Steep Curve Ahead for Utilities to Engage Consumers in Energy Management, IBM Study Says

AUSTIN, Texas -- How to engage the consumer in energy and management was the main theme of the Parks Associates Smart Energy Summit this week, and utilities will have to learn a new way to communicate with consumers if they're going to navigate the transition successfully, participants said. Multiple issues stand in the way of broad consumer adoption of energy management products and services including reluctance to cede power to utilities in a demand-response smart meter program, cost -- if the return on investment isn’t enough to justify consumers to spend for energy management services -- lack of education about the benefits of energy management, and varying levels of consumer comfort with technology, said Ron Ambrosio, a staffer at IBM’s TJ Watson Research Center. He’s also chairman emeritus of the U.S. Department of Energy’s GridWise Architecture Council.

Seven in ten people are willing to experiment with how they interact with energy providers, said IBM’s 2010 Global Utility Consumer Survey of 5,000 respondents worldwide. Ambrosio said many consumers have specific visions of what they want regarding energy management services and how much they're willing to pay for it. Eighty percent of consumers in the survey said they'd change the times when they do energy-consuming housework in exchange for “large savings” of at least 50 percent. Savings of 50 percent, however, is a highly optimistic figure when models currently indicate typical consumer savings of around 10 percent when using typical energy management features.

In the smart grid environment, the dynamic between utilities and consumers is shifting from a passive one-way model to a participatory network that benefits consumers and utilities, Ambrosio said. Utilities will have to understand choices available to consumers and how they interact with current and future providers, he said. Age-based attitude shifts based on comfort with technology will help ease the transition long term, according to the IBM study. Sixty-eight percent of respondents ages 18-24 said they'd be willing to pay a monthly fee for energy management and self-management tools and 75 percent said they'd consider third-party services. Even consumers 65 and older, although a smaller percentage, showed a willingness to participate in services that gave them more control over their utility costs.

Social computing will play a key role in the smart grid transition where consumers have choices they didn’t have before and have a public say in their energy choices, Ambrosio said. Utilities will have to “understand how customers get information from governments, the media and even one another,” he said. Utilities are accustomed to the one-way model where customers can be “modeled” and “whose compliance can be taken for granted,” he said. In the new world order, they'll have to consider customers as “active elements” whose participation can’t be taken for granted, he said. It will be important for utilities to understand how consumers are “recruited, enlisted, and motivated,” he said. Systems that incorporate that knowledge, he said, “are more likely to be accepted and seen as legitimate."

Two areas where social computing is likely to play a role, Ambrosio said, are crowdshifting, where social networks can effect “large-scale voluntary behavioral change” such as a transition to or from a provider, and social intelligence, where customers can tap into “deep local knowledge of their surroundings.” He noted emerging types of social computing including place-based reporting such as fixmystreet.org, which lets people report street problems such as potholes or broken street lights on a shared map. Social computing methods, he said, can provide a non-economic form of social and psychological motivation for consumer participation in energy management programs.