Ricardo Klatlovsky - Plugging In The Consumer: Results and Conclusions of the 2007 IBM Study

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Ricardo Klatlovsky - Plugging In The Consumer: Results and Conclusions of the 2007 IBM Study

  1. 1. Global Business Services “P l u g g i n g i n t h e c o n s u m e r ” CISCO 2nd CU D G lo b a l E v e n t Se p t e m b e r 20 0 8 ©C o p y r ig h t IB M C o r p o r a tio n 2 0 0 8
  2. 2. Global Business Services Key Paper Highlights “P l u g g i n g i n t h e c o n s u m e r ” – t h e E & U / IB V “U t i l i t y o f t h e F u t u r e 20 0 7 ” 1 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  3. 3. Global Business Services Key Paper Highlights T h e c h a n g e s in c u s to m e r b e h a v io r a n d th e e x p lo s io n in in fo r m a tio n flo w h a v e im p lic a tio n s fo r u tilitie s in th r e e k e y a r e a s S t r a t i f i c a t i o n o f T r a di t i o na l C u s t o m er B a s e 1 F r u g al E n er g y G o al -S eek er S t al w ar t (F G ) (E S ) 1 Passive E n er g y I nc r ea s ed C l i m a t e R at ep ay er E p ic u r e ( PR ) (E E ) C h a ng e C o nc er ns S h i f t s i n B u s i nes s M o del s 2 2 Operations P artic ipatory N etw ork T ransf orm ation ( OT ) (P N ) P assiv e P ersistenc e C onstrained C h oic e (P P ) (C C ) 3 I nc r ea s ed C u s t o m er I nv o l v em ent T r a ns f o r m a t i o n o f I ndu s t r y V a l u e C h a i n Energy F lo w 3 I nf o rm a t i o n F lo w T ec h no l o g y E v o l u t i o n S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 2 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  4. 4. Global Business Services Key paper highlights: I n c reased c lim ate c han ge c o n c ern s Ov e r 6 5 % o f c o n s u m e r s w i l l p a y m o r e f o r l o w e r g r e e n h o u s e g a s e m i s s i o n s , th o u g h m o s t w o u ld o n ly a c c e p t a v e r y s m a ll in c r e a s e W h at is t h e m ax im um increase in y our m ont h ly elect ric bill y ou w ould accep t f or p ow er t h at could be d ef init ively sh ow n t o h ave low er em issions of g reenh ouse g ases ( and no ot h er unrelat ed benef it s) ? 5 0% 4 4 % 4 5 % 4 0% 3 4 % 3 5 % 3 0% 2 5 % 2 0% 1 6 % 1 5 % 1 0% 4 % 5 % 2% 0% 5 0p e rc e n t o r 3 5 p e rc e n t 2 0p e rc e n t 5 p e rc e n t W o u ld N o t m o re P a y M o re S ourc e: 20 0 7 I B M I nstitute f or B usiness V a lue R esid entia l/ S ma ll Commerc ia l Consumer S urv ey . 3 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  5. 5. Global Business Services Key paper highlights: I n c reased c u sto m er in v o lv em en t M o s t c o n s u m e r s w a n t th e o p tio n to c h o o s e th e ir e le c tr ic o r g a s u tility p r o v id e r , b u t m a jo r ity e ith e r c a n n o t o r d o n o t k n o w th e y c a n C an y ou current ly ch oose a d if f erent I f y ou d id not answ er y es, w ould y ou elect ric p ow er or nat ural g as p rovid er lik e t o be able t o ch oose y our p rovid er? t h an y ou h ave now ? E le c t r i c t y 83% 1 7 % E le c tr ic t y 42% 42% 1 6 % N a tu r a l G a s 84 % 1 6 % N a tu ra l G a s 3 2% 3 0 % 3 8 % 0% 1 0% 2 0% 3 0% 4 0% 5 0% 6 0% 7 0% 8 0% 9 0% 1 00% 0% 1 0% 2 0% 3 0% 4 0% 5 0% 6 0% 7 0% 8 0% 9 0% 1 00% Y e s N o Y e s N o D o n 't K n o w S ourc e: 20 0 7 I B M I nstitute f or B usiness V a lue R esid entia l/ S ma ll Commerc ia l Consumer S urv ey . 4 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  6. 6. Global Business Services Key paper highlights: T ec hn o lo gy ev o lu tio n A fte r m a n y y e a r s o f in d e c is io n , a c o n s e n s u s tim e lin e fo r e x p lo itin g th e in te g r a te d c a p a b ilitie s o f th e s e a d v a n c e s is b e g in n in g to e m e r g e When do you think there will be a A t l ea s t o ne s m a l l , c l ea n “S m art G rid” in N orth A m eric a? a dv a nc ed g ener a t i o n t ec h no l o g y w i l l b ec o m e w i del y 6-10 Years dep l o y ed a m o ng R & C 64 % c u s to m er s w i t h i n 1 0 y ea r s 64% AGREE R eg u l a t o r s a nd l eg i s l a t o r s w o u lds u p p o r t dep l o y m ent o f 3 -5 Years new t ec h no l o g i es , p a r t i c u l a r l y 18 % th o s ew ith p o s itiv e env i r o nm ent a l i m p a c t 7 7 % AGREE N o t in m y 1-2 Years 10% V a lu efr o m a l o w -c o s t , l o w - l i f et i m e env i r o nm ent a l i m p a c t g ener a t i ng 8 % t ec h no l o g y c o u ldm o v ea s i g ni f i c a nt p er c ent a g e o f R & C c u s t o m er s t o s el f -g ener a t i o n w ith i n a dec a de “R i g h t n o w t h e s e r e s i d e n t i a l m i c r o -C H P s y s t e m s a r e j u s t a b l i p . B u t i t ' s a t e c h n o lo g y t h a t c o u ld h a v e a b ig im p a c t a s it 's a d o p t e d m o r e w id e ly o v e r t h e 5 5 % AGREE n e x t f i v e t o 1 0 y e a r s .” – N ic hola s L enssen, I D C E nergy I nsights Christian Science Monitor, N ov emb er 14, 20 0 6 S ourc es: 20 0 7 I B M I nstitute f or B usiness V a lue/ E c onomist I ntelligenc e U nit ( E I U ) U tility E x ec utiv e S urv ey ( n= 91) ; “S ma rt E nergy A llia nc e Pulse S urv ey : D istrib uT E CH Conf erenc e, ” Ca p G emini, F eb rua ry 20 0 6; “I t hea ts. I t p ow ers. I s it the f uture of home energy ? ”, M a rk Cla y ton, Christia n S c ienc e M onitor, 14 N ov emb er 20 0 6. 5 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  7. 7. Global Business Services Key paper highlights T h e r a p id in c r e a s e in c o n s u m e r c h o ic e in o th e r in d u s tr ie s , e .g ., m e d ia a n d e n te r ta in m e n t, w ill s h a p e e x p e c ta tio n s fo r th e fu tu r e n a tu r e o f e n e r g y s e r v ic e S ourc es: B erma n, D uf f y , a nd S hip nuc k , “T he E nd of T elev ision a s W e K now I t, ” I B M I nstitute f or B usiness V a lue, I B M I nstitute f or B usiness V a lue ( I B V ) a na ly sis. 6 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  8. 8. Global Business Services 1 Key Paper Highlights D e c i s i o n -m a k i n g r e s p o n s i b i l i t y t a k e n a n d i n c o m e a v a i l a b l e f o r e n e r g y c h o ic e s w ill le a d to d iffe r e n t ty p e s o f b e h a v io r Residential and Small Commercial Energy Customers T wo f ac tors w ill F r u g a l G o a l -Se e k e r ( F G ) E n e r g y St a l w a r t ( E S) d et erm ine t h e nat ure H ig h of t h e int erf ace A n ener g y c o ns u m er w h o i s w i l l i ng t o A n ener g y c o ns u m er w h o h a s s p ec i f i c t a k e m o des t a c t i o n t o a ddr es s s p ec i f i c bet w een ut ilit ies and g o a l s o r needs i n ener g y u s a g e, a nd consum ers in t h e g o a l s o r needs i n ener g y u s a g e, b u t i s Decision-M a k ing I nit ia t iv e T a k en h a s b o t h t h e i nc o m e a nd des i r e t o a c t c o ns t r a i ned i n w h a t t h ey a r e a b l e t o do o nth o s e needs f ut ure: b ec a u s e di s p o s a b l e i nc o m e i s l i m i t ed 1 . T h e d eg ree t o w h ich consum ers take initiativ e in dec is ion-m aking in P a s s iv e R a te p a y e r (P R ) E n e r g y E p ic u r e (E E ) t h eir energ y sup p ly and usag e t ow ard A n ener g y c o ns u m er w h o i s r el a t i v el y A v er y h i g h -u s a g e ener g y c o ns u m er u ni nv o l v ed w i t h dec i s i o ns r el a t ed t o w h o i s r el a t i v el y u nc o ns t r a i ned b y m eet ing sp ecif ic ener g y u s a g e a nd u ni nt er es t ed i n b u dg et l i m i t s , b u t h a s l i t t l e o r no g oals t a k i ng o r u na b l e t o t a k e a dded des i r e f o r c o ns er v a t i o n o r a c t i v e r es p o ns i b i l i t y f o r t h es e dec i s i o ns i nv o l v em ent i n ener g y c o nt r o l ; l i k el y t o 2 . T h e consum ers’ o w n m a ny h i g h -c o ns u m p t i o n dev i c es dis p os able inc om e f o r g a m i ng , c o m p u t i ng , ent er t a i nm ent , av ailable f or et c . energ y c hoic es in L ow sup p ly and L o w H ig h D i s p o s a b l e I nc o m e A v a i l a b l e f o r E ner g y C h o i c es conservat ion S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 7 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  9. 9. Global Business Services Key Paper Highlights F ru g al E nerg y G oal - S tal w art S eek er (E S ) (F R ) P a s s iv e R a te p a y e r s a r e th e m o s t p o p u lo u s g r o u p , a n d Passive E nerg y E pic u re R at ep ay er (E E ) r e p r e s e n ta tiv e o f th e ty p ic a l h is to r ic a l c u s to m e r ( PR ) A n ener g y c o ns u m er w h o i s r el a t i v el y u ni nv o l v ed w i t h dec i s i o ns r el a t ed t o ener g y u s a g e a nd u ni nt er es t ed i n t a k i ng o r u na b l e t o P assiv e Ratep ayer ( P R) t a k e a dded r es p o ns i b i l i t y f o r t h es e dec i s i o ns p a s •s i v e: not participating readily or actively; being the object of action rather than cau s ing action O b serv ations and K ey T raits P R s h a v e t h e h i g h es t p er c ent a g e o f o v er a l l “do n’t k no w ” a ns w er s i n t h e s u r v ey , in d ic atin g that there PR s are to d ay, an d w ill lik ely rem ain o v er the n ex t ten m ay b e ro o m to ed u c ate so m e in this gro u p years, the m o st po pu lo u s gro u p o f all ( ab o u t 4 5 % o f all c u sto m ers) PR s lik e the statu s q u o , an d hav e n o d esire w ith c u rren t 6 0% in c en tiv es/ in f o rm atio n to c han ge; this gro u p has the 5 0% sm allest perc en tage d esirin g c u sto m er c ho ic e am o n g tho se w ho d o n o t n o w hav e it 4 0% PR s ( alo n g w ith F G s) hav e the m o st n egativ e o u tlo o k f o r f u tu re pric e in c reases – w hile o n ly 2 4 % o f PR s 3 0% b eliev e their u sage w ill in c rease o v er the n ex t f iv e 2 0% years, 5 1 % b eliev e their m o n thly b ill w ill in c rease 1 0% 0% E E F G E S P R S ourc es: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis, 20 0 7 I B M I nstitute f or B usiness V a lue Consumer S urv ey ( n= 1894) . 8 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  10. 10. Global Business Services Key Paper Highlights E nerg y F r u g al G o al - S tal w art S eek er ( F G ) (E S ) F r u g a l G o a l -Se e k e r s v a l u e s h o r t -t e r m c o n s e r v a t i o n , b u t o n l y P assiv e E nerg y R atepay er E pic u re (P R ) (E E ) w h e r e it c a n b e a c h ie v e d a t little o r n o e x p e n s e A n ener g y c o ns u m er w h o i s w i l l i ng t o t a k e m o des t a c t i o n t o a ddr es s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, b u t i s c o ns t r a i ned F rugal G oal-Seek er ( F G ) i n w h a t t h ey a r e a b l e t o do b ec a u s e di s p o s a b l e i nc o m e i s l i m i t ed f r u •g a l : characteriz ed by or reflecting econom y in the u s e of res ou rces and avoidance of w as te, particu larly w ith res pect to financial or natu ral res ou rces O b serv ations and K ey T raits T h i s g r o u p h a d t h e s t r i c t es t “r eq u i r em ent s ” f o r c o r p o r a t e s o c i a l r es p o ns i b i l i t y f r o m t h ei r p r o v i der s , M an y lo w -in c o m e c o n su m ers w o u ld f all in to this w ith the highest perc en tage o f “v ery im po rtan t” c atego ry, as m o n th-to -m o n th c ash c ru n c hes f o rc e respo n ses to the f o u r c ritic al C S R f ac to rs* “b ru te c o n serv atio n ” ( u se o f en ergy-c o n su m in g d ev ic es o n ly in ab so lu te n eed ) 7 0% M an y m id d le-in c o m e en v iro n m en tally-f o c u sed 6 0% ho u seho ld s w o u ld also f all in to this c atego ry b ec au se o f high c o st o f ren ew ab les, as they w o u ld em plo y so m e 5 0% lev el o f “b ru te c o n serv atio n ” to m eet perso n al 4 0% en v iro n m en tal im pac t go als thro u gh red u c ed en ergy c o n su m ptio n 3 0% Presu m ab ly b ec au se o f a lac k o f d ispo sab le in c o m e 2 0% av ailab le f o r high f ro n t-en d c o st self -gen eratio n 1 0% system s, this gro u p w as the m o st lik ely to b e “u n lik ely” o r “v ery u n lik ely” to in stall a d istrib u ted gen eratio n u n it 0% ac ro ss all b en ef it types, an d u su ally b y a w id e m argin F G E S P R E E * CS R q uestions w ith > 70 % of a ll resp ond ents a nsw ering “I mp orta nt” or “v ery I mp orta nt” S ourc es: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis, 20 0 7 I B M I nstitute f or B usiness V a lue Consumer S urv ey ( n= 1894) . 9 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  11. 11. Global Business Services Key Paper Highlights F ru g al G oal - E nerg y S eek er ( F G ) S tal w art (E S ) E n e r g y E p ic u r e s s p e n d lo ts o f m o n e y , c o n s u m e lo ts o f p o w e r , P assiv e E n er g y R atepay er (P R ) E p ic u r e a n d in te n d to c o n tin u e d o in g b o th (E E ) A h i g h -u s a g e ener g y c o ns u m er w h o h a s l i t t l e o r no des i r e f o r c o ns er v a t i o n o r a c t i v e i nv o l v em ent i n ener g y c o nt r o l ; l i k el y t o Energy Ep icure ( EE) o w n a l a r g e nu m b er o f h i g h -c o ns u m p t i o n dev i c es f o r g a m i ng , c o m p u t i ng , ent er t a i nm ent , et c . e•p i •c u r e: a pers on devoted to s ens u ou s pleas u res and lu x u riou s living O b serv ations and K ey T raits T he c o n trast w ith the o ther c atego ries in ex pec ted c han ge in c o n su m ptio n o v er the n ex t f iv e years is T he typic ally higher-spen d in g age b rac k et b etw een 2 5 d ram atic ; w hile 2 5 -3 5 % o f the o ther gro u ps ex pec t an d 4 4 years o f age is ho m e to w ell o v er half o f this in c reases, o v er 7 5 % o f t h i s g r o u p ex p ec t c u sto m er gro u p c o ns u m p t i o n t o i nc r ea s e O n ly 4 % ex pec t c o n su m ptio n to d ec rease, c o m pared to 1 5 -2 0 % in the o ther gro u ps; c o n serv atio n is n o t a 8 0% c o n sid eratio n 7 0% T he E pic u re’s C o n u n d ru m : A lm o st half said they w o u ld 6 0% n o t pay m o re f o r “c lean en ergy”, the highest perc en tage 5 0% o f an y o f the f o u r pro f iles – b u t w hen allo w ed to 4 0% partic ipate in ren ew ab le po w er pro gram s, 7 4 % d id … 3 0% alm o st d o u b le the perc en tage o f an y o ther gro u p 2 0% A lm o st 4 0 % d id n o t w an t their en ergy u sage in f o rm atio n 1 0% to b e m ad e av ailab le to o ther pro v id ers; the o ther three gro u ps w ere in the 2 0 -2 5 % ran ge 0% E E E S F G P R S ourc es: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis, 20 0 7 I B M I nstitute f or B usiness V a lue Consumer S urv ey ( n= 1894) . 10 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  12. 12. Global Business Services Key Paper Highlights E n er g y F ru g al G oal - S eek er S t al w ar t ( E S ) (F R ) E n e r g y St a l w a r t s a r e t h e e a r l y t r a i l b l a z e r s o n c o m p e t i t i o n , Passive E nerg y R at ep ay er E pic u re (E E ) ( PR ) c o n s e r v a tio n , a n d te c h n o lo g y , a n d h e lp s h a p e b r o a d e r o p in io n s A n ener g y c o ns u m er w h o h a s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, a nd h a s b o t h t h e i nc o m e a nd des i r e t o a c t o n t h o s e needs Energy Stalw art ( ES) s t a l •w a r t : firm , s teadfas t, or u ncom prom is ing; one w ho s teadfas tly s u pports an organiz ation, cau s e, or philos ophy O b serv ations and K ey T raits I n tw o c o u n tries, PR m ay n o lo n ger b e the d o m in an t T he E E c o n su m er typic ally f alls in to o n e o r m o re o f c atego ry – E S s ex c eeded P R s i n t h e s u r v ey three c atego ries: r es p o ns es f o r b o t h J a p a n ( 5 4 % -4 1 % ) a nd G er m a ny An environmentally-ac tive energ y c ons u mer (4 6 % -3 8 % ) A c ons u mer w ith h ig h reliab ility need s ( f or h ome elec tronic 6 0% eq u ip ment or c omf ort and h ealth need s ) A c ons u mer interes ted in long -term s aving s and / or 5 0% ind ep end enc e f rom th e u tility u s ing tec h nolog y 4 0% D istrib u ted gen eratio n is a high prio rity f o r this gro u p – in ev ery c atego ry, b etw een 3 0 % an d 5 0 % rated 3 0% them selv es “v ery lik ely” to d eplo y D G , in all c ases this highest o f an y gro u p 2 0% Highest ratio o f to p-en d b ill-to -u sage in c rease 1 0% ex pec tatio n , o r “4 C R atio ”* ; E E m easu re o f 1 . 6 c o m pares w ith ratio s o f 2 . 4 f o r E E s, 3 . 4 f o r PR s, an d 0% 4 . 5 f o r F G s. Japan G e r m any A u s t r al i a U .S . U .K . * T he ra tio of the p erc enta ge ex p ec ting elec tric ity usa ge to “inc rea se a grea t d ea l” ov er nex t 5 y ea rs to the Perc ent ex p ec ting b ills to inc rea ses to ES Repondents P R Respondents ha v e a “grea t d ea l of imp a c t” on f uture monthly b ills; see p a ge 72 S ourc es: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis, 20 0 7 I B M I nstitute f or B usiness V a lue Consumer S urv ey ( n= 1894) . 11 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  13. 13. Global Business Services 2 Key Paper Highlights If c o n s u m e r s e l e c t t o t a k e m o r e r e s p o n s i b i l i t y f o r t h e i r e n e r g y u s a g e , t h e y w ill r e a p m o r e b e n e fits fr o m te c h n o lo g ic a l a d v a n c e s U t i l i t y In d u s t r y M o d e l s 20 0 7 —20 1 7 P articip atory N etw ork O p erations T ransf ormation Dist r ib u t ed a nd A wide v ariety of grid and network Dy na m ic Some combination of grid and network tech nol ogy ev ol v e to enabl e s h ared tech nol ogy ev ol v es to enabl e s h ared res p ons ibil ity , and cons u mers ’ s trong res p ons ibil ity , bu t cons u mers eith er interes t in s p ecific goal s creates new markets ( v irtu al and p h y s ical ) and new T ech nol og y E v ol u t ion cannot ex ert mu ch control or el ect not to and th e bal ance of benefits fav ors th e p rodu ct demands , wh ich bal ances u til ity benefits more eq u al l y between th e cons u mers and u til ities P assiv e P ersistence ( P P ) Constrained Ch oice ( CC) C ent r a l iz ed a nd C ons u mers take firm s tep s to mov e T raditional u til ity market s tru ctu res toward more control , bu t are l imited to O ne-W a y dominate, and cons u mers eith er accep t certain “l ev ers ” ( tech nol ogies , beh av iors , or p refer th e traditional s u p p l ier-u s er or ch oices in p rov iders ) by regu l atory rel ations h ip and/ or tech nol ogical cons traints U tility C o ns u m er D ec i s i o n-M a k i ng R es p o ns i b i l i t y S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 12 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  14. 14. Global Business Services 3 Key Paper Highlights In t h e t r a d i t i o n a l u t i l i t y i n d u s t r y v a l u e c h a i n , b o t h p o w e r a n d i n f o r m a t i o n ty p ic a lly flo w e d in o n e d ir e c tio n S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 13 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  15. 15. Global Business Services 3 Key Paper Highlights In t h e full participatory network v a l u e c h a i n , n e w c o n s u m e r -f o c u s e d b u s in e s s n ic h e s e m e r g e , g iv in g c o n s u m e r s m o r e fle x ib ility a n d c h o ic e S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 14 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  16. 16. Global Business Services Key Paper Highlights If c o n s u m e r i n t e r e s t i n o r r e g u l a t o r y s t r u c t u r e s f o r c o n s u m e r c o n t r o l i s w e a k , u t i l i t i e s w i l l b e n e f i t f r o m Op e r a t i o n s T r a n s f o r m a t i o n i n t h e i n t e r i m D ec i s i o n-M a k i ng R es p o ns i b i l i t y E c onom ic and T ec hnolog y B loc kers U tility C o ns u m er Regulation/legislation to enable customer T r a ns i t i o n P l a t f o r m : control not enacted O p er a t i o ns PA RT NERS H IP b e t w e e n T r a ns f o r m a t i o n c o n su m e r s a n d u t il it ie s in L ack of f eed -in or sell-back tarif f s to Dist r ib u t ed a nd d e c isio n -m a k in g p romote d istributed generation Dy na m ic Rate structures th at p romote inv olv ement T ech nol og y E v ol u t ion ( e. g. , time-of -use) not in p lace I nsuf f icient ch oice in comp etitiv e mark ets or lack of comp etitiv e mark et I nsuf f icient tech nology op tions f or v iable d ep loy ment on w id e scale C ent r a l iz ed a nd T o da y : P a s s i v e L ow p rimary f uel costs w h ich h ind er O ne-W a y P er s i s t enc e comp etitiv eness I nsuf f icient consumer incentiv es f or ENERGY PROVIDER is k e y d e c isio n m a k e r alternativ e op tions L ack of ed ucation on op tions In Operations Transformation, consumers either cannot exert much control or el ect not to, and the d epl oy ment of new technol og ies, on b al ance, b enefits the util ity S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) 15 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  17. 17. Global Business Services Key Paper Highlights A s c o n s u m e r d e m a n d m o r e c o n tr o l o r b e tte r b a la n c e in th e b e n e fits o f te c h n o lo g y , r e g u la to r s m a y lo w e r b a r r ie r s to P a r tic ip a to r y N e tw o r k s D ec i s i o n-M a k i ng R es p o ns i b i l i t y K ey G oals : O p erations -C entered P ath U tility C o ns u m er T h e p eriod d uring w h ich a utility is on O p erations T ransf ormation sh ould be PA RT NERS H IP b e t w e e n ENERGY PROVIDER is c o n su m e r s a n d u t il it ie s in v iew ed as a w ind ow of op p ortunity to k e y d e c isio n m a k e r imp rov e comp etitiv e stand ing in Dist r ib u t ed a nd d e c isio n -m a k in g Dy na m ic p rep aration f or increased consumer O p er a t i o ns -c ent er ed p a t h inv olv ement T ech nol og y E v ol u t ion T r a ns i t i o n P l a t f o r m : F u t u r e: T o ach iev e th is, imp rov ing ef f iciencies and O p er a t i o ns P a r tic ip a to r y low ering costs d uring th is p eriod w ill be T r a ns f o r m a t i o n N et w o r k critical goals A ch iev ing th ese goals w ill gain regulatory sup p ort f or ad d itional d ep loy ment of new tech nologies, w h ich w ill lead to f urth er C ent r a l iz ed a nd op erational and cost imp rov ements w h ile O ne-W a y setting th e stage f or a strong entry into a comp etitiv e P articip atory N etw ork mark et S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) 16 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  18. 18. Global Business Services Key Paper Highlights If c u s t o m e r s d e m a n d m o r e c o n t r o l b u t t e c h n o l o g y d e p l o y m e n t i s b l o c k e d o r d e l a y e d , u t i l i t i e s w i l l n e e d t o p r e p a r e t o c o m p e t e i n Co n s t r a i n e d Ch o i c e D ec i s i o n-M a k i ng R es p o ns i b i l i t y E c onom ic and T ec hnolog y B loc kers U tility C ons um er H igh cost of cap ital or oth er cap ital constraints PA RT NERS H IP b e t w e e n T ech nologies slow er to d ep loy th an Dist r ib u t ed a nd c o n su m e r s a n d u t il it ie s in f orecast Dy na m ic d e c isio n -m a k in g I nsuf f icient stand ard iz ation, mak ing T ech nol og y E v ol u t ion integration of netw ork elements d if f icult L ack of cost recap ture mech anism in stand ard tarif f s I nsuf f icient business cases f or tech nology d ep loy ment Centralized and T o da y : P a s s i v e P er s i s t enc e Regulation/legislation to enable new O ne-W ay T r a ns i t i o n P l a t f o r m : business structures not enacted C o ns t r a i ned ENERGY PROVIDER is C h o ic e L ack of f eed -in or sell-back tarif f s to k e y d e c isio n m a k e r p romote d istributed generation on consumer sid e In C onstrained C hoice, consumers tak e firm steps to mov e tow ard more control , b ut are l imited to certain “l ev ers” ( technol og ies, b ehav iors, or choices in prov id ers) S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) 17 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  19. 19. Global Business Services Key Paper Highlights A s c u s to m e r d e m a n d fo r c o n tr o l g r o w s , r e g u la to r y b a r r ie r s fo r te c h n o lo g y e v o lu tio n w ill fa ll, a n d P a r tic ip a to r y N e tw o r k s c a n d e v e lo p D ec i s i o n-M a k i ng R es p o ns i b i l i t y K ey G oals : C us tom er-C entered P ath U tility C ons um er A f ocus on th e w ants and need s of th e consumer is critical d uring th is transition, PA RT NERS H IP b e t w e e n as some consumers w ill not h av e th e v ariety of op tions f or control th at th ey Dist r ib u t ed a nd c o n su m e r s a n d u t il it ie s in Dy na m ic d e c isio n -m a k in g w ould lik e F u t u r e: P a r t i c i p a t o r y M ost alternativ e p rov id ers w ill not h av e th e T ech nol og y E v ol u t ion N et w o r k ability to meet th e consumers’ need s y et, as th e regulatory structure or tech nology inf rastructure is not y et suf f icient to sup p ort broad comp etition C u st o m e r -c e n t e r e d p a t h T h is sh ould be v iew ed as a brand -build ing Centralized and T r a ns i t i o n P l a t f o r m : p eriod w h ere th e utility h as “p riority C o ns t r a i ned C h o i c e O ne-W ay access” to th e consumers th at w ill be most L IM IT ED S H A RING o f recep tiv e to new p rod ucts and serv ices r e sp o n sib il it ie sb e tw e e n c o n su m e r sa n d u t il it ie s in S uccess in ev aluating and meeting d e c isio n -m a k in g customer need s in C onstrained C h oice p ositions th e comp any f or a strong entry into a comp etitiv e P articip atory N etw ork mark et S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) 18 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  20. 20. Global Business Services Key Paper Highlights D iffe r in g c u s to m e r n e e d s a n d b r o a d e r o p e r a tio n a l a n d m a r k e tin g o p tio n s w ill d r iv e d iffe r e n t a p p r o a c h e s fo r e a c h c u s to m e r p r o file P a s s i v e R a t ep a y er s / F r u g a l G o a l -S eek er s E ner g y S t a l w a r t s E ner g y E p i c u r es “Sp u r-o f -th e-mo ment” co nservatio n ( no E mp l o y “b ru te-f o rce co nservatio n” B u y h igh est-ef f iciency ap p l iances avail ab l e co nsistent p l an) T y p i c a l E ner g y - I nstal l h igh -ef f iciency l igh t b u l b s B u y b ack u p generatio n u nit F o c u s ed C o mp u te carb o n imp act o f u sage I nstal l smart-h o me d evices A c t i v i t i es E ngage in p o l itical activism I nstal l so l ar p anel s/o th er D G I nvest in renew ab l e/su stainab l e f u nd s O n/o f f sw itch es O n/o f f sw itch es T h ermo stat ( au to mated ) K ey C o nt r o l T h ermo stat ( manu al ) T h ermo stat ( au to mated o r ro u tine manu al ) Smart meter/E nergy P o rtal I nt er f a c es R emo te b u il d ing au to matio n T rad itio nal generatio n U til ity -o w ned renew ab l es Sel f -generatio n T ec h no l o g y T rad itio nal d istrib u tio n netw o rk s L o w -co st ( to co nsu mer) I U N cap ab il ities U til ity -o w ned renew ab l es L ev er a g ed F u l l -sp ectru m I U N cap ab il ities T rad itio nal u til ity service T ime o f U se p ro gram G reen P o w er p ack ages S er v i c e R emo te no tif icatio n ( E E ) E f f iciency incentives G rid p o w er w ith b ack u p U P S P a c k a g es Su b sid iz ed p ro grams T ime o f U se p ro gram R emo te no tif icatio n T argeted b il l inserts ( b est cand id ates P u b l ic ed u catio n/mass med ia o u treach D irect mark eting f ro m cu sto mer anal y sis) A sso ciatio n/interest gro u p messaging Sp ecial interest med ia ( magaz ines, w eb sites) P u b l ic ed u catio n/mass med ia o u treach C o m m u ni c a t i o n F inancial incentives/assistance A sso ciatio n/interest gro u p messaging P ro d u ct tie-ins P ro d u ct tie-ins C SR p u b l icity Smart metering incentives Smart metering incentives Smart metering/net metering incentives R eg u l a t o r y H o me/o f f ice energy ef f iciency stand ard s R enew ab l e energy investment co st reco very F eed -in o r sel l -b ack tarif f s and mark etab l e renew ab l e energy cred its f o r sel f -generato rs E na b l er s P erf o rmance-b ased rate stru ctu res P erf o rmance-b ased rate stru ctu res S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 19 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8
  21. 21. Global Business Services Key Paper Highlights A lth o u g h th e s e a c tio n s w o r k to w a r d a c h ie v in g d iffe r e n t g o a ls , a ll p r e p a r e u tilitie s fo r a n e v e n tu a l m o v e to a m o r e p a r tic ip a to r y n e tw o r k Invest in understanding customer b eh avior and ex p ectations to get a firm 1 u n d ers tan d in g th e l oc al l y -rel ev an t mix of th e fou r c on s u mer ty p es in p l ac e tod ay an d to mon itor mov emen ts ou t of s ome c u s tomer grou p s an d in to oth ers ov er time D evel op a l ong-term strategy f or transitioning to a p articip atory netw ork model as grid an d gen eration tec h n ol ogies ev ol v e ov er time, c on s u mers in c reas in gl y 2 as s u me more res p on s ib il ity for th eir en ergy n eed s , an d regu l ators en ab l e more c on s u mer c on trol Exploit advances in technology to improve operational efficiency once business cases become suf f iciently p ositiv e ( includ ing regulatory incentiv es or ch arges) , and use th ese to lay th e f ound ation f or comp eting in th e p articip atory netw ork as it emerges P rovide cu stomer grou ps w ith edu cation and targeted programs th at allow th em to assume a lev el of resp onsibility f or energy d ecisions w ith w h ich th ey are comf ortable; f or less inv olv ed customer group s, a goal may be to mov e customers at th e margin to become more inv olv ed A ssess the regu latory environment for each step to lev erage enabling f actors and w ork w ith ind ustry group s and consumers to p ut sup p orting structures and incentiv es in p lace 3 D evel op a strategy f or cap turing val ue f rom new f l ow s of customer inf ormation b y imp rov in g op eration s , l ow erin g c os ts , an d ex p l oitin g n ew b u s in es s op p ortu n ities S ourc e: IB M I nstitute f or B usiness V a lue ( I B V ) a na ly sis 20 Plugging in the Consumer © Cop y right I B M Corp ora tion 20 0 8

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