Our electricity needs are growing. Our current lifestyles require a great deal of electricity and global economy demands are expected to accelerate in the future. There is however a growing awareness that the climate effect from electricity consumption must be kept to a minimum. Reducing consumption is one major challenge; the other is to increase the share of climate neutral energy.
Technical development makes distributed generation and storage more affordable to consumers, enabling climate neutral electricity consumption. However, balancing supply and demand becomes more of a challenge for the grid with distributed generation, a problem that can be solved but requires more attention, says Johan Ander, Program Manager, Stockholm Royal Seaport Smart City project, who will be co-presenting our upcoming webinar, Why don't Energy Management Services take off in the consumer market in Europe? He explains, “We need to make sure that wind and solar power is being harnessed effectively. The challenge here is to create solutions to steer consumption or store excess when produced. This is the system aspect which is more relevant today when we talk about electricity/energy efficiency. This is where the technological focus is right now and this is what we are doing at Stockholm Royal Seaport. Through the smart grid, we use signals that steer appliances to start and stop according to consumer needs. This is what the future will be about.”
This is where Energy Management Services (EMS) can play an important role to help consumers manage their electricity consumption better. In the 1990s the utility industry talked about the “Intelligent house”, today we talk about services for the “Connected Home”.
But, EMS are not taking off in Europe’s consumer market as expected. We spoke to Mr Ander and webinar co-presenter Marcus Törnqvist, Head of Utility Engagements Northern Europe and Central Asia, Ericsson, to gain a better understanding of the barriers when it comes to larger propagations of EMS to consumers, what needs to occur before this is made possible and the business models and drivers enabling it.
The barriers that EMS face
According to the speakers, price volatility across Europe is not high enough to influence consumers to be more energy efficient.
Also entry costs of these services are usually quite high and there is a lack of scale. Because of the low scale, it is difficult to build cost efficient services and devices.
There is also an integrity aspect when it comes to keeping data private during the data management process. There also appears to be challenges when it comes to accessing data in a cost efficient manner due to European regulations. In some European countries, it’s not clear who even owns the data. Mr Törnqvist believes that regulation must be developed to make data assimilation and access easier.
Both presenters agree that the biggest challenge is probably a lack of interest on the consumers’ part. Many consumers are simply not interested in their consumption data and this is where education comes to play. The energy sector has to translate consumption data into something that is relevant to the consumer, whether it’s reducing their environmental footprint, saving on their energy bills or helping the energy supplier to provide a reliable source of energy. Relevancy will depend on a number of factors so it’s important for energy suppliers to understand what’s relevant for their customers to start with.
Mr Ander believes that in order to get consumers more interested in their energy consumption, a more holistic view is necessary. Consumers need to see their consumption habits across the board-heating, electricity and water. Individual metering will be the driving force of efficient consumption, he explains. “This creates relevance for the customer as they can attach a cost to their own consumption. Once they have this complete personal overview, they can understand what needs to be altered in their home. It will then become easier to alter behaviour.” EMS must be made more cost-effective and easy (and interesting) to use, points out Mr Törnqvist.
Builders also need to implement EMS in new buildings and include it as part of the sales process but this can also prove to be challenge since so many parties are involved in a building project and self interest can often be a barrier to larger propagations of EMS to consumers.
Business models around EMS
There is serious market potential for those who are willing to take the lead in the EMS market, says Mr Ander.
He points to electricity retailers and ESCOs who are looking at selling a broader range of services. “Electricity retailers should develop services to help customers manage their energy. They have to promote interest around energy management for the consumer. They need to build a business case based on what makes EM interesting for customers.”
He adds that energy efficiency must be placed higher up on the agenda. “It has to be connected to something bigger. This is why it hasn’t taken off yet. Building standards should include plans for energy efficiency measures and management. This should be evident from the outset.”
Mr Törnqvist says that in order to find the best solutions around EMS, it’s important to partner with others. “Encourage innovators and startups into the ecosystem to explore business opportunities and find potential to gain scale. Also, it’s important to work with policymakers and regulators to remove various barriers across the European region. International harmonisation will go a long way towards helping the smart device market grow.”
To gain a better understanding of the EMS market and its growing potential, sign up for the webinar here. Attendees will be given the opportunity at the end of the webinar to ask the presenters questions.