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Industry Trends in Smart Grids:Industry Trends in Smart Grids:The ConsumerThe Consumer
Ron AmbrosioRon AmbrosioGlobal Research Leader, Energy & Utilities IndustryGlobal Research Leader, Energy & Utilities IndustrySenior Technical Staff MemberSenior Technical Staff MemberIBM TJ Watson Research Center, Yorktown Heights, NYIBM TJ Watson Research Center, Yorktown Heights, NY
U.S. Dept. of Energy GridWise Architecture Council ChairmanU.S. Dept. of Energy GridWise Architecture Council Chairman 1
© 2008 IBM Corporation
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The convergence of new realities will force our energy and utility The convergence of new realities will force our energy and utility clients to rethink their businessclients to rethink their business
Customer Innovation
Energy Flow
Information Flow
Industry Value Chain Innovation
Business Model Innovation
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IBM Research
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In the current environment, integration of consumers’ wants and In the current environment, integration of consumers’ wants and needs is critical for success regardless of geographyneeds is critical for success regardless of geography
Lighting the Way | 04/11/23
To fully understand and benefit from these changes, utilities must
take steps now to integrate the
“consumer voice” into strategic planning, as
stakeholders will challenge them to
show how the public benefits from new
investments
New customer behaviors are
emerging based on income, desire for
control, ability to take control, and age that
will be a critical factor in how successfully
these new investments can be
leveraged
As utilities prepare for a period of major new
infrastructure investments,
consumers worldwide are reconsidering their
role in the electric power value chain
because of a combination of environmental, economic, and
technology-driven factors
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As this industry model unfolds, customers will gravitate toward specific As this industry model unfolds, customers will gravitate toward specific behavioral patterns based on two key factorsbehavioral patterns based on two key factors
Lighting the Way | 04/11/23
Two factors will determine the nature of the interface between utilities and consumers in the future:
The degree to which consumers take initiative in decision-making in their energy supply and usage toward meeting specific goals
The consumers’ disposable income available for energy choices in supply and conservation
Disposable Income Available for Energy ChoicesLow High
De
cis
ion
-Ma
kin
g I
nit
iati
ve
Ta
ke
n
Lo
wH
igh
Passive Ratepayer (PR)
Frugal Goal-Seeker (FG) Energy Stalwart (ES)
Energy Epicure (EE)
An energy consumer who is relatively uninvolved with decisions related to
energy usage and uninterested in taking or unable to take added
responsibility for these decisions
An energy consumer who is willing to take modest action to address specific goals or needs in energy usage, but is constrained in what they are able to do because disposable income is limited
An energy consumer who has specific goals or needs in energy usage, and
has both the income and desire to act on those needs
A very high-usage energy consumer relatively unconstrained by budget limits, but with little or no desire for
conservation or active involvement in energy control
Residential and Small Commercial Energy Customers
22% 21%
31% 26%
Sample Size = 5084Sample Size = 5084
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Using survey responses, we evaluated these types of consumers Using survey responses, we evaluated these types of consumers on six key attributeson six key attributes
Focus on Environment: Interest in green products, willingness to make changes to reduce personal environmental impact
Hunger for Information: Desire for more frequent and more detailed information around the cost and impact of personal energy usage
Willingness to Take Control: Motivation and desire to actively manage energy usage, cost, and environmental impact
Motivation to be Efficient: Willingness to take steps to increase energy efficiency through some combination of lower-cost and higher-cost actions
Knowledge about Providers: Overall awareness of energy provider and options that the provider makes available to manage efficiency, environment, and cost
Sensitivity to Cost: Degree to which behavior would change (or be limited) by the cost or energy or of options made available
Lighting the Way | 04/11/23
Source: IBM Institute for Business Value (IBV) analysis
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Several important findings emerged from this year’s survey, particularly Several important findings emerged from this year’s survey, particularly in comparison with last year’s surveyin comparison with last year’s survey
The emphasis on climate is as strong with consumers as it was in 2007, but there has been a significant and consistent pullback of desire to spend more on green products over the past year
Cost remains the most powerful motivator for desire for control and willingness to change behavior, more so than environmental concerns, reliability concerns, or other factors
Consumers are having a hard time getting (or understanding) information about the availability of new utility programs
– In particular, provider messages are not reaching the youngest consumers in our survey (18-34 years old)
– This is an emerging issue of concern, because this age bracket is most likely to be willing to pay for new products and services
Major generational shifts in how information is obtained imply that multiple communication channels across a broad array of old and new media are needed to be effective
Over 90% of respondents indicated that they would like to see a smart meter and tools for managing their usage available at their home, with 55-60% of those respondents willing to pay a fixed or monthly fee for that capabilityLighting the Way | 04/11/23
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This will lead toThis will lead to a future for energy providers driven by a future for energy providers driven by technological evolution and increasing consumer controltechnological evolution and increasing consumer control
Lighting the Way | 04/11/23
Source: IBM Institute for Business Value (IBV) analysis
Operations Transformation
Some combination of grid and network technology evolves to enable shared responsibility, but consumers either
cannot exert much control or elect not to and the balance of benefits favors the
utility
Participatory Network
A wide variety of grid and network technology evolve to enable shared
responsibility, and consumers’ strong interest in specific goals creates new
markets (virtual and physical) and new product demands, which balances benefits more equally between the
consumers and utilities
Constrained Choice
Consumers take firm steps to move toward more control, but are limited to
certain “levers” (technologies, behaviors, or choices in providers) by regulatory
and/or technological constraints
Passive Persistence
Traditional utility market structures dominate, and consumers either accept
or prefer the traditional supplier-user relationship
Low High
Te
ch
no
log
y E
vo
luti
on
Utility Industry Models 2007—2017C
en
tra
lize
d a
nd
O
ne
-Wa
yD
istr
ibu
ted
an
d
Dy
na
mic
Degree of Consumer Control
IBM Research
© 2009 IBM Corporation
Contact
Ron Ambrosio
Global Research Leader
Energy & Utilities Industry
Ron Ambrosio/Watson/IBM@IBMUS
+1 914-945-3121
IBM T.J. Watson Research Center
P.O. Box 218
1101 Kitchawan Rd. / Route 134
Yorktown Heights, NY 10598
IBM Research
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