ricardo klatlovsky - plugging in the consumer: results and conclusions of the 2007 ibm study

Global Business Services

© C o p y r i g h t I B M C o r p o r a t i o n 2 0 0 8

CISCO 2nd CU D G l o b a l E v e n tSe p t e m b e r 20 0 8

“P l u g g i n g i n t h e c o n s u m e r ”

Plugging in the Consumer1


© Cop y right I B M Corp ora tion 20 0 8

“P l u g g i n g i n t h e c o n s u m e r ” – t h e E & U / IB V “U t i l i t y o f t h e F u t u r e 20 0 7 ”

Key Paper Highlights




Operations T ransf orm ation ( OT )

P artic ipatory N etw ork ( P N )

C onstrained C h oic e ( C C )

P assiv e P ersistenc e ( P P )

Passive R at ep ay er

( PR )

F r u g al G o al -S eek er

( F G )E n er g y S t al w ar t ( E S )

E n er g y E p ic u r e ( E E )

T h e c h a n g e s i n c u s t o m e r b e h a v i o r a n d t h e e x p l o s i o n i n i n f o r m a t i o n f l o w h a v e i m p l i c a t i o n s f o r u t i l i t i e s i n t h r e e k e y a r e a s

I nc r ea s ed C l i m a t e C h a ng e C o nc er ns

I nc r ea s ed C u s t o m er I nv o l v em ent

T ec h no l o g y E v o l u t i o n

1

3

S t r a t i f i c a t i o n o f T r a di t i o na l C u s t o m er B a s e

S ourc e: I B M I nstitute f or B usiness V a lue ( I B V ) a na ly sis

Energy F l o w

I nf o rm a t i o n F l o w

T r a ns f o r m a t i o n o f I ndu s t r y V a l u e C h a i n

S h i f t s i n B u s i nes s M o del s

2 2

1

3





Ov e r 6 5 % o f c o n s u m e r s w i l l p a y m o r e f o r l o w e r g r e e n h o u s e g a s e m i s s i o n s , t h o u g h m o s t w o u l d o n l y a c c e p t a v e r y s m a l l i n c r e a s e

2% 4 %

1 6 %

4 4 %

3 4 %

0%5 %

1 0%1 5 %2 0%2 5 %3 0%3 5 %4 0%4 5 %5 0%

5 0 p e r c e n t o rm o r e

3 5 p e r c e n t 2 0 p e r c e n t 5 p e r c e n t W o u l d N o tP a y M o r e

W h at is t h e m ax im um increase in y our m ont h ly elect ric bill y ou w ould accep t f or p ow er t h at could be d ef init ively sh ow n t o h ave low er em issions of g reenh ouse g ases ( and no ot h er unrelat ed benef it s) ?

S ourc e: 20 0 7 I B M I nstitute f or B usiness V a lue R esid entia l/ S ma ll Commerc ia l Consumer S urv ey .

Key paper highlights: I n c reased c lim ate c han ge c o n c ern s




M o s t c o n s u m e r s w a n t t h e o p t i o n t o c h o o s e t h e i r e l e c t r i c o r g a s u t i l i t y p r o v i d e r , b u t m a j o r i t y e i t h e r c a n n o t o r d o n o t k n o w t h e y c a n

42%

3 2%

1 6 %

3 8 %3 0 %

42%

0% 1 0% 2 0% 3 0% 4 0% 5 0% 6 0% 7 0% 8 0% 9 0% 1 00%

E l e c t r i c t y

N a t u r a l G a s

Y e s N o D o n ' t K n o w

C an y ou current ly ch oose a d if f erent elect ric p ow er or nat ural g as p rovid er

t h an y ou h ave now ?

83%

84 % 1 6 %

1 7 %

0% 1 0% 2 0% 3 0% 4 0% 5 0% 6 0% 7 0% 8 0% 9 0% 1 00%

E l e c t r i c t y

N a t u r a l G a s

Y e s N o

I f y ou d id not answ er y es, w ould y ou lik e t o be able t o ch oose y our p rovid er?

S ourc e: 20 0 7 I B M I nstitute f or B usiness V a lue R esid entia l/ S ma ll Commerc ia l Consumer S urv ey .

Key paper highlights: I n c reased c u sto m er in v o lv em en t




A f t e r m a n y y e a r s o f i n d e c i s i o n , a c o n s e n s u s t i m e l i n e f o r e x p l o i t i n g t h e i n t e g r a t e d c a p a b i l i t i e s o f t h e s e a d v a n c e s i s b e g i n n i n g t o e m e r g e

V a l u e f r o m a l o w -c o s t , l o w -env i r o nm ent a l i m p a c t g ener a t i ng

t ec h no l o g y c o u l d m o v e a s i g ni f i c a nt p er c ent a g e o f R & C c u s t o m er s t o s el f -g ener a t i o n

w i t h i n a dec a de

A t l ea s t o ne s m a l l , c l ea n a dv a nc ed g ener a t i o n

t ec h no l o g y w i l l b ec o m e w i del y dep l o y ed a m o ng R & C

c u s t o m er s w i t h i n 1 0 y ea r s

R eg u l a t o r s a nd l eg i s l a t o r s w o u l d s u p p o r t dep l o y m ent o f new t ec h no l o g i es , p a r t i c u l a r l y

t h o s e w i t h p o s i t i v e env i r o nm ent a l i m p a c t

64% AGREE

7 7 % AGREE

5 5 % AGREE

6-10 Years64 %

3 -5 Years18 %

1-2 Years10%N o t i n m y

l i f et i m e8 %

When do you think there will be a “S m art G rid” in N orth A m eric a?

“R i g h t n o w t h e s e r e s i d e n t i a l m i c r o -C H P s y s t e m s a r e j u s t a b l i p . B u t i t ' s a t e c h n o l o g y t h a t c o u l d h a v e a b i g i m p a c t a s i t ' s a d o p t e d m o r e w i d e l y o v e r t h e n e x t f i v e t o 1 0 y e a r s .”

– N ic hola s L enssen, I D C E nergy I nsightsChristian Science Monitor , N ov emb er 14, 20 0 6

S ourc es: 20 0 7 I B M I nstitute f or B usiness V a lue/ E c onomist I ntelligenc e U nit ( E I U ) U tility E x ec utiv e S urv ey ( n= 91) ; “S ma rt E nergy A llia nc e Pulse S urv ey : D istrib uT E CHConf erenc e, ” Ca p G emini, F eb rua ry 20 0 6; “I t hea ts. I t p ow ers. I s it the f uture of home energy ? ”, M a rk Cla y ton, Christia n S c ienc e M onitor, 14 N ov emb er 20 0 6.

Key paper highlights: T ec hn o lo gy ev o lu tio n




T h e r a p i d i n c r e a s e i n c o n s u m e r c h o i c e i n o t h e r i n d u s t r i e s , e . g . , m e d i a a n d e n t e r t a i n m e n t , w i l l s h a p e e x p e c t a t i o n s f o r t h e f u t u r e n a t u r e o f e n e r g y s e r v i c e

Key paper highlights

S ourc es: B erma n, D uf f y , a nd S hip nuc k , “T he E nd of T elev ision a s W e K now I t, ” I B M I nstitute f or B usiness V a lue, I B M I nstitute f or B usiness V a lue ( I B V ) a na ly sis.




D e c i s i o n -m a k i n g r e s p o n s i b i l i t y t a k e n a n d i n c o m e a v a i l a b l e f o r e n e r g y c h o i c e s w i l l l e a d t o d i f f e r e n t t y p e s o f b e h a v i o r

T wo f ac tors w ill d et erm ine t h e nat ure of t h e int erf ace bet w een ut ilit ies and consum ers in t h e f ut ure:

1 . T h e d eg ree t o w h ich consum ers take initiativ e indec is ion-m aking in t h eir energ y sup p ly and usag e t ow ard m eet ing sp ecif ic g oals

2 . T h e consum ers’dis p os able inc om e av ailable f or energ y c hoic es in sup p ly and conservat ion

S ourc e: I B M I nstitute f or B usiness V a lue ( I B V ) a na ly sisD i s p o s a b l e I nc o m e A v a i l a b l e f o r E ner g y C h o i c esL o w H i g h

Decis

ion-Making

Initia

tive T

aken

Low

High

P a s s i v e R a t e p a y e r ( P R )

F r u g a l G o a l -Se e k e r ( F G ) E n e r g y St a l w a r t ( E S)

E n e r g y E p i c u r e ( E E )A n ener g y c o ns u m er w h o i s r el a t i v el y u ni nv o l v ed w i t h dec i s i o ns r el a t ed t o ener g y u s a g e a nd u ni nt er es t ed i n t a k i ng o r u na b l e t o t a k e a dded r es p o ns i b i l i t y f o r t h es e dec i s i o ns

A n ener g y c o ns u m er w h o i s w i l l i ng t o t a k e m o des t a c t i o n t o a ddr es s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, b u t i s c o ns t r a i ned i n w h a t t h ey a r e a b l e t o do b ec a u s e di s p o s a b l e i nc o m e i s l i m i t ed

A n ener g y c o ns u m er w h o h a s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, a nd h a s b o t h t h e i nc o m e a nd des i r e t o a c t

o n t h o s e needs

A v er y h i g h -u s a g e ener g y c o ns u m er w h o i s r el a t i v el y u nc o ns t r a i ned b y b u dg et l i m i t s , b u t h a s l i t t l e o r no des i r e f o r c o ns er v a t i o n o r a c t i v e

i nv o l v em ent i n ener g y c o nt r o l ; l i k el y t o o w n m a ny h i g h -c o ns u m p t i o n dev i c es f o r g a m i ng , c o m p u t i ng , ent er t a i nm ent ,

et c .

Residential and Small Commercial Energy Customers

Key Paper Highlights 1




P a s s i v e R a t e p a y e r s a r e t h e m o s t p o p u l o u s g r o u p , a n dr e p r e s e n t a t i v e o f t h e t y p i c a l h i s t o r i c a l c u s t o m e r

A n ener g y c o ns u m er w h o i s r el a t i v el y u ni nv o l v ed w i t h dec i s i o ns r el a t ed t o ener g y u s a g e a nd u ni nt er es t ed i n t a k i ng o r u na b l e t o t a k e a dded r es p o ns i b i l i t y f o r t h es e dec i s i o nsp a s •s i v e: not participating readily or actively; being the object of action rather than cau s ing action

O b serv ations and K ey T raits� PR s are to d ay, an d w ill lik ely rem ain o v er the n ex t ten

years, the m o st po pu lo u s gro u p o f all ( ab o u t 4 5 % o f all c u sto m ers)

� PR s lik e the statu s q u o , an d hav e n o d esire w ith c u rren t in c en tiv es/ in f o rm atio n to c han ge; this gro u p has the sm allest perc en tage d esirin g c u sto m er c ho ic e am o n g tho se w ho d o n o t n o w hav e it

� PR s ( alo n g w ith F G s) hav e the m o st n egativ e o u tlo o k f o r f u tu re pric e in c reases – w hile o n ly 2 4 % o f PR sb eliev e their u sage w ill in c rease o v er the n ex t f iv e years, 5 1 % b eliev e their m o n thly b ill w ill in c rease

P assiv e Ratep ayer ( P R)

S ourc es: I B M I nstitute f or B usiness V a lue ( I B V ) a na ly sis, 20 0 7 I B M I nstitute f or B usiness V a lue Consumer S urv ey ( n= 1894) .


( PR )

F ru g al G oal -

S eek er ( F R )

E nerg y S tal w art

( E S )

E nerg y E pic u re

( E E )

P R s h a v e t h e h i g h es t p er c ent a g e o f o v er a l l “do n’t k no w ” a ns w er s i n t h e s u r v ey , in d ic atin g that there

m ay b e ro o m to ed u c ate so m e in this gro u p

0%

1 0%

2 0%

3 0%

4 0%

5 0%

6 0%

E E F G E S P R





A n ener g y c o ns u m er w h o i s w i l l i ng t o t a k e m o des t a c t i o n t o a ddr es s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, b u t i s c o ns t r a i ned i n w h a t t h ey a r e a b l e t o do b ec a u s e di s p o s a b l e i nc o m e i s l i m i t edf r u •g a l : characteriz ed by or reflecting econom y in the u s e of res ou rces and avoidance of w as te, particu larly w ith res pect to financial or natu ral res ou rces

T h i s g r o u p h a d t h e s t r i c t es t “r eq u i r em ent s ” f o r c o r p o r a t e s o c i a l r es p o ns i b i l i t y f r o m t h ei r p r o v i der s ,

w ith the highest perc en tage o f “v ery im po rtan t”respo n ses to the f o u r c ritic al C S R f ac to rs*

0%1 0%2 0%3 0%4 0%5 0%6 0%7 0%

F G E S P R E E* CS R q uestions w ith > 70 % of a ll resp ond ents a nsw ering “I mp orta nt” or “v ery I mp orta nt”

O b serv ations and K ey T raits � M an y lo w -in c o m e c o n su m ers w o u ld f all in to this

c atego ry, as m o n th-to -m o n th c ash c ru n c hes f o rc e “b ru te c o n serv atio n ” ( u se o f en ergy-c o n su m in g d ev ic es o n ly in ab so lu te n eed )

� M an y m id d le-in c o m e en v iro n m en tally-f o c u sed ho u seho ld s w o u ld also f all in to this c atego ry b ec au se o f high c o st o f ren ew ab les, as they w o u ld em plo y so m e lev el o f “b ru te c o n serv atio n ” to m eet perso n al en v iro n m en tal im pac t go als thro u gh red u c ed en ergy c o n su m ptio n

� Presu m ab ly b ec au se o f a lac k o f d ispo sab le in c o m e av ailab le f o r high f ro n t-en d c o st self -gen eratio n system s, this gro u p w as the m o st lik ely to b e “u n lik ely”o r “v ery u n lik ely” to in stall a d istrib u ted gen eratio n u n it ac ro ss all b en ef it types, an d u su ally b y a w id e m argin

F rugal G oal-Seek er ( F G )

F r u g a l G o a l -Se e k e r s v a l u e s h o r t -t e r m c o n s e r v a t i o n , b u t o n l y w h e r e i t c a n b e a c h i e v e d a t l i t t l e o r n o e x p e n s e

P assiv e R atepay er

( P R )

F r u g al G o al -S eek er ( F G )


( E S )

E nerg y E pic u re

( E E )






E n e r g y E p i c u r e s s p e n d l o t s o f m o n e y , c o n s u m e l o t s o f p o w e r , a n d i n t e n d t o c o n t i n u e d o i n g b o t h

A h i g h -u s a g e ener g y c o ns u m er w h o h a s l i t t l e o r no des i r e f o r c o ns er v a t i o n o r a c t i v e i nv o l v em ent i n ener g y c o nt r o l ; l i k el y t o o w n a l a r g e nu m b er o f h i g h -c o ns u m p t i o n dev i c es f o r g a m i ng , c o m p u t i ng , ent er t a i nm ent , et c .e•p i •c u r e: a pers on devoted to s ens u ou s pleas u res and lu x u riou s living


O b serv ations and K ey T raits� T he typic ally higher-spen d in g age b rac k et b etw een 2 5

an d 4 4 years o f age is ho m e to w ell o v er half o f this c u sto m er gro u p

� O n ly 4 % ex pec t c o n su m ptio n to d ec rease, c o m pared to 1 5 -2 0 % in the o ther gro u ps; c o n serv atio n is n o t a c o n sid eratio n

� T he E pic u re’s C o n u n d ru m : A lm o st half said they w o u ld n o t pay m o re f o r “c lean en ergy”, the highest perc en tage o f an y o f the f o u r pro f iles – b u t w hen allo w ed to partic ipate in ren ew ab le po w er pro gram s, 7 4 % d id …alm o st d o u b le the perc en tage o f an y o ther gro u p

� A lm o st 4 0 % d id n o t w an t their en ergy u sage in f o rm atio n to b e m ad e av ailab le to o ther pro v id ers; the o ther three gro u ps w ere in the 2 0 -2 5 % ran ge

Energy Ep icure ( EE)

P assiv e R atepay er

( P R )

F ru g al G oal -S eek er ( F G )


( E S )

E n er g y E p ic u r e ( E E )

T he c o n trast w ith the o ther c atego ries in ex pec ted c han ge in c o n su m ptio n o v er the n ex t f iv e years is d ram atic ; w hile 2 5 -3 5 % o f the o ther gro u ps ex pec t

in c reases, o v er 7 5 % o f t h i s g r o u p ex p ec t c o ns u m p t i o n t o i nc r ea s e

0%1 0%2 0%3 0%4 0%5 0%6 0%7 0%8 0%

E E E S F G P R





E n e r g y St a l w a r t s a r e t h e e a r l y t r a i l b l a z e r s o n c o m p e t i t i o n , c o n s e r v a t i o n , a n d t e c h n o l o g y , a n d h e l p s h a p e b r o a d e r o p i n i o n s

A n ener g y c o ns u m er w h o h a s s p ec i f i c g o a l s o r needs i n ener g y u s a g e, a nd h a s b o t h t h e i nc o m e a nd des i r e t o a c t o n t h o s e needsEnergy Stalw art ( ES)s t a l •w a r t : firm , s teadfas t, or u ncom prom is ing; one w ho s teadfas tly s u pports an organiz ation, cau s e, or philos ophy

O b serv ations and K ey T raits� T he E E c o n su m er typic ally f alls in to o n e o r m o re o f

three c atego ries:� An environmentally-ac tive energ y c ons u mer� A c ons u mer w ith h ig h reliab ility need s ( f or h ome elec tronic

eq u ip ment or c omf ort and h ealth need s )� A c ons u mer interes ted in long -term s aving s and / or

ind ep end enc e f rom th e u tility u s ing tec h nolog y � D istrib u ted gen eratio n is a high prio rity f o r this gro u p

– in ev ery c atego ry, b etw een 3 0 % an d 5 0 % rated them selv es “v ery lik ely” to d eplo y D G , in all c ases this highest o f an y gro u p

� Highest ratio o f to p-en d b ill-to -u sage in c rease ex pec tatio n , o r “4 C R atio ”* ; E E m easu re o f 1 . 6 c o m pares w ith ratio s o f 2 . 4 f o r E E s, 3 . 4 f o r PR s, an d 4 . 5 f o r F G s.


( PR )

F ru g al G oal -

S eek er ( F R )

E n er g y S t al w ar t ( E S )

E nerg y E pic u re

( E E )

0%

1 0%2 0%3 0%4 0%5 0%6 0%

Japan G e r m any A u s t r al i a U . S . U . K .

ES Repondents P R Respondents

I n tw o c o u n tries, PR m ay n o lo n ger b e the d o m in an t c atego ry – E S s ex c eeded P R s i n t h e s u r v ey

r es p o ns es f o r b o t h J a p a n ( 5 4 % -4 1 % ) a nd G er m a ny ( 4 6 % -3 8 % )


* T he ra tio of the p erc enta ge ex p ec ting elec tric ity usa ge to “inc rea se a grea t d ea l” ov er nex t 5 y ea rs to the Perc ent ex p ec ting b ills to inc rea ses to ha v e a “grea t d ea l of imp a c t” on f uture monthly b ills; see p a ge 72





If c o n s u m e r s e l e c t t o t a k e m o r e r e s p o n s i b i l i t y f o r t h e i r e n e r g y u s a g e , t h e y w i l l r e a p m o r e b e n e f i t s f r o m t e c h n o l o g i c a l a d v a n c e s

O p erations T ransf ormation Some combination of grid and network tech nol ogy ev ol v es to enabl e s h ared res p ons ibil ity , bu t cons u mers eith er

cannot ex ert mu ch control or el ect not to and th e bal ance of benefits fav ors th e

u til ity

P articip atory N etw ork A wide v ariety of grid and network tech nol ogy ev ol v e to enabl e s h ared res p ons ibil ity , and cons u mers ’ s trong interes t in s p ecific goal s creates new markets ( v irtu al and p h y s ical ) and new p rodu ct demands , wh ich bal ances benefits more eq u al l y between th e

cons u mers and u til ities

Constrained Ch oice ( CC)C ons u mers take firm s tep s to mov e toward more control , bu t are l imited to

certain “l ev ers ” ( tech nol ogies , beh av iors , or ch oices in p rov iders ) by regu l atory and/ or tech nol ogical cons traints

P assiv e P ersistence ( P P )T raditional u til ity market s tru ctu res

dominate, and cons u mers eith er accep t or p refer th e traditional s u p p l ier-u s er

rel ations h ip

D ec i s i o n-M a k i ng R es p o ns i b i l i t yU t i l i t y C o ns u m er

Techno

logy E

volut

ion

U t i l i t y In d u s t r y M o d e l s 20 0 7 —20 1 7Ce

ntralized a

nd

One-W

ayDistr

ibuted

and

Dynamic


Key Paper Highlights 2




In t h e t r a d i t i o n a l u t i l i t y i n d u s t r y v a l u e c h a i n , b o t h p o w e r a n d i n f o r m a t i o n t y p i c a l l y f l o w e d i n o n e d i r e c t i o n


3Key Paper Highlights




In t h e full participatory network v a l u e c h a i n , n e w c o n s u m e r -f o c u s e d b u s i n e s s n i c h e s e m e r g e , g i v i n g c o n s u m e r s m o r e f l e x i b i l i t y a n d c h o i c e


3Key Paper Highlights




If c o n s u m e r i n t e r e s t i n o r r e g u l a t o r y s t r u c t u r e s f o r c o n s u m e r c o n t r o l i s w e a k , u t i l i t i e s w i l l b e n e f i t f r o m Op e r a t i o n s T r a n s f o r m a t i o n i n t h e i n t e r i m

Distr

ibuted

and

Dynamic

U t i l i t y C o ns u m er

Centr

alized a

nd

One-W

ayTechno

logy E

volut

ion

In Operations Transformation, consumers either cannot exert much control or el ect not to, and the d epl oy ment of new technol og ies, on b al ance, b enefits the util ity

S ourc e: I B M I nstitute f or B usiness V a lue ( I B V )

D ec i s i o n-M a k i ng R es p o ns i b i l i t y

ENERGY PROVIDER is k e y d e c isio n m a k e r

T o da y : P a s s i v e P er s i s t enc e

PA RT NERS H IP b e t w e e n c o n su m e r s a n d u t il it ie s in

d e c isio n -m a k in g

T r a ns i t i o n P l a t f o r m : O p er a t i o ns

T r a ns f o r m a t i o n

� Regulation/legislation to enable customer control not enacted

� L ack of f eed -in or sell-back tarif f s to p romote d istributed generation

� Rate structures th at p romote inv olv ement ( e. g. , time-of -use) not in p lace

� I nsuf f icient ch oice in comp etitiv e mark ets or lack of comp etitiv e mark et

� I nsuf f icient tech nology op tions f or v iable d ep loy ment on w id e scale

� L ow p rimary f uel costs w h ich h ind er comp etitiv eness

� I nsuf f icient consumer incentiv es f or alternativ e op tions

� L ack of ed ucation on op tions

E c onom ic and T ec hnolog y B loc kers





A s c o n s u m e r d e m a n d m o r e c o n t r o l o r b e t t e r b a l a n c e i n t h e b e n e f i t s o f t e c h n o l o g y , r e g u l a t o r s m a y l o w e r b a r r i e r s t o P a r t i c i p a t o r y N e t w o r k s

U t i l i t y C o ns u m er




T r a ns i t i o n P l a t f o r m : O p er a t i o ns

T r a ns f o r m a t i o n

F u t u r e: P a r t i c i p a t o r y N et w o r k

O p er a t i o ns -c ent er ed p a t h

Distr

ibuted

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alized a

nd

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ayTechno

logy E

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� T h e p eriod d uring w h ich a utility is on O p erations T ransf ormation sh ould be v iew ed as a w ind ow of op p ortunity to imp rov e comp etitiv e stand ing in p rep aration f or increased consumer inv olv ement

� T o ach iev e th is, imp rov ing ef f iciencies and low ering costs d uring th is p eriod w ill be critical goals

� A ch iev ing th ese goals w ill gain regulatory sup p ort f or ad d itional d ep loy ment of new tech nologies, w h ich w ill lead to f urth er op erational and cost imp rov ements w h ile setting th e stage f or a strong entry into a comp etitiv e P articip atory N etw ork mark et

K ey G oals : O p erations -C entered P ath






If c u s t o m e r s d e m a n d m o r e c o n t r o l b u t t e c h n o l o g y d e p l o y m e n t i s b l o c k e d o r d e l a y e d , u t i l i t i e s w i l l n e e d t o p r e p a r e t o c o m p e t e i n Co n s t r a i n e d Ch o i c e

Distr

ibuted

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Centr

alize

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e-WayTechno

logy E

volut

ion




T o da y : P a s s i v e P er s i s t enc e



T r a ns i t i o n P l a t f o r m : C o ns t r a i ned C h o i c e

In C onstrained C hoice, consumers tak e firm steps to mov e tow ard more control , b ut are l imited to certain “l ev ers” ( technol og ies, b ehav iors, or choices in prov id ers)

� H igh cost of cap ital or oth er cap ital constraints

� T ech nologies slow er to d ep loy th an f orecast

� I nsuf f icient stand ard iz ation, mak ing integration of netw ork elements d if f icult

� L ack of cost recap ture mech anism in stand ard tarif f s

� I nsuf f icient business cases f or tech nology d ep loy ment

� Regulation/legislation to enable new business structures not enacted

� L ack of f eed -in or sell-back tarif f s to p romote d istributed generation on consumer sid e

E c onom ic and T ec hnolog y B loc kersU tility C ons um er





A s c u s t o m e r d e m a n d f o r c o n t r o l g r o w s , r e g u l a t o r y b a r r i e r s f o r t e c h n o l o g y e v o l u t i o n w i l l f a l l , a n d P a r t i c i p a t o r y N e t w o r k s c a n d e v e l o p

Distr

ibuted

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U tility C ons um er

Centr

alize

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logy E

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C u st o m e r -c e n t e r e d p a t h

F u t u r e: P a r t i c i p a t o r y N et w o r k

T r a ns i t i o n P l a t f o r m : C o ns t r a i ned C h o i c eL IM IT ED S H A RING o f

r e sp o n sib il it ie s b e t w e e n c o n su m e r s a n d u t il it ie s in


� A f ocus on th e w ants and need s of th e consumer is critical d uring th is transition, as some consumers w ill not h av e th e v ariety of op tions f or control th at th ey w ould lik e

� M ost alternativ e p rov id ers w ill not h av e th e ability to meet th e consumers’ need s y et, as th e regulatory structure or tech nology inf rastructure is not y et suf f icient to sup p ort broad comp etition

� T h is sh ould be v iew ed as a brand -build ing p eriod w h ere th e utility h as “p riority access” to th e consumers th at w ill be most recep tiv e to new p rod ucts and serv ices

� S uccess in ev aluating and meeting customer need s in C onstrained C h oice p ositions th e comp any f or a strong entry into a comp etitiv e P articip atory N etw ork mark et

K ey G oals : C us tom er-C entered P ath






D i f f e r i n g c u s t o m e r n e e d s a n d b r o a d e r o p e r a t i o n a l a n d m a r k e t i n g o p t i o n s w i l l d r i v e d i f f e r e n t a p p r o a c h e s f o r e a c h c u s t o m e r p r o f i l e

Smart metering/net metering incentivesF eed -in o r sel l -b ack tarif f s and mark etab l e renew ab l e energy cred its f o r sel f -generato rsP erf o rmance-b ased rate stru ctu res

Smart metering incentivesR enew ab l e energy investment co st reco veryP erf o rmance-b ased rate stru ctu res

Smart metering incentivesH o me/o f f ice energy ef f iciency stand ard sR eg u l a t o r y

E na b l er s

D irect mark etingSp ecial interest med ia ( magaz ines, w eb sites)A sso ciatio n/interest gro u p messagingP ro d u ct tie-ins

P u b l ic ed u catio n/mass med ia o u treachA sso ciatio n/interest gro u p messagingF inancial incentives/assistanceP ro d u ct tie-insC SR p u b l icity

T argeted b il l inserts ( b est cand id ates f ro m cu sto mer anal y sis)P u b l ic ed u catio n/mass med ia o u treachC o m m u ni c a t i o n

G reen P o w er p ack agesG rid p o w er w ith b ack u p U P ST ime o f U se p ro gramR emo te no tif icatio n

T ime o f U se p ro gramE f f iciency incentivesSu b sid iz ed p ro grams

T rad itio nal u til ity serviceR emo te no tif icatio n ( E E )S er v i c e

P a c k a g es

Sel f -generatio nU til ity -o w ned renew ab l esF u l l -sp ectru m I U N cap ab il ities

U til ity -o w ned renew ab l esL o w -co st ( to co nsu mer) I U N cap ab il ities

T rad itio nal generatio nT rad itio nal d istrib u tio n netw o rk sT ec h no l o g y

L ev er a g ed

T h ermo stat ( au to mated )Smart meter/E nergy P o rtalR emo te b u il d ing au to matio n

O n/o f f sw itch esT h ermo stat ( au to mated o r ro u tine manu al )

O n/o f f sw itch esT h ermo stat ( manu al )K ey C o nt r o l

I nt er f a c es

B u y h igh est-ef f iciency ap p l iances avail ab l eB u y b ack u p generatio n u nitI nstal l smart-h o me d evicesI nstal l so l ar p anel s/o th er D GI nvest in renew ab l e/su stainab l e f u nd s

E mp l o y “b ru te-f o rce co nservatio n”I nstal l h igh -ef f iciency l igh t b u l b sC o mp u te carb o n imp act o f u sageE ngage in p o l itical activism

“Sp u r-o f -th e-mo ment” co nservatio n ( no co nsistent p l an)T y p i c a l E ner g y -F o c u s ed A c t i v i t i es

E ner g y S t a l w a r t sF r u g a l G o a l -S eek er sP a s s i v e R a t ep a y er s / E ner g y E p i c u r esE ner g y E p i c u r es






A l t h o u g h t h e s e a c t i o n s w o r k t o w a r d a c h i e v i n g d i f f e r e n t g o a l s , a l l p r e p a r e u t i l i t i e s f o r a n e v e n t u a l m o v e t o a m o r e p a r t i c i p a t o r y n e t w o r k

Invest in understanding customer b eh avior and ex p ectations to get a firm u n d ers tan d in g th e l oc al l y -rel ev an t mix of th e fou r c on s u mer ty p es in p l ac e tod ay an d to mon itor mov emen ts ou t of s ome c u s tomer grou p s an d in to oth ers ov er time

D evel op a l ong-term strategy f or transitioning to a p articip atory netw ork modelas grid an d gen eration tec h n ol ogies ev ol v e ov er time, c on s u mers in c reas in gl y as s u me more res p on s ib il ity for th eir en ergy n eed s , an d regu l ators en ab l e more c on s u mer c on trolExploit advances in technology to improve operational efficiency once business cases become suf f iciently p ositiv e ( includ ing regulatory incentiv es or ch arges) , and use th ese to lay th e f ound ation f or comp eting in th e p articip atory netw ork as it emerges

P rovide cu stomer grou ps w ith edu cation and targeted programs th at allow th em to assume a lev el of resp onsibility f or energy d ecisions w ith w h ich th ey are comf ortable; f or less inv olv ed customer group s, a goal may be to mov e customers at th e margin to become more inv olv ed

A ssess the regu latory environment for each step to lev erage enabling f actors and w ork w ith ind ustry group s and consumers to p ut sup p orting structures and incentiv es in p lace

D evel op a strategy f or cap turing val ue f rom new f l ow s of customer inf ormation b y imp rov in g op eration s , l ow erin g c os ts , an d ex p l oitin g n ew b u s in es s op p ortu n ities

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ricardo klatlovsky - plugging in the consumer: results and conclusions of the 2007 ibm study

Technology