Though the vision of a smart energy home is still in its formative stages, smart meters, demand response systems, energy efficiency programs and home-area networking technologies are being deployed in significant numbers by utilities.
So what’s next? Smart appliances, home energy management systems, electric vehicles and a greater variety of other systems and devices are likely to follow. How should utility companies prepare, and which devices will have the greatest impact on residential energy consumption? More importantly, which of these devices will consumers embrace?
The panelists at the Autovation 2011 Closing General Session, moderated by Clint Wheelock, founder and president of Pike Research, explored several visions of the future for residential smart energy applications, assessing the likely consumer adoption patterns and preferences, along with the business models holding the greatest promise. Panelists included:
- Ron Zimmer, president and CEO of CABA Energy
- Val Jensen, vice president, marketing and environmental programs for Commonwealth Edison
- Ogi Kavazovic, vice president of strategy & marketing for Opower
Consumer Engagement
Smart customer engagement was the vanguard of discussion. “There’s no one person or one company that can possibly follow all of the permeations and changes, particularly today, in what’s happening in the connected home or in intelligent buildings,” said Ron Zimmer.
“We’re going to have to be more engaged, better engaged with the customers,” said Jenson. To date, there are approximately 27 million smart meters, and they’re not all the same. Future projections are that by 2015, that number will be 65 million, which is 54% of the households in the U.S.
“Our analysis shows,” said Wheelock, “that the most compelling cases for smart grid…. center around the opportunity to improve the efficiency of utility grid operations, things that most customers don’t see.”
“All customers want is for their lights to be on and for it to be cheap,” said Kavazovic, reiterating the sentiments of a utility executive. “When you think about the energy management space, it’s a really difficult value proposition for the consumer because in one way, what we are saying and essentially asking them to do is a lot more work and pay a lot more attention to continue receiving the same level of service they’ve been receiving for decades—And that’s tough.”
“Customers are not aware of problems they are trying to solve—from their perspective there is no problem,” said Kavazovic. “The utility…. Is almost the only entity that can play this role in terms of opening up the eyes of the customers, and educating them about what they don’t instinctively know.”
The Opportunity for Utilities
The good news is that there is quite a bit of wasted energy use throughout homes in this country, so while the rates may be low, there’s an opportunity to do much better. Roughly 20% of energy use within the home doesn’t actually contribute to any lifestyle improvements. “For example,” said Kavazovic, “people leave the AC on when nobody is home for three, 10 hours at a time.” That’s the opportunity when it comes to communicating change to customers.
More good news: The majority of the customers get the notion that they can do better when it comes to energy conservation. That’s the opportunity when it comes to the smart home.
Appealing to a Mass Market
Can we take these initial ideas and make them more pragmatic and cost-effective to appeal to the mass consumer? “From a classical economics perspective, if you look at the electricity consumer, they pay a fixed fee for electricity, but the value they get from that kilowatt-hour electricity far exceeds their price,” said Jensen. “It’s something they call consumer surplus. The value of the product far exceeds what we’re charging them for. It seems there’s a lot of value out there yet to be captured by somebody that could figure out how to translate a new product that could capture that consumer surplus.”
We have to maximize the net value to customers. By implicating the best network service provider possible, you can maximize the value, explained Jensen.
Looking Ahead
What’s really exciting is that what is happening now in energy, on smart grid, in the world of smart meters, is truly helping shape that vision that people had 30-40 years ago in terms of what we could possibly expect to see in intelligent buildings.
With AMI deployment, we’re taking the first steps.
“The utility…. has a very important role to play in customer engagement,” said Kavazovic. “The utility has the data in terms of usage and a captive customer base to help bridge the gap between where they are today and where they need to be. The biggest problem between the consumer and the math is that the customers don’t know what they don’t know.”
When customer demand grows, the utility has an important role to play: The utility should provide a basic level of awareness and information to all customers using practical and existing channels of communication. Give them a full diagnosis of where they are today.
“The utility certainly does play an integral role in all of this from a communications perspective,” said Wheelock. When Pike Research investigated how customers expect to be informed about changes like these, the majority of the customers said they expect to hear that information from the utility, because that’s whom they communicate with. “Even a monthly bill is a form of communication,” said Wheelock.
