Will the customer engage in a meaningful and sustainable way in smart grid ? That was one of the central questions of a smart grid panel at the SAP Utilities North America. The panel was led by Michael Vallochi of IBM Global Services, with participation but lots of industry veterans from vendor and analyst community – Ivo Steklac from Tendril, Andy Zetlan from Telvent, Larsh Johnson from emeter, and Zarko Sumic from Gartner, with me representing IDC Energy Insights. The discussion is about achieving the value of the investment, especially for an industry that is used to making large capital investments, not infrastructure with a long life cycle, such as generation, vs. the shorter lived technology investment. The consumer has to be engaged to get value out of the investment.
The game changers will be smart phone, smart appliances and electric vehicles (EV).
The consumer will engage, but not all customers are alike. Utilities will need to segment the customer population, much more granularly than what has been done in the past (by residential, small commercial and industrial, and large C&I or cost to serve and credit risk), but they are on the right track. Many utilities are now polling their customers to determine what appeals to them. They are looking at segments like those in the BGE communications plan - green altruists, privacy resistors, digital control enthusiasts, survival mode, comfort lovers, and bargain hunters. One retail provider we know has 53 segments. Utilities will need to use this information to design products, as the messaging around those products accordingly. They will need also to answer "What’s in it for me?" Customers expect the message to be delivered according to their preferences – via various devices (smart phone, website, e-mail, text messaging, etc.) and social media that they use (twitter, facebook, utube, website). And the "consumer" is not just the residential customer. There are other segments to be considered as well - colleges as micro-grids for example.
Smart phones, smart appliances and EV will change the way customers understand and control their energy usage. IDC research has revealed that there are 7 billion communicating devices in 2010 and 5 billion aren’t laptops. Smart phones will surpass laptops by close to 2.5 times by 2020 and with more devices comes more interactions. Smart phones and innovative apps are already starting to engage some consumers in managing energy in the home. Smart appliances will eliminate the need to get the consumer's active attention to usage. With smart appliance, the consumer will only need to set their preferences and have appliances respond. Of course, a price signal is critical to get most customers really engaged.
America has a love affair with the car, so EV will be the biggest attention getter. As soon as the consumer sees the impact on their electric consumption and bill when they plug in their EV, a lot of things will change about how closely energy is monitored. The introduction of the EV will also be when I expect time-based pricing will be introduced. Consumers expect fluctuations in fuel price, so time-base pricing will almost be expected.
The utility business model will change, what are the home-based technologies that we expect to see over the next two to five years and what is the future of AMI technologies and how will that impact the Smart Grid. What's your take on these questions?
