The Role of Data for Consumer Centric Energy Markets and Solutions
- Jan 29, 2019 1:17 pm GMT
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A new report that gathered 578 pilots involving 5,5 million residential consumers over the past 10 years sheds new light on consumer engagement and learning patterns. The research was commissioned by ESMIG and conducted by VaasaETT in November 2018.
In its new policy framework “the Clean Energy for All Europeans Package”, the European Commission highlights the key and central role of consumers in the global transition to a low-carbon society. It proposes to help consumers save money and energy through better information and give them a wider choice of action when choosing their participation in energy markets.
Fortunately, there are several trends converging to make consumer centric markets a reality. Already a majority of the EU member states (17) have taken a positive decision for a full roll-out of smart meters which will make available granular and reliable information about individual energy use. In addition, the increasing penetration of connected objects in homes and the decreasing costs of measuring and analysing ever-larger amounts of data will make real-time data ubiquitous.
However, households are still scarcely knowledgeable on what energy efficiency entails, how much energy they consume, how much they pay for it, why and how they should save energy. Also, increases in knowledge and concern from mass communication campaigns may not translate into observable change of behaviour, unless the general information is combined with other more tailored and targeted techniques.
This study reports on how consumers react to feedback on their electricity and gas consumption and what is the added-value of near real-time data in achieving other customer benefits. It does so by analyzing the biggest database of feedback, dynamic pricing, home automation pilots and commercial roll-outs around the world.
Main findings of the report
- Disaggregated consumption feedback followed by total current consumption feedback leads to the highest savings as it allows consumers to link their everyday activities with energy consumption, being often based on real-time data, and thus better focus their efforts.
- The feedback channel that leads to the highest savings is the in-home-display (IHD). This may be attributable to three main advantages of IHDs over other feedback channels: it can act as a constant reminder of energy consumption, reach the entire family - unlike bills, mobile apps and web portals - and can provide additional information via different dynamic menus.
- Feedback is most effective in the short term, when task learning is most likely to occur, and over the long term as the impact of behavioural change becomes more automatic and newer more ambitious household goals are set when previous ones are achieved.
- 86% of pilot participants are satisfied with the feedback programme and 85% would have liked the programme to continue.
- The impact of feedback increases with the number of feedback types and channels provided. People, even those living under the same roof, are different and behaviour change is often triggered by different incentives and mechanisms. Energy conservation through feedback can thus only be maximised if the solution attends to different segments of consumers with different interest, norms and rationalities.
- The importance of segmentation and targeted messages is crucial. Consumers should feel that the information they are given is relevant and that the advice is useful. Recent ICT developments allow creating seemingly tailored information on a mass-scale.
- Feedback solutions should, rather than offering one static programme, bring participants through a cycle. For instance, starting with simple messages and suggesting tasks of low degree of involvement and low perceived complexity, then progressing towards more sophisticated or constraining behaviours.
- Providing real-time feedback on both gas and electricity leads to significantly higher savings: 9.2% for dual-fuel pilots versus 7.7% for electricity only pilots. Natural gas represents 37% of household’s final energy consumption in Europe compared to 25% for electricity and in many countries a higher share of household energy expenditure as well.
- Home automation alone tends to have an adverse effect on households’ overall energy consumption. While some would argue that there is no point trying to engage and educate customers who have automated appliances, pilot results show that when efficiency improvements come solely from the technological side, people remain passive actors, leading to low levels of awareness, continued inefficient habits and sometimes a rebound effect (seeing its energy expenditures decrease, the customer might become more careless about his consumption).
- Innovative customer centric data-driven models and services are staring to appear in Europe and revolve around two main themes sometimes offered in combination: a) providing households with the ability to automatically increase and decrease energy demand and be rewarded for providing grid flexibility thus preparing the grid for increased electrification of transport and heating (e.g. electric cars, heat pumps) and b) enabling and maximising independence from traditional suppliers by optimising local generation (typically solar PV), battery storage and home control. In the case of gas, new services often focus on remote control and scheduling of water boilers and heating.
Consumers need accurate information based on real-time data, via multiple channels and using targeted techniques. This is key in achieving savings and encouraging their participation in the energy market. For this to happen, several conditions must be met:
- The technology is available: the roll-out of smart meters must be completed in order to have granular and reliable information about individual energy use.
- Real-time data is available as a basis for feedback and additional consumer services.
- There are multiple feedback channels available, with priority to in-home-displays.
- Consumers are in control of their own consumption/generation data and resources and can voluntarily hand over this control to a 3rd party of their choice.
- Consumers get the benefits (comfort and/or savings).
This study brings new and compelling analysis which confirms what many in the industry already know, that feedback produces good levels of consumer engagement and results in tangible energy savings. The number of trials included in the study from all over the world makes the conclusions enduring for policy makers everywhere.
Patrick Caiger-Smith, CEO at geo and Chair of ESMIG’s Consumer Energy Management Working Group
ESMIG is the European voice of the smart energy solution providers. It represents European companies which provide products, information technology and services for multi-commodity metering, display and management of energy consumption and production at consumer premises. These products and services enable better outage detection, customized tariffs and accurate bills, a precise overview of consumption and manageable demand. Therefore, they help in making energy cleaner, more affordable and more reliable.