True interoperability: the missing piece in the energy transition

The energy transition won’t happen without interoperability.

A decarbonized energy system powered by intermittent renewable generation needs flexible demand at scale.

But consumer flexibility solutions depend upon seamless access to all energy devices and their data – something which remains fragmentary for energy companies. The APIs provided by Original Equipment Manufacturers (OEMs) are inconsistent and their pricing is restrictive, thanks to a lack of industry-wide interoperability standards. That means that today, it’s difficult for energy providers to build solutions that work for all device categories and brands, and to onboard and compensate users.

Fail to solve this problem – and fast – and the full potential of consumer flexibility will remain unrealized. That’s an outcome we can’t afford. The energy system depends upon finding substantial flexible capacity to avoid grid instability, expensive new infrastructure and long-term dependence on fossil fuels. We won’t reach Net Zero goals without it.

Consumers, energy companies, and grid operators all depend on reliable, secure, and cost-effective connectivity to optimize energy use, reduce costs, and integrate more renewable energy. Making that a reality means working together to create an open energy system, one that prioritizes interoperability, usability, commercial viability, and consumer choice.

Interoperability standards are emerging, but barriers remain

There’s consensus across the industry that open energy is the way forward, and clear momentum towards codifying interoperability.

The introduction of the EU Data Act, FERC Order 2222, and Australia’s Open Energy Network signal a shift towards an ecosystem approach. They encourage fair access to energy device data, and are designed to empower consumers and foster competition.

OEMs also recognize the tangible value of offering hardware that enables flexibility. As energy systems shift toward demand response and grid optimization, ensuring seamless connectivity between devices and flexibility programs will be a competitive advantage.

But despite this progress, significant challenges remain. These regulations are still in their nascent stages, and interoperability is not yet standardized, enforced, or commercially viable.

Many OEM ecosystems remain closed, preventing the seamless control over their energy devices that consumers need. Regulation stipulates that device access and data should be made available via API, but doesn’t provide clear guidance on how those APIs should be built. The result is that in practice:

• OEM API access remains limited: For many energy companies, relying on official OEM APIs today essentially means integrating with only a handful of manufacturers. This limits consumer participation and flexibility program potential.
• Interoperability is commercially unviable today: The cost of accessing device APIs varies widely, with some pricing structures making large-scale integrations financially unfeasible.
• Technical fragmentation persists: The lack of standardized API formats and varying reliability across different providers makes scaling energy flexibility solutions difficult.

So, while regulation is helping to lay the groundwork for open energy, it’s not yet solving the persistent commercial and technical realities of interoperability.

For energy companies, this is more than a technical challenge – it’s a market constraint. Without interoperability, flexibility programs remain costly to scale, difficult to implement, and limited to certain device ecosystems.

Multiple integration methods enable vital innovation

Today, there are no standardized, commercially viable APIs that enable full interoperability. The result is that innovators working to integrate energy devices into flexibility programs have to rely on a combination of methods to ensure all consumers can participate in the energy transition.

The first choice is always to work with official OEM APIs – as long as those APIs are available, reliable, and commercially viable. But in many cases, they’re not. Only a small percentage of OEM APIs are flexibility-ready today, meaning only a handful of consumers with specific devices can participate. That drastically curtails the potential benefits for both consumers and the energy system.

It leaves us with two options: stop building, or find another way.

Stopping isn't an option. Decarbonization of the energy system is an existential issue: we can’t wait for industry-wide standardization before we start scaling the solutions that enable it. Instead, leveraging the data and controls available through consumer APIs are vital to unlock consumer flexibility en masse.

This ensures that:

• Consumers can connect their energy devices to flexibility programs without waiting for slow-moving regulatory implementation.
• Energy companies can scale demand-side flexibility now, unlocking new value streams and accelerating industry adoption—rather than waiting for interoperability to catch up.
• Scaling demand-side flexibility reduces the total cost of ownership of residential energy devices, making technologies like EVs more accessible and attractive to consumers—ultimately accelerating the energy transition

Focus on integration outcomes, not methodologies

The energy industry isn’t alone in facing an interoperability challenge. Open Banking provides a clear precedent for how breaking down data barriers can unlock innovation, increase competition, and benefit consumers

The banking industry used to look a lot like the energy industry. It was dominated by legacy commodity providers who controlled access to customer data, limiting innovation and competition. It was consumers who lost out: there was little engagement with providers beyond checking bills, or queueing in-branch.

But when PSD2 was introduced in 2018, it unleashed innovation across the financial industry. It required financial institutions to build open APIs, transforming the industry and allowing fintech companies to build better services.

The lesson from Open Banking is clear: when access is standardized and commercially viable, innovation follows. The energy industry needs a similar shift – and this time, the stakes are much higher. Interoperability is the foundation that allows energy companies to build better services, improve customer engagement, and drive decarbonization.

But instead of focusing on achieving practical interoperability, much of the energy industry debate has centered on whether a particular approach – such as leveraging consumer APIs – is “official” or “unofficial.” This distinction misses the point. What matters is the outcome, not the methodology. The real question is whether the data and controls provided by the integration approach meet four core criteria:

• Functionality: Comprehensive data and control capabilities to enable flexibility use cases.
• Security: Safe, controlled data-sharing that meets industry standards, including explicit end-user consent in compliance with GDPR.
• Reliability: Stable, high-performance connectivity for energy management.
• Cost-effectiveness: Viable for energy flexibility at scale.

OEMs hold the keys to an open energy ecosystem

Until standardized, accessible APIs exist, the only way to enable real-world interoperability is through a mix of official APIs and alternative integration methods that ensure energy companies can scale today. It may not be a perfect solution, but it meets the criteria we need to scale flexibility at the pace the energy transition demands.

In the future – and with real collaboration from all stakeholders, including OEMs, energy companies, regulators, and consumers – we can work towards official APIs that enable large-scale interoperability. OEMs play a critical role in this. As consumer adoption of DERs increases and energy systems become more connected, demand for seamless device integrations will continue to grow. Providing access to devices and their data isn’t just beneficial for energy companies—it’s a strategic opportunity for OEMs. Those who embrace open energy access will drive higher adoption of their products, create new revenue streams, and play a leading role in shaping the future of energy flexibility.

So, what’s next? OEMs, energy companies, and regulators need to work together to create API solutions that align with the business needs of all stakeholders. Open, cost-effective, and reliable APIs benefit the entire industry, driving higher adoption of smart energy programs, stronger consumer engagement, and firepower for consumer flexibility.

An energy future powered by true interoperability

The industry has a choice: wait for interoperability to happen on its own, or actively push for a future where open energy access is a reality.

To maximize value for the energy ecosystem, and accelerate decarbonization efforts, we need to act now. By working together, the industry can move beyond the fragmentation that’s currently holding us back, and create an energy system where interoperability is the default – not the exception.

To accelerate this shift, we need:

• OEMs to offer API access that is fair, scalable, and commercially viable.
• Regulators to ensure that interoperability is not just a policy vision, but an enforced industry standard.
• Energy companies to push for open, cost-effective, and technically sound integrations.
• Consumers to have the power to choose how their energy devices are connected and managed.

The transition to an interoperable energy system is already underway. But for it to succeed, the industry must acknowledge the current reality, embrace the solutions that exist today, and actively build the future of open energy. The time to act is now.