Smart Grid Implementation – how to engage consumers?
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Whilst there is considerable focus on the technological aspects of delivering Smart Grids, little is understood of the extent to which consumers are willing and able to embrace new technologies and initiatives that would enable their use of energy to be actively managed. There is a real risk that if consumers do not adopt new approaches to the way that they consume electricity, Smart Grids may not be able to achieve their full potential. This presentation provides an overview and summary of the key findings from a 2 year re-search project exploring Smart Grids from a consumer perspective.
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Smart Grid Implementation – how to engage consumers?
- 1. DNV GL © 2015 Ungraded 17 September 2015 SAFER, SMARTER, GREENERDNV GL © 2015 Ungraded 17 September 2015 Yvonne Boerakker ENERGY How to engage consumers to smart grids 1 IEA DSM Task 23:The Role of the Demand Side in Delivering Effective Smart Grids
- 2. DNV GL © 2015 Ungraded 17 September 2015 Participants Operating Agent Linda Hull EA Technology Yvonne Boerakker DNV GL Even Bjørnstad Enova Chae, Yeoungjin Korea Power Exchange Magnus Brolin SP Technical Research Institute Duncan Yellen EA Technology A multi-national project with partners from five countries This slide deck is one of the outputs of IEA DSM Task 23
- 3. DNV GL © 2015 Ungraded 17 September 2015 Project Overview Work Programme Scope To explore Smart Grid related policies, technologies and tools from the perspective of the consumer (specifically households and small businesses) in order to gain a better understanding of their impact on consumer willingness and ability to engage in Smart Grids. Aim To draw together international experiences in order to provide guidance on how to ensure the demand side become an integral component of a successful Smart Grid. Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective
- 4. DNV GL © 2015 Ungraded 17 September 2015 TECHNOLOGY TOOLS POLICY CUSTOMER SMART GRID TECHNOLOGY TOOLS POLICY CUSTOMER TECHNOLOGY TOOLS POLICY CUSTOMER TECHNOLOGY TOOLS POLICY CUSTOMER SMART GRID Project Overview
- 5. DNV GL © 2015 Ungraded 17 September 2015 Understanding Energy Behaviour (1) 5
- 6. DNV GL © 2015 Ungraded 17 September 2015 Understanding Energy Behaviour (2) – energy behaviour model External facilitators External barriers Attitude Social Norm Self efficacy Intention Behaviour Habitual behaviour positive feedback negative feedback Societal level Individual level Awareness
- 7. DNV GL © 2015 Ungraded 17 September 2015 Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective Background research & information gathering Collation of results to produce a ‘Smart Grid Guidance’ document Key learning points applicable in participating countries Work Programme Research Collation Dissemination The project was conducted over three distinct phases June 2012 December 2013 May 2014
- 8. DNV GL © 2015 Ungraded 17 September 2015 Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective Background research & information gathering Collation of results to produce a ‘Smart Grid Guidance’ document Key learning points applicable in participating countries Work Programme Research Collation Dissemination The project was conducted over three distinct phases June 2012 December 2013 May 2014
- 9. DNV GL © 2015 Ungraded 17 September 2015 Background research Three ‘areas’ of research Impact of markets Interaction with Smart Grid initiatives Risks and Rewards Identifying the drivers for Smart Grids Assessing the impact of the electricity market on consumers Recognising the extent to which the electricity market facilitates consumer engagement or represent a barrier Gathering information on consumers views towards and experiences with Smart Grid initiatives Exploring risks and rewards viewed from the consumer perspective Understanding how this impacts the decision making process Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective
- 10. DNV GL © 2015 Ungraded 17 September 2015 Background research Three ‘areas’ of research Impact of markets Interaction with Smart Grid initiatives Risks and Rewards Identifying the drivers for Smart Grids Assessing the impact of the electricity market on consumers Recognising the extent to which the electricity market facilitates consumer engagement or represent a barrier Gathering information on consumers views towards and experiences with Smart Grid initiatives Exploring risks and rewards viewed from the consumer perspective Understanding how this impacts the decision making process Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective
- 11. DNV GL © 2015 Ungraded 17 September 2015 Impact of markets 11
- 12. DNV GL © 2015 Ungraded 17 September 2015 Drivers for Smart Grids UK Drivers Support transition to low carbon economy Ensure security of supply Minimise costs to customers Empowering customers The drivers for Smart Grids differ from one context to another © EA Technology
- 13. DNV GL © 2015 Ungraded 17 September 2015 Electricity market impact on consumers Key facilitators in UK Equalising incentives scheme – DNOs no longer dis-incentivised to seek ‘capital solutions’ RIIO approach to network regulation – Strong incentive to deliver efficiency savings and use innovative approaches Key barriers in UK Metering is the responsibility of Suppliers – Not network companies Consumers lack trust in energy companies Time of use tariffs not widespread
- 14. DNV GL © 2015 Ungraded 17 September 2015 Consumers can help by: 00:00 04:00 08:00 12:00 16:00 20:00 Dynamic load shifting 00:00 04:00 08:00 12:00 16:00 20:00 Permanent load shifting 00:00 04:00 08:00 12:00 16:00 20:00 Overall energy reduction By reducing electricity consumption Changing pattern of consumption Demand side response Sharing smart meter data (e.g. with DNOs)
- 15. DNV GL © 2015 Ungraded 17 September 2015 Background research Three ‘areas’ of research Impact of markets Interaction with Smart Grid initiatives Risks and Rewards Identifying the drivers for Smart Grids Assessing the impact of the electricity market on consumers Recognising the extent to which the electricity market facilitates consumer engagement or represent a barrier Gathering information on consumers views towards and experiences with Smart Grid initiatives Exploring risks and rewards viewed from the consumer perspective Understanding how this impacts the decision making process Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective
- 16. DNV GL © 2015 Ungraded 17 September 2015 Consumer Interaction with Smart Grid Initiatives 16
- 17. DNV GL © 2015 Ungraded 17 September 2015 INT2 INT3 INT6 INT4 INT7 KR1 Analysis of 23 case studies 17 IT1 SE3 SE4 SE 1 SE 2 NL2 NL3 NL1 Advice Control Feedback Tariff Key INT5 NO1 NO2 UK5 UK9 UK7 UK8 UK6 UK1 UK2 Case Studies INT1 UK4 UK3
- 18. DNV GL © 2015 Ungraded 17 September 2015 Review of consumer attitudes from 22 consumer surveys The views and opinions were wide-ranging Some consumers are sceptical and lack trust There is a lot of misunderstanding about why industry stakeholders are developing smart grids and why consumers should engage Once the drivers for Smart Grid are understood, some consumers say they would be willing to participate Some consumers say they would not participate under any circumstances Many consumers say they would participate in return for a financial payment The level of payment required varies, but in many cases it is not unreasonable
- 19. DNV GL © 2015 Ungraded 17 September 2015 Key findings – top five 19
- 20. DNV GL © 2015 Ungraded 17 September 2015 Background research Three ‘areas’ of research Impact of markets Interaction with Smart Grid initiatives Risks and Rewards Identifying the drivers for Smart Grids Assessing the impact of the electricity market on consumers Recognising the extent to which the electricity market facilitates consumer engagement or represent a barrier Gathering information on consumers views towards and experiences with Smart Grid initiatives Exploring risks and rewards viewed from the consumer perspective Understanding how this impacts the decision making process Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective
- 21. DNV GL © 2015 Ungraded 17 September 2015 Risks and rewards from a consumer perspective 21
- 22. DNV GL © 2015 Ungraded 17 September 2015 Predicting behaviour If Y > X then option will be selected If Y < X then option won’t be selected Where: Y = benefits to the customer (£) X = cost to the customer (£) The traditional ‘engineers’ approach to predicting whether a consumer will do something is to use a neo-classical economic model
- 23. DNV GL © 2015 Ungraded 17 September 2015 Loft insulation example There are many examples to show that neo-classical economic modelling does not predict behaviour Benefits to the consumer ~ £180/year reduced heating bill ~ 730kg/year reduced CO2 emissions Costs to the consumer ~ £0 – installed free of charge But, they need to: - allow installers into their home - empty the loft of all its contents
- 24. DNV GL © 2015 Ungraded 17 September 2015 Example (continued) Would not allow assessor access No response when assessor called to property Household assessed - no survey necessary (not suitable for insulation) Household assessed - offered and received free insulation Household assessed - offered but did not accept free insulation % of households 35% 16% 6% 16% 27% Kirklees Scheme An extremely successful scheme, achieving very high participation levels A significant number of households did not take up the offer of free insulation
- 25. DNV GL © 2015 Ungraded 17 September 2015 Key findings – top five 25
- 26. DNV GL © 2015 Ungraded 17 September 2015 Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective Background research & information gathering Collation of results to produce a ‘Smart Grid Guidance’ document Key learning points applicable in participating countries Work Programme Research Collation Dissemination The project was conducted over three distinct phases June 2012 Decembe r 2013 May 2014
- 27. DNV GL © 2015 Ungraded 17 September 2015 Smart Grid Implementation Guidance document Who is it for? The document is intended to provide guidance to implementers of Smart Grid initiatives , specifically those initiatives that require action from households and small commercial / industrial businesses. How should it be used? The guidance document provides general guidance, applicable in a range of contexts, on how Smart Grid initiatives should be designed in order to make them more attractive to consumers. What is it? The guidance document describes a step- by-step approach to implementing Smart Grid initiatives.
- 28. DNV GL © 2015 Ungraded 17 September 2015 It is suggested that readers start by reviewing the background information in Section 2, followed by the overview of the step-by-step process in Section 3. Thereafter, readers have the option to focus only on those areas where they require further information and guidance. The document contains a number of interesting and relevant examples to highlight the key criteria from a consumer perspective. Each Section concludes with a series of key messages for stakeholders, outlining general criteria that need to be considered, and who is responsible for ensuring these criteria are met. Overview of guidance document Section 12 Tools to assist implementers - Assessment matrix to evaluate the benefits of Smart Grids - Quantifying benefits and dis-benefits to the consumer - Customer segmentation models Step 1: Understand drivers Section 4 Step 2: Define outcomes Section 5 Step 3: Target consumers Section 6 Step 4: Design offering Section 7 Step 5: On-going support Section 8 Step 6: Assess benefits Section 9 Step 7: Monitor and Evaluate Section 10 Step 8: Implement Section 11 Section 13 Further Reading Introduction This Section provides a high level description of the Factors for successful implementation - introduced in the form of a step by step process Section 1 Section 3 This Section describes the Background to the project, including: - An overview of Smart Grids - An introduction to energy behaviours and energy practices Section 2
- 29. DNV GL © 2015 Ungraded 17 September 2015 Key messages – top five 29
- 30. DNV GL © 2015 Ungraded 17 September 2015 Impact of markets Interaction with technology Risks and Rewards Definitionofoffersand programs Synthesisand Dissemination Customer perspective Project Outputs Document Type Document Title Date Research Report The Impact of Electricity Markets on Consumers January 2013 Interaction between Customers and Smart Grid Related Initiatives November 2013 How risks and rewards from the perspective of customers affects the decision to engage in Smart Grids December 2013 Guidance Document Smart Grid Implementation: How to engage consumers July 2014 Executive Summary Smart Grid Implementation: How to engage consumers July 2014
- 31. DNV GL © 2015 Ungraded 17 September 2015 SAFER, SMARTER, GREENER www.dnvgl.com Thank you for your interest 31 Yvonne Boerakker Yvonne.Boerakker@dnvgl.com +31 263566017
- 32. DNV GL © 2015 Ungraded 17 September 201532