Releasing the full potential of Smart Meters and Smart Grid

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Pilgrim Beart of AlertMe speaking to HEAT, Cambridge, 2 Dec 2010, explaining why Consumer engagement is critical to maximising ROI.

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Releasing the full potential of Smart Meters and Smart Grid

  1. 1. Releasing the full potential of Smart Meters & Smart GridConsumer engagement is critical to maximising ROIPilgrim Beart, Founder Director, AlertMe2 Dec 2010
  2. 2. Agenda • Market transformation • Objectives, opportunity and challenges • Consumer psychology: Engaging consumers • Visibility & EngagementAGENDA 1
  3. 3. Market is evolving rapidly • Energy industry undergoing significant technological change, driven by • The need to provide certainty and security of supply Energy Industry • De-carbonise supply to meet challenging Govt/Regulatory targets Consumers must Investing in Smart Metering Capital Cost believe and see that Efficiency Smart Grid (passed to consumers) there is a tangible benefit to them • Investment in smart metering/grid holds considerable promiseMARKET TRANSFORMATION Forecasts and Trends • Operational efficiencies • Up to 300 million smart meters forecast • Overhead reduction, timely and globally by 2015 Utilities accurate bills, demand smoothing • Principally in Europe and US • Almost half to have a HAN • Consumption efficiencies gateway for in home energy management • Changing consumer behaviour • 47 million smart meters in the UK by 2020 or sooner “60% of the business case for smart meters lies in • 1.5bn ZigBee devices in the home (HEM & Demand Control) by 2015 operational benefits, 40% consumption related” Source: ONWorld Research Boston Consulting Group, April 2010 2
  4. 4. The Challenge • Both utilities and consumers play an important role in delivering smart grid benefits … the 60% … the 40% OPERATIONAL EFFICIENCIES CONSUMPTION RELATED through technology deployment through Consumer engagement • Building a new communications network • Consumer benefits needed to unlock potential • Unprecedented access to data • Visibility • Connecting to customer for first time • Actionable Information • Increased control over peak demand • ControlMARKET TRANSFORMATION • Choice THE CHALLENGE • To take consumers along in this transformation • Create a win-win situation • Those engaging the consumer can expect a valued customer relationship, in an increasingly competitive and converged world 3
  5. 5. Delivering consumption side benefits • Key mechanisms to deliver efficiencies, alleviate peak demand improve reliability of supply TIME OF USE TARIFFS DEMAND RESPONSE MICROGENERATION CONSUMER IMPACT CONSUMER IMPACT CONSUMER IMPACT • Potentially higher bills • Interference in consumer’s life • Up front cost • Increased complexity in tariffs and choices - ‘Big Brother’ • Adds further complexity & bills – confusing • No benefit CONSUMER POTENTIAL CONSUMER POTENTIAL CONSUMER POTENTIALMARKET TRANSFORMATION • Visibility of tariffs and zones • Involve, engage & reward • Alleviate dependency on the provides choice customers – opt in, not impose grid • Opportunity to benefit from • Dynamic engagement at peak • Export as well as generate lowest tariffs demand times for reward • Visibility of energy generated, • Alerts at peak crossover, and • Customer automation of used and exported, the P&L for easy control of appliances to preferences for maximum home energy use avoid peak pricing benefit and convenience • Future opportunity for further • Automation to balance best use integration – EVs/Storage of tariffs 4
  6. 6. Consumer Psychology • How do consumers think? Abstract Concrete Consuming Energy Using a washing machineCONSUMER PSYCHOLOGY Motivation - Empowerment = Frustration Motivation + Empowerment = Action 5
  7. 7. Consumer Psychology Motivation: Money (mainly as a “stick”) • Energy bills ≈9% of disposable income • 90% of householders concerned about bills • Energy bills viewed like mortgage/rent • Standing charge exactly the wrong model • Rule of thumb: 1W = £1/yearCONSUMER PSYCHOLOGY 6
  8. 8. Consumer Psychology Motivations: Competition, Collaboration, Reputation • We are social animalsCONSUMER PSYCHOLOGY 7
  9. 9. Consumer Psychology: Segmentation “He who would do good to another, must do it in Minute Particulars. General Good is the plea of the scoundrel, hypocrite and flatterer” Blake Challenges for every segment • Sociable middle class – community peer pressure • Children and young adults – education and online • Social housing – local government • Home Workers – as extension to CRCCONSUMER PSYCHOLOGY Some offer a particular challenges: • Elderly – ensure they don‟t economise, help with insulation • Illiterate/Innumerate – non numerical visual representation • Less well off – help with false economies, helping to budget 8
  10. 10. Consumer Psychology What empowers consumers? • Householders today feel unempowered • View energy bill as outside their control • Bring energy costs into the here-and-now • Associate cost with use • Cost-per-useCONSUMER PSYCHOLOGY 9
  11. 11. Making energy visible 10
  12. 12. Analytics: Turning data into actionable information • Simple intuitive reporting, clear and engaging interface Partners In Home Display PARTNER INTERACTION Aggregated data across user base Demand profiling ANALYSE Customer profiling for retention Appliance usage profiles REPORTVISIBILITY & ENGAGEMENT Extract patterns STORE High level data in a Identify appliance meaningful way: fingerprints USER INTERACTION CAPTURE Record data over - Totals Determine appliance Actionable information time at individual - Averages conditions of use Data from home level and in - Comparisons Personalised tips electricity clamp aggregate Engaging dialogue (goals) or smart meter in real-time Most competitors stop here 11
  13. 13. A stream of new applications Live Energy… Comparative… Predictive… Explanatory… Appliances… Heating… Connected Home… Microgen…VISIBILITY & ENGAGEMENT 12
  14. 14. Consumer Partnership • AlertMe works alongside the utility to benefit consumer through 3 phases of the journey • Provides visibility, control & automation • Enabling consumers to reduce energy use, cost and CO2 • Takes consumer on a journey through behaviour change, control and onto self-generation • Active behaviour change can offset energy price rises Overall home energy usage and bill over time “Usage Shock” Possible Net Bill Position Better tariffVISIBILITY & ENGAGEMENT Turn off standby Reductions necessary to offset likely future Identify consumer energy price rises appliances Smarter use using most More efficient appliances energy Use Sustained usage levels “Free” energy contribution - self appliances more cost generation (eg. Solar panels) effectively REVEAL REDUCE RENEW (Diagnostics) (Establishing Active Behaviour Change) (Self-Generation) Stages of Behaviour Change 13
  15. 15. Maximising Engagement • Nascent market with low awareness • Conserving energy not new, but tangible benefits of „Smart‟ not obvious for consumers and managing energy is not „front of mind‟ • All companies with large customer bases have potential to deliver maximum awareness and engagement • Different motivations and challenges for each sector – all sectors have a green agenda DIRECT • Early adopters • Consumers can take independent control of their energy use UTILITY TELCO OEM • External pressure to • Looking to next services– Beyond Connectivity • Seeking to connect the multitude of meet challenging targets home devices as home gateway • Home monitoring is next growth phase in online • Vested interest in services space • Creating a point of differentiation for changing consumers‟ their equipment energy use behaviour • ARPU growth potentialVISIBILITY & ENGAGEMENT • An explosion of data opens e-commerce opportunities 14
  16. 16. Conclusions • Vital to engage Consumers to release full potential of the Smart Grid • 30% of all energy is used in the home, and it‟s 8-10% of disposable income • Effect 15-25% reduction in consumption, through visibility & control • Need to engage & empower customers • Visibility, control and choice • Reveal, Reduce, Renew • Motivated customers create a „pull‟ for services (rather than „push‟) • Learn lessons from markets where change is imposed or pushed onto customers • They will push back! • Transformation happens when consumers are motivated and empowered to adopt • E.g. Broadband adoption and Digital TV Switchover: affordable, self-CONCLUSIONS installable, relevant • Driven via education & awareness (consumers can understand the benefits) 15
  17. 17. Releasing the full potential of Smart Meters & Smart GridConsumer engagement is critical to maximising ROIPilgrim Beart, Founder Director, AlertMe2 Dec 2010

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