Most household consumption in Europe is still settled based on static consumption profiles, even if the customers have smart meters. This means that consumers can only save on their electricity bills if they consume less, but not by shifting their consumption to off-peak hours or by responding, in real-time, to high or low electricity prices. It also means that suppliers are not responding to the actual consumption of their own client portfolio, but only to the static consumption profiles attached to their clients.
Allocation based on estimated consumption profiles instead of actual, time-stamped consumption thus prevents suppliers from offering pricing schemes that value flexibility, thereby restricting effective market participation. Suppliers have less room to diversify their retail products, resulting in less consumer choice and less competition.