Collective Switching or a Group Buying scheme, where thousands of consumers join forces to negotiate the best deal for energy possible, has been shown to save money for all involved.
Collective switching or group buying schemes, where thousands of consumers join forces to negotiate cheaper electricity tariffs, are becoming more popular in the UK as bills continue to rise putting increasing pressure on household budgets. Initiatives like Which?'s Big Switch, People Power or the Big Deal have helped thousands of consumers to save, on average, up to a third of their yearly electricity bills.
Now research from Heriot-Watt University and the University of Southampton proves these schemes work and proposes a model to help consumers form more efficient buying groups and minimize switching risks.
A common problem with existing schemes is that one tariff may not be efficient for every consumer. Often they may have been financially better off not switching, or as the research now shows creating a new sub-group which chooses a different tariff.
Speaking at the AAAI Artificial Intelligence conference in Canada this week Dr. Valentin Robu from Heriot-Watt University explains, "Electricity suppliers buy from the wholesale market where electricity prices are considerably lower. There are a number of ways they sell this onto consumers but typically they predict the amount of electricity required and pass on premium prices to consumers to cover any risk associated with over or under buying, allowing them to make profits.
"Crucially, this is where group buying is important. While everyone has potentially some uncertainty about their future consumption, our work shows that, by grouping together, consumers can gain size and market power and reduce their risk and access better prices."
(Score: 4, Insightful) by Dunbal on Thursday July 31 2014, @09:37PM
As soon as "group buying" impacts the energy company's bottom line in any way, expect special fees to be added to groups to increase revenue. After all, many power companies are now lobbying for and getting increased rates for people who produce their own power through solar, etc claiming that these people are causing "losses" to the power company. Hint: it's a racket, they have more power than you, and if they want to they'll just make new laws to keep enough money flowing out of your wallet and into theirs.
(Score: 2) by bob_super on Thursday July 31 2014, @09:57PM
I'm no fan of the power companies, but they do have a point about pure net metering.
The cost of the kWh at your doorstep is not just the production cost. If they buy from an independent supplier (micro-power is developing in many areas), they don't buy at residential cost.
I understand the need for the governments to incentivize the people to put panels on roofs. But if the company has to buy at the sales price which includes its margin, someone who can't afford panels is going to pay more for the margin.
(Score: 2) by frojack on Thursday July 31 2014, @10:34PM
Further, buying power on the open market (wheeling) is not cost free to your local power utility which still has to maintain the lines. They usually end up charging you a fee to carry power from your source.
And when a storm hits that knocks out long lines as happened in Hurricane Sandy, your local power company ends up picking up your load.
Wheeling by big companies happens a lot in this country, but short of forming a consortium, is pretty much effectively unavailable to Joe Sixpack.
No, you are mistaken. I've always had this sig.
(Score: 2) by Leebert on Friday August 01 2014, @11:17AM
Depends on the regulatory structure of your locality. In Maryland, for example, distribution and generation are separate. I pay a distribution charge to my electric utility, regardless of the electric supplier.
(Score: 2) by frojack on Friday August 01 2014, @06:10PM
That's pretty much what I meant.
Even if you buy power From Minnesota Hydro, you still have to deal with the wire owners in your local jurisdiction.
Maybe the supplier handles that billing for you.
Maybe your meter and bill is still from the local utility, with a simple reduction in cost shown on the bill.
There's no way to tell a a volt where to go once its on the grid. Nobody knows which power plant actually supplies the power, its a huge trust game.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Friday August 01 2014, @12:15AM
> But if the company has to buy at the sales price which includes its margin,
> someone who can't afford panels is going to pay more for the margin.
Given the infrastructure costs (and savings) it isn't quite so simple.
Solar shifts much grid-consumption to off-peak hours, thus reducing the need to build new plants and associated costs. That can be a net savings for everyone.
This report [fiercemarkets.com] looked at the impact of net metering in california and found that 2 out of 3 utilities had minor cost-savings due to net-metering while one had minor losses. But both the losses and gains were basically in the noise compared to total revenue.
(Score: 2) by bryan on Friday August 01 2014, @01:30AM
With a large solar installation on my roof, I produce almost twice as much electricity as what I use. If I could "sell" my excess directly to my neighbor without the power company ever seeing it, I could make out like a bandit. At the moment all my excess kilowatt hours get sold back to the power company at 2 cents per kilowatt, while my neighbor buys this same electricity for ten times as much. Too bad running an extension cable across the lawn is probably a code violation. :)
(Score: 2) by frojack on Friday August 01 2014, @03:08AM
I'm sure there are ways to do it legally, but neighbor will need the same type of isolation gear that you have.
How much did that gear cost you?
No, you are mistaken. I've always had this sig.
(Score: 2) by bryan on Friday August 01 2014, @05:20AM
$9,136 for the solar gear and installation. Plus new roof shingles, tree trimming, and some of my own labor.
But speaking of group rebates... Each house on the block has to pay a base "connection fee" of around $25 per month - just to have electric service. Think about if a row of houses could "pool" their connections together and between them have just have 1 connection to the electric company. $25 times a dozen is $300 a month. One of the neighbors would still have to be in charge of metering and billing amongst the houses, but surely some costs could be saved.
(Score: 2) by frojack on Friday August 01 2014, @07:11AM
Well, when asking the cost, I meant just the cost of the grid connection gear, not the panels.
Even in your neighborhood scheme, you's probably have to have everybody isolated from each other by similar connection gear. Phase matching, voltage regulation, all that stuff gets taken care of right in that box.
So if you side-feed a house that doesn't have panels, you still have to isolate him from the power company with that gear.
I like your idea of pooling an entire neighborhood, but suspect you will need an EE to bless it all.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Friday August 01 2014, @12:33PM
> $25 times a dozen is $300 a month.
Since it costs absolutely nothing for the power company to produce that power and get it to your fridge, that is PURE PROFIT to them. Greedy bastards.
(Score: 2) by Hawkwind on Thursday July 31 2014, @10:30PM
What if all of the UK formed one group?
(Score: 1) by Freeman on Thursday July 31 2014, @11:20PM
That's called a monopoly. They are typically bad for various reasons.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by The Mighty Buzzard on Thursday July 31 2014, @11:29PM
Especially once the government starts getting their fingers in the pie.
My rights don't end where your fear begins.
(Score: 2) by lhsi on Friday August 01 2014, @07:29AM
An interesting thought experiment. If everyone in the UK joined the same group, threatening to go to the energy company that would offer the lowest rates, logically all the companies would offer lower and lower rates until they reach a point where they would start to lose money. If all power companies are equally efficient (private companies are supposed to be efficient, right?) then that would be the same value. Thus everyone gets the "best" rate at whatever company they choose.
There would be no point in all colluding on a high price, as any single one could just offer a lower one and get all the business (which would start a downward spiral). Similarly, if there is that large a market, anyone could create a not-for-profit energy company and not have to worry about also making a profit.
(Score: 1) by mmarujo on Monday August 04 2014, @05:03PM
So wish it was true..
This happened in Portugal. DECO the biggest consumer protection "group" pooled together hundreds of thousands of consumers and got exactly the same deal as everybody else.
All the power companies are colluding. Most didn't even respond to the request for contracts.