Challenging the social-power paradigm: Moving beyond consumer empowerment to an energy ecosystem of shared value

Abstract

The evidence to date on the effectiveness of promoting ‘consumer empowerment’ in energy policy as a method to address consumer needs is limited and inconclusive, especially in light of power-relations amongst energy stakeholders which gives rise to both ‘winners’ and ‘losers’. As such, we challenge conventional wisdom by suggesting that emphasising consumer sovereignty reflects an abrogation of responsibility by policy makers, which unnecessarily imbues burdensome responsibilities to the consumer and household. This raises the question: if consumer empowerment is not delivering energy policy outcomes for consumers, then what should be the approach? We challenge four key assumptions commonly used to advocate for greater ‘consumer empowerment’ and instead introduce an alternative paradigm of shared value. While traditional economic theory argues that markets maximize shared value (i.e., Adam Smith's invisible hand) then it is assumed that the behaviour of consumers is rational and is fully informed, although there is ample evidence that neither of these assumptions hold. Thus, shared value has to be achieved differently. When value is shared across the key stakeholders in a market, collective impact is achieved which fosters shared understanding of the problems and shared responsibility for addressing these problems, resulting in more amenable and effective solutions. Within the context of the deregulated Australian energy market, this conceptual paper introduces the Ecosystem of Shared Value framework (Kramer and Pfitzer, 2016) to the energy sector and explains how policymakers can implement the five key elements: common agenda and language; shared measurement system; mutually reinforcing activities; dedicated ‘backbone’ support; frequent and transparent communication. We note that consumer empowerment does not solve the scarcity problem in the current energy crisis, whereas the shared value approach has the potential to align the interests of producers and consumers in most contexts. Wherever there is a scarcity of resources, whether they are consumer, government or natural resources, the shared value approach provides utility. Exceptions would be in situations where energy is a free resource, or in civil uprisings where it would be difficult to enact.