Australia’s energy sector is set to be shaken up by the same data portability regime currently disrupting the country’s banking industry. Built to empower consumers through access to their data, Australia’s Consumer Data Right brings with it new challenges and opportunities to a sector already in flux.
Currently, a mix of industry stakeholders – large and small – and Australia’s top scientists, are working on the technical standards for better sharing energy data as the regulator considers exactly what information will be on the move.
One goal, for now, is to avoid a similarly stunted roll out to Open Banking which, yet to fully launch, already bears the teething problems of a major economic reform. But sector differences, an already revised timeline, and questions over the scheme’s security and necessity suggest the challenge for energy will involve more than learning from banking’s mistakes.
The Consumer Data Right (CDR) is a government and regulator led scheme which mandates that organisations, must share consumers’ data with them or an accredited third party in a machine-readable way in accordance with certain standards – when requested by the consumer. There are few exceptions allowing the organisation to withhold the data.
CDR is first being applied to banking and is already in a pilot phase. But energy is next followed by telecommunications with other sectors also a possibility.
What is changing?
The government’s reasoning for the scheme is to increase consumers’ access to data which it says will remove barriers to switching providers, drive competition, and spur innovation based on the newly available data.
Many of the energy sector’s smaller players, like energy-techs, are expecting to gain access to a trove of customer and energy data which has until now remained largely in the possession of large energy networks and retailers.
CDR, along with renewables and digital technology, is expected to play a considerable role in the continued disruption of the Australian energy sector and help fuel a new two-sided energy market.
The more portable data could eventually help put downward pressure on energy prices, according to several energy companies Which-50 spoke with.
But the new data requirements also represent a significant shift in organisations’ responsibilities and, for some, their infrastructure requirements.
Exactly what data will be made available is yet to be confirmed. Treasury is still consulting on which data sets will be included but it is safe to assume, based on the banking model, that it will be extensive.
“The Consumer Data Right gives Australians greater choice and control about sharing their data,” says Andrew Stevens, the Chairman of Innovation and Science Australia.
Stevens, a former managing director of IBM Australia and New Zealand, chairs the CSIRO’s Data Standards Body for the implementation of the Consumer Data Right in Australia. He tells Which-50 energy organisations need to start thinking of new ways to leverage data in preparation for the new data right.
“In the energy sector, providers should start to think about how data can be used to empower their consumers and foster closer relationships.
“Energy providers are coming to grips with what consumer data they hold, and exploring what new data-driven services can be developed for Australians.”
Stevens notes that for many organisations the new data flows could strain their current IT systems, many never built with the new use cases in mind.
“It’s not only about the services being offered,” Stevens says, “it’s also about the underlying infrastructure. Energy providers need to ensure their IT systems are able to deliver the data as required. We welcome this development and encourage energy providers to work in collaboration with the Data Standards Body as well as the regulators to help shape a framework which will unlock tremendous value for all Australians.”
While the scheme is designed around consumers and promoting competition, energy organisations stand to benefit too, provided they can harness the newly portable insights.
“The CDR framework aims to improve innovation, competition and overall outcomes for consumers,” says AGL general manager data & analytics, Dayle Stevens.
“With the consumer’s consent, businesses will have greater access to data to help them tailor products and personalise consumer experiences.”
Stevens says AGL supports the Consumer Data Right in the energy sector and believes consumers should have access to and control over the data that relates directly to them.
Stevens, who is also a member of the Data Standards Body’s newly formed Energy Advisory Council; a group of industry stakeholders assisting with the development of standards, cautions any transfer of consumer data must always be well protected.
“We support the recommendation in the Australian Competition and Consumer Commission Retail Electricity Pricing Inquiry that the CDR be applied to the electricity sector as a priority.
“However, we believe any expansion of a consumer’s right to access their data must be managed and rolled out in a way that facilitates and ensure rigorous protection of that consumer data.”
Fellow energy powerhouse Origin Energy says it too supports a Consumer Dat a Right that leads to effective competition in the sector.
A company spokesperson told Which-50 the company has been an active participant in the development of the new framework which it expects will lead to new technologies as well as more tailored products and services.
For example, the data could help the retailer identify certain consumers which would benefit from solar or battery technology.
When will it start?
For now, the timetable for implementation is unclear. The ACCC will release an official timetable by the end of the year but there are already signs the scheme is headed for a stunted release schedule, similar to open banking.
A COAG Energy Council declared in 2018 their desire to have CDR up and running in the first half of 2020, a position initially supported by the ACCC. However, setbacks in the rollout of open banking and a delay in passing CDR legislation this year means the ACCC now recognises “this timeframe is not achievable”.
And with the regulator revealing last month it is still facing several “readiness issues” in open banking, a delay to its public rollout would not be surprising and would likely cause a subsequent delay in the energy sector.
Put simply, it will likely be at least a year, likely several, before consumers are entitled to request access to their energy data as part of the Consumer Data Right. And sector incumbents, in particular, are cautioning against too hasty an implementation in their submissions to the regulator.
But significant progress has been made in several aspects and so far the regime has attracted input from a diverse range of stakeholders.
What has happened so far?
While most of the attention has been on banking, the energy sector, the regulator and CSIRO’s Data61, have been preparing their own open data scheme since the government announced in 2018 that the energy would be included in the Consumer Data Right.
While the energy sector’s scheme will share the same legislation and broad sector-wide rules for data access and sharing, it will have its own sector-specific considerations.
So far a data-sharing model has been agreed upon, and Data61’s Data Standards Body – established to develop the technical standards for CDR – has formed a dedicated Energy Advisory Committee to provide stakeholder input.
The Energy Advisory Committee comprises 14 members, mostly from the energy industry but also from consumer groups, and the finance and telecommunications sector. Three of the members also sit on the corresponding Open Banking Data Standards Advisory Committee.
“The Energy Advisory Committee will meet monthly with the first meeting scheduled for Wednesday 13 November,” Data61’s Andrew Stevens told Which-50.
“As Chair, I look forward to working with these Committee members to provide the technical standards which will make the CDR a reality.”
Several of the Committee members have already consulted with the ACCC on the data-sharing model, which was agreed upon in August.
The agreed-upon model is a “gateway” model that puts the Australian Energy Market Operator (AEMO) in the middle, providing data on consumer’s current electricity arrangements from their current provider to trusted third parties when authorised by the consumer.
The ACCC was also considering two other models, an economy-wide data sharing model and one which placed the Energy Market operator at the centre of all data transfers.
The gateway model, according to ACCC Commissioner Sarah Court, “best balances functionality, cost-effectiveness, flexibility and security while also leveraging AEMO’s data and IT expertise. It allows AEMO to facilitate the rollout of the CDR to the energy sector, helping to reduce implementation costs particularly for smaller energy retailers”.
Do we need a Consumer Data Right in the energy sector?
Dr Sangeetha Chandrashekeran, a lecturer at the University of Melbourne and deputy chair of its Melbourne Sustainable Society Institute says she sees the logic in a consumer data right but questions the need for such a large scale, top-down reform, and more research may be needed.
“I think the fundamental problems to do with competition and consumer outcomes have to do with the fact that we don’t have … a good energy comparison service for consumers that easily presents the different options to them.”
While Victoria does have an official comparison tool and several third party providers offer some forms of the service, Chandrashekeran says most Australian consumers do not have access to their energy options “in a way that’s relevant and effective” despite being legally entitled to their energy data.
“Under the national electricity rules consumers actually already have access to their electricity data. The problem is that it’s not provided in that simple and accessible and easy [way] for consumers to use or to pass on to third parties for use.”
And while a Consumer Data Right may address some of those shortcomings by standardisation and the encouragement of third parties, such a major reform brings certain additional risks. Some of which, Chandrashekeran says, may not be necessary.
The risks around data security and privacy are particularly concerning, Chandrashekeran says, when financial, energy and telecommunication data is being used.
“I think there are actually risks around the potential combining and harvesting of data once you have data from three kind of essential services with sensitive data … It will be really important that risks, particularly to vulnerable consumers, are mitigated. And it wouldn’t take much for that stuff to come undone with poor handling.”
She argues many of the goals of CDR in energy could be achieved by building on the existing frameworks in a more customer-focused way, starting with the physical infrastructure.
Chandrashekeran says, any reforms to energy sector data sharing must be accompanied by effective consumer education, as evidenced by her research on Australia’s smart meter rollout which suggests the infrastructure – which will be vital to an effective CDR scheme – is not being leveraged effectively.
“The fatal mistake the [Victorian] government made in doing this was that they didn’t translate the benefits of the smart meter rollout to consumers.”
Chandrashekeran says many of the consumers with new digital meters, including herself, haven’t been able to translate the technology into better outcomes. And the now uneven roll out to the rest of Australia could lead to a system favouring only certain consumers and metre and data “black spots”.
“Networks in New South Wales we’re rolling out the older style meters even in 2015, and they can last for up to 50 years. So it’s going to take a long time to get full coverage of this advanced metering.
“It’s slow, it’s patchy and, because of the telecommunications technology that they use, if you have poor Wi-Fi it’s very hard to get the benefits out of the meter.”
Victoria’s rollout also put pressure on energy network organisations’ IT systems because of the huge amounts of data they now had to monitor and collect. The wider rollout of smart metres, to be managed by retailers, will see similar system strain, Chandrashekeran says, and retailers may look to pass the cost of upgrading systems on to consumers.
“These cost savings that people are talking about for consumers as a result of greater competition, I think they need to be balanced against the increased costs of managing the data,” Chandrashekeran told Which-50.
What is clear is the growing value of data in the energy sector and beyond.
“Data is going to be increasingly valuable in multiple markets. And so we really do need to think of, when we set up a system like this. Do we need to do this? And how do we do this in a way that really sets up foundational protections for consumers? Rather than [an approach] driven by market opportunities.”