16 August 2018

COAG is driving a data strategy for the energy industry – are you ready?

This article was written by Scott GardinerVishal AhujaMichael Swinson and Lauren Murphy.

Every day, Australian residents, utilities, government agencies and innovative start-ups generate and collect energy data.

The Energy Security Board set out its views and guiding principles on how it sees data policy and governance developing for the energy industry in its excellent NEM Data Strategy paper of earlier this year.

Now we are starting to see the data related forms come to market. In June of this year the AEMC released a draft Rule Determination to create a Register of Distributed Energy Resources, in response to its early consultation on a national register of small scale battery storage systems – see our commentary on the earlier consultation paper at Register of distributed energy resources AEMC rule change.

Watch KWM partner Scott Gardiner discuss what the new consumer data right will mean for the energy industry:

While the consultation paper focussed on creation of a registry, in the draft Rule change the AEMC makes more extensive recommendations - perhaps in response to the many stakeholders’ views - in relation to the sharing of aggregated (ie anonymised) data. Relevant features of the draft Rule include in this context:

  • a data sharing framework that obliges AEMO to share disaggregated data regarding the locational and technical characteristics of devices in the DER register with network business in relation to their network areas, subject to privacy laws and protected information provisions in the National Electricity Law
  • AEMO to periodically report publicly relevant information from the DER register to an appropriate level of aggregation.

The first recommendation will obviously benefit DNSPs and TNSPs, but not Retailers – the Commission is recommending that the only Registered Participants who can access disaggregated information in the DER Register are NSPs. And in the context of the NSPs the Commission notes that the Ring-Fencing Guidelines will ensure accounting and functional separation of direct control services from their other (competitive) services.

The second of the recommendations is in some respects the more interesting, in that it broadens access to data beyond the more traditional market participants, creating potentially more opportunities for the development and roll out of innovative new products and offerings for consumers.

The Commission did not go the next step and give consumers the ability to access their own data, though they suggested this be addressed as part of the broader changes that may flow from the Consumer Data Right.

The NEM Data Strategy seeks to set in place clear principles to guide how data is managed in the energy market – to maximise benefits and the long-term interests of consumers. It is all about the consumer, and seeks to complement Treasury’s Consumer Data Right, which will give consumers a right to direct that their data be shared with others. The Consumer Data Right will be rolled out on a sector-by-sector basis, starting with the banking, energy and telecommunications sectors. The exposure draft of the Consumer Data Right law was released yesterday and more information on this can be found here.

The ESB’s suggested guiding principles for managing data in the energy market include:

  • data sharing and transparency should be the default wherever there is value to consumers or to competition, efficiency or market security, and where clear reasons to withhold do not exist. The test should always be the maximising the long term interest of consumers
  • commercial advantage is not a reason for withholding data, if customers would benefit from having access (e.g. consumption data), or if there are consumer and market benefits for planning, regulatory and/or monitoring
  • processes for sharing data should be standardised (eg using common data standards and formats)

The ESB is clearly supportive of more open data within the energy industry, and with the imminent release of the Consumer Data Right this may be closer than many of us think.

So, are you ready for open data?

We set out some preliminary questions and thoughts below.

Sharing your data

The energy sector will be part of the first wave of the Consumer Data Right roll out, which will give consumers access to data about themselves in a readily usable form. This will include a right for the consumer to direct that their data be transferred to a trusted third party. Third parties will need to be accredited before they can receive consumer data in this way. Interestingly, a reciprocity principle will apply, so that entities wishing to receive data in this way will also be obliged to share their own “equivalent” data in response to a consumer’s request. This could open up all sorts of interesting data flows between different organisations and across different sectors.

How would you provide data in a standardized way?

This question is particularly relevant to Networks in the context of the draft Rule change - under the draft Rule Networks may be required to collect and provide AEMO with static data on distributed assets. Are you ready for this? What will it likely cost you to collate and share that data?

What data are you willing to share and what data would you not want to share?

If you are not subject to the Consumer Data Right, but you wish to receive access to data from an organisation that is, you may have to share any equivalent consumer data you hold to get it. Have you started considering whether you are prepared to share data with others to receive equivalent data from them?

Some questions you may wish to consider as you prepare for open data in the energy industry could include the following.

Using data to your competitive advantage

Are you using your data to its fullest potential?

When considering this, it is important not just to benchmark against your competitors but to look to how those in other industries (ie banking and telecommunications) are using their data. You may wish to have particular regard to the changes that flow from the implementation of the Consumer Data Right.

What opportunities does access to third party data present?

Consider potential innovations or projects in your pipeline that require data and how they could be enhanced with access to data from other industries or third parties.

One theme that runs through all the recent government reviews of data sharing frameworks is the emphasis on using data to innovate and provide better products and services. In the face of the New Energy Future, perhaps the focus should be on ‘owning the customer’ not ‘owning the data’. Organisations that are investing in and deriving value from their data may gain a distinct competitive advantage through cost reductions, efficiency gains and new product and services offerings.

Maintaining trust with your customers

Consumer trust is hard to build, but easy to lose. Key to maintaining trust among customers is ensuring that your use of data complies not only with the law, but also with customer expectations.

Companies must be prepared to engage in a new conversation with their customers about how their data may be used and how also it will be protected against misuse. This will help to educate customers while giving them confidence that their data is in safe hands. This should in turn facilitate future innovative data projects.

How are you protecting your customer data – and how would you expect others to?

It is important to understand the practical safeguards you have in place for the data you hold, and whether they match industry standards and customer expectations.

Are you prepared for a data breach affecting your customer data?

The reality is that even the best security in the world may not guarantee you will never suffer some form of data breach. There will always be a risk of human error or a determined malicious attacker finding a way around your data safeguards. Organisations dealing with customer data and other valuable information should have a robust data breach response plan in place. Swift and decisive action in response to a data breach emergency is the best way to mitigate any financial impact and preserve customer trust.

If you want to hear more about what our New Energy Team is up to or if you would like to discuss your organisations’ data strategy further please get in touch.

Key contacts

The Future Project

With the rapid pace of change in our markets and the emerging challenges and opportunities facing our clients, we’re diving into key issues that our clients may face in the future.

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Data Central

Have you checked out our new Data Hub? Data Central contains a range of resources to help our clients minimise the legal, regulatory and commercial risks this data-driven environment presents and ensure that its full value is being realised.

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