Understanding the smart energy consumer


Michael Valocchi,
IBM Global Business
Services’ Global
Energy & Utilities
Industry leader
Somers, NY, U.S.A. — (METERING.COM) — February 26, 2009 – The majority of energy consumers are willing to experiment with how they interact with energy providers, and many have specific visions of what they want and how much they will pay for it, a new report from IBM finds.

The study, “Lighting the way: Understanding the smart energy consumer,” finds that while in the short term, changes in customer needs will occur based on personal initiative and income, in the long run, even more radical changes may yet emerge as the millennial generation continues to move into adulthood and the energy customer base.

The study was based on a survey of over 5,000 energy consumers in twelve countries, Australia, Belgium, Canada, Denmark, Germany, France, Ireland, Japan, the Netherlands, New Zealand, the U.K. and the U.S.

Respondents believe that energy prices are more likely to rise than fall and a strong majority value environmental considerations in their choices of products and services, although economic pressures have made them less likely to pay premium prices to meet their goals.

Indeed cost remains the most powerful motivator for desire for control and willingness to change behavior, with 80 percent of respondents saying they would change the times at which they do energy consuming housework in exchange for large savings.

With this prevalent feeling that prices will move inexorably upward and awareness of smart meters growing, over 90 percent of respondents indicated that they would like a smart meter and tools for managing their usage. Moreover, 55 to 60 percent of these respondents were willing to pay a one-time or monthly fee for that capability.

However, the respondents aged 18 to 34 were most eager for the types of “self service” and automated energy management that smart metering and smart grids will bring. This age group – and particularly those under 25 – is also the most willing to pay a stated premium for these services – approximately US$100 as a one-time fee, or a monthly fee of US$5. Having a message sent to a mobile device when power is out at the consumer’s home also garnered significantly higher interest from the under-25 age group (about 30 percent were more likely than the other age groups to be willing to pay US$1 per month for such a service).

Commenting on the survey, Michael Valocchi, IBM Global Business Services’ Global Energy & Utilities Industry leader, said: “We see new ways the energy consumer is seeking information in order to make more educated and proactive decisions about their energy use.”

While utilities around the world are modernizing their networks to stay competitive and respond to the needs and values of their customers, they must also plan to understand and encourage new consumer behaviors that will be important in the future industry environment, the report says. Utilities must invest in customer analytics and segmentation to assess the current consumer base and lay the foundation for continual reevaluation, and they must initiate a program to analyze enhanced and new customer interactions that will take place over a more dynamic and data-rich network.

“Generation, network and metering technology available today provide tremendous opportunities to improve capabilities and convenience for residential and small business customers. Realizing this potential, however, requires shifting emphasis from utility controlled decision factors to consumer driven ones,” says the