A recent article in the U.K.’s Guardian newspaper leads with the headline “Why smart meters could make power firms richer.” It’s a speculative piece with many assumptions about what regulators will allow (like, selling your electricity information to the highest bidder without your consent) -- but even though it is mostly devoid of facts, it taps into a sentiment that is not limited to Bakersfield, Calif. when it comes to smart meters and smart grid.
Smart grid projects and smart meters have faced considerable resistance from a small but noisy group of concerned citizens from Germany to Texas. In Europe, which will have an estimated 206 million smart meters by 2020, the concerns vary by country but tend to be more centered around privacy, whereas in the U.S., the anger and confusion is around higher bills and health concerns.
Although the flavors vary by region, the overall impact is the same. GTM Research’s latest report, The Smart Grid in Europe 2012-2016: Technologies, Market Forecasts and Utility Profiles, shows that having an energy-conscious population does not ensure that smart grid technologies (especially smart meters) will automatically be a success. Like the shift in the past six to 12 months in the U.S., “regulators in Europe have figured out that it’s not about the technology,” said the study’s author, Geert-Jan van der Zanden. “It’s about the information that consumers are getting.”
Consumer awareness and education are as much of a hurdle in most European countries as they are in the U.S. Nobody likes their utility (or not many, at best). At The Networked Grid conference earlier this year, Nick Hunn, Development Director of Onzo, a U.K.-based company that provides customer solutions to utilities, said he hears one message when he talks to consumers. “The first thing they say is they don’t trust the utility, the second thing they say is they don’t trust the utility, and then the third thing they say is they don’t trust the utility.” The sentiment is not surprising, especially in the U.K., where the major utilities have hiked prices about 10 percent in the past year alone.
That sentiment is shared by some in Germany, where there are concerns over the rightful ownership of smart meter data. Ditto in the Netherlands, says van der Zanden, where privacy issues forced the government to change a planned smart meter deployment from mandatory to voluntary.
The backlash has led to a more tailored message about smart grid technologies for some European consumers. The Netherlands has television commercials touting the new options that people have in terms of electricity providers and the technologies they offer. The deregulation in many European countries means that companies vying for market share can potentially tailor smart grid offerings that will benefit their customers and increase retention rates (as many U.K. providers are doing by offering AlertMe, OPower, Onzo and other energy management programs). Denmark’s SEAS-NVE trained smart meter installers in how to talk to customers in their homes, which dropped the utility’s complaint rates and increased consumer savings.
And the potential savings are huge. GTM Research’s European report found that, depending on the level of response to consumption feedback and incentives, up to €18.2 billion (US$26.2 billion) can be saved annually on power bills.
And while everyone likes saving money -- the message to customers in Europe can be tailored differently than in the U.S. IBM’s 2011 Global Utility Consumer Survey found that more than half of the respondents from the U.K. are interested in trying different ways to save energy if it means helping the reliability and future economic health of their nation, according to Michael Valocchi, Vice President, Global Energy & Utilities Industry Leader for IBM Global Business Services. The European population has a high awareness of energy issues and energy independence, and so many people polled said they would try different things to decrease their energy use if it meant being less dependent on foreign sources.
The messenger also matters more than utilities might think. While Dutch companies may be putting out commercials and EDF is educating French consumers, the IBM survey found that the internet, traditional media and opinions of friends collectively outweighed the influence of information coming directly from the utility.
“We keep using the word 'education,' but one of the things we saw from the survey and the behavioral economics [is that] it is about the availability and type of the information,” said Valocchi. “Giving consumers too much information or too much education could be detrimental.”
The Guardian report is particularly concerned with time-of-use pricing schemes hurting the average consumer, as well as the possibility that they will be particularly detrimental to the elderly and low-income populations. But research shows that this fear has not been borne out in many time-of-use pilots, such as PowerCentsDC. The concerns, however, are valid -- and need to be combated with accurate information and ample regulation to protect the most vulnerable.
Despite the hurdles, well-crafted smart grid plans and tailored education initiatives can be a win for customers in Europe and the U.S. IBM found that more than 50 percent of consumers worldwide expected that smart grid technologies and smart meters will help foster development of clean energy and benefit their families. “Consumers are understanding the bigger picture,” said Valocchi. “I think that’s a promising finding.”