Smart Grid Needs Smart Customer

As countries gear up to introduce the smart grid, utilities are scrambling to find ways of convincing customers that the new technology is beneficial.
Published: Wed 20 Feb 2013

The successful transition to a “smarter” digitized power grid relies on customer adoption and satisfaction with smart grid technology. Without the customer’s co-operation, the potential of the smart technology will not be completely realized. The smart grid is after all meant to be interactive. The digitized electricity grid enables two-way communications between consumers and utility companies, giving consumers access to their energy consumption data in real time. Displayed electricity prices give customers the power to make informed decisions about how and when they use energy, thereby assisting them to improve their energy efficiency and reduce their energy bills.

Utilities already face smart grid deployment challenges such as costs and infrastructure development but marketing to consumers appears to have fallen by the wayside. According to Pike Research, many consumers remain unfamiliar with smart grid concepts. It appears that utilities are failing to effectively communicate the benefits of smart grids to the end user. The 2012 survey, undertaken by Pike Research in the US, shows that 30% are unfamiliar with smart grids, and 24% are unfamiliar with smart meters. This is a shocking state of affairs as governments are investing billions in the technology. The US government has allotted US$4.5bn in smart-grid provisions under the American Recovery and Reinvestment Act of 2009. The UK is also spending billions of Pounds on the deployment of around 53 million meters and its citizens also appear not to understand the benefits of the smart technology. Worse still, is that a survey of British consumers shows that, even if they had a smart meter, 70% would ignore the information it provided.

Privacy is a major concern for consumers. Many do not want utility companies to know about their electricity usage and habits in real time. Demographics matter, too. The technology-savvy population—mainly younger consumers—might be an easier sell than older consumers, who might feel that operating smart meters adds an unnecessary layer of difficulty to their lives.

Senior research analyst Neil Strother says of the US survey: “The survey data indicates we are still in the early phase of consumer awareness and adoption of smart grid technologies, and consumers’ understanding of the benefits that can be derived from these technologies remains relatively low. Utilities and other smart grid stakeholders must find more effective means of engaging customers with simple, affordable, and helpful energy management products and services.”

But, since 73% of the respondents are concerned about their electricity costs and 63% are interested in home energy management, it seems that utilities should have an easy job convincing the public about smart technology. However, it appears that those interested do not take sufficient action. That is, only 49% know of home energy management services and less than 40% have a high level of interest in participating in programs such as demand response.

In the US, steps are being taken to gain consumer confidence. The American Council for an Energy-Efficient Economy has launched a program called Behavior and Human Dimensions of Energy Use. The program focuses on the assimilation of consumer feedback on advanced metering. In addition, a new nonprofit coalition of utilities, academics, and smart-grid companies formed the Smart-Grid Consumer Collaborative (SGCC) in an effort to better understand consumer needs related to the smart grid. 

The SGCC suggests how to get consumers excited about the smart grid:

  1. Information-The key is to explain smart grid in terms people understand and care about (more control over energy usage, cost-savings and easier to switch suppliers). Utilities must explain the costs and benefits.
  2. Control-People love choice and control. Utilities can offer pricing options, access to web portals and home control options as smart meters are installed.
  3. Pricing options-Few customers like the idea of mandatory pricing as no-one likes the idea of being forced in to programs. Utilities should offer customers different peak programs to cater for different needs. Ideally, programs should offer a price guarantee even when customers don’t save money
  4. Reliability-Customers want a reliable power supply. Utilities need to inform customers that smart technology will shorten outage times and will prevent the outages from being so widespread.
  5. Green aspect-Customers like the idea that they can connect to renewable energy via smart technology. Also, customers like the idea that a smart grid will reduce the need for more power plants
  6. Time for an upgrade-Customers will like the idea of an upgrade if they are told that the grid is really old and is unable to keep up with the growing demands of the 21st century. An ageing grid can be counter-productive if a country is to remain competitive in the global market.

It’s imperative that utilities explain, in consumer-friendly terms, what the future power needs of a country are and how these can be met by all. Utilities must communicate to consumers how smart technology can help to meet these growing consumption needs.

Engerati Analysis

Utilities have to rethink their customer relationship strategies as traditional approaches will not work with the two-way communication capability of the smart grid. Without customer participation, the success of the smart grid will not be realized. Without consumer participation, smart grid technology ceases to be a two-way communication device.


Financial Times-Smart-meter savings on the horizon

Pike Research- Many Consumers Remain Unfamiliar With Smart Grid Concepts, According to New Pike Research Survey

PWC-Selling the smart grid

Which-Most consumers ‘would ignore smart meter info’