store and safeguard consumer data at the consent of the user, until they choose to use it or move it on. As custodians of consumer data operating under CDR, businesses must respect the wishes of their customers, and be prepared to share.
For CDR business participants, compliance is key. The Australian CDR involves a rigorous process for authorising a network of accredited data recipients (ADRs), including the ability to prove information security controls to protect data from misuse, interference, loss, unauthorised access, modification or disclosure. Information security is an obvious area that organisations must be at the top of their game to participate in CDR, but along with this is the ability to share mass amounts of data. Cloud computing will play a critical role in enabling the transfer of mass amounts of smart meter data collected every hour of every day in our industry.
As a means to drive up competition within a sector, indeed across sectors, CDR is a major step forward. In New Zealand, which has a 90%+ smart meter penetration rate, CDR represents a massive opportunity for data-driven innovation. While Australia has seen a comparatively sluggish smart meter uptake, the market is ahead of much of the world in terms of home generation, DER and other prosumer energy technology that could be greatly enhanced by CDR. The potential benefits for consumers and retailers could be the motivation needed to run a complete and comprehensive smart meter rollout alongside the steady uptake of the likes of home generation in Australia.
Along with compliance and mass data portability, a data management system must also allow businesses to glean valuable insight in order to capitalise on newly liberated information. In order to utilise a data set, a business needs to be able to access, interpret and apply information, regardless of its source. The way that the energy industry is capturing and storing data is growing in complexity, with the engagements between those that make, move, sell and use energy becoming less and less linear. Further, how data is managed, where data management means setting up and maintaining infrastructure, affects quality. This has a direct impact on the quality of the tech solutions that give that data meaning.
What does Consumer Data Right mean for Flux?
As a software provider our role is to provide data access as a foundational requirement of our platform, to enable a business to concentrate on analysis and product development. While it’s easy to see the far-reaching benefits of CDR for businesses with the software infrastructure to securely collect, store and analyse mass amounts of cross-sector data, it’s important to note that CDR promises just what it says on the box - the right for the consumer to decide what they share, when, and with whom. When shared data delivers more convenience, greater competition and better products and services, we might then see the willingness of consumers to opt-in to tracking and data collection.
As an industry, we should prepare for a cross-sector CDR world by focusing on the compliance and applicability of our data management systems. As consumers become accustomed to a world in which their data is truly their own, the value of accessible and transferable information will encourage participation in an open economy shaped by CDR. Like leading fin-tech companies in an open banking world, we have an opportunity to get ahead of the game by preparing our data management software for a consumer-controlled world of mass information. Let Flux be the software partner that helps you lead the way.