ibm research ® industry trends in smart grids: the consumer ron ambrosio global research leader,...

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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

IBM Research


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


IBM Research


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


IBM Research


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


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


IBM Research


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


Source: IBM Institute for Business Value (IBV) analysis


IBM Research


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


IBM Research


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


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


Contact

Ron Ambrosio

Global Research Leader

Energy & Utilities Industry

Ron Ambrosio/Watson/IBM@IBMUS

[email protected]

+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 ® industry trends in smart grids: the consumer ron ambrosio global research leader,...

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