Energy switching decisions could widen social inequalities, says research

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New energy tariffs designed for a low carbon future could leave people on bad deals even worse off, according to new research.

The study, led by University of Leeds with researchers from UCL and University of Waikato in New Zealand, found that new types of contracts could benefit all types of customer, with opportunities to sell excess energy from solar panels or incentives for using energy at off-peak times.

However, according to researchers, many were unlikely to choose them because they were disengaged from the energy market, didn’t trust energy companies, or already felt satisfied with their current tariffs.

The study found that consumers who already trust the energy market, with higher incomes and positive attitudes towards technology, are likely to do well out of contracts that help energy system decarbonisation.

However, consumers in lower income and lower education groups may be too cautious to gain the benefits of early adoption, be too disinterested in switching supplier, or find the market too untrustworthy to engage with.

According to the researchers, this could lead to them defaulting to more expensive, less tailored, or even more risky contracts.

Principal investigator Dr Stephen Hall, from the School of Earth and Environment at University of Leeds, commented on the findings: “These new energy contracts are really important for low-carbon energy systems, and are already appearing on price comparison sites.

“Our work shows only some consumers find these new types of energy supply attractive, and others cannot access them because they rent their home or might not be able to afford cutting-edge technologies such as electric cars and home batteries.

“This means some consumers could get left behind because they cannot or will not engage with new tariffs.

“The energy market tends to preference affluent and active consumers, while often exploiting inactive consumers who are usually in lower income groups.

“The findings of this research suggests that gap is likely to widen without intervention, because smarter and more flexible tariffs worsen the divide between who benefits from the market, and who loses out.”

This story was first reported by the University of Leeds.

‘Matching consumer segments to innovative utility business models’-research paper is available on Nature Energy.