The Power of the Energy Consumer

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Market drivers in the home energy management (HEM) space are indicative of any residential energy efficiency market –they pivot on energy efficiency measures and applications affecting the bottom line. Additionally, in the residential energy efficiency space –and more specifically HEM– consumer engagement and the promotion of energy efficiency and demand response (DR) will have to be the driving force in reducing capital expenditures (capex).

Consumer participation even trumps the market accepted differing channel paths that HEM vendors will penetrate while trying to supply more devices and create larger profit margins.

The current market-accepted winning business model to distribute energy information displays (EIDs) is by penetrating a utility’s customer channel into the home. This is the case in North America and even more so in the UK, where EIDs will be offered (in addition to smart meters) by British energy companies. Yet, the most challenging hurdle for the market to overcome –as a Pike Research senior analyst likes to say– will be the EIDs “mean time to drawer,” resulting in non-use of the device.

If consumer behavior does not change, and families do not begin to manage their energy via an EID, then crucial data will never be created, thereby hindering many potentially vital algorithms and tools built around consumer energy data in the future. The quicker the “mean time to drawer,” the higher the possibility that EIDs become vaporware –and the HEM market a “bubble,” as so many have suggested before.

But consumers might start viewing energy and the managing of it much as they do their bank accounts. Here, beyond simply increasing energy efficiency and residential DR for consumer benefits, consumer engagement will also create new revenue streams through increased data production.

The EID –whether consumer advocate groups like it or not– will provide insight to the behavioral and fiscal attributes of residential energy end-users. This data will enable two very powerful groups –advertising agencies and politicians– to make informed business and governing decisions. Where advertisers (i.e. Google) will sell us swimsuits when they glean that we have been heating our pool, legislatures and policy makers will carve out specific carbon pricing and renewable portfolio standards that level the playing field for those most affected: the utility industry, end-users, and the environment.

The result of increased energy efficiency and demand response in the residential sector has far-reaching implications through periphery benefits and the trickledown effect, also. One such case is lower customer service costs for utilities, which will force the hand of the regional public utility commission (PUC) to lower rates.

Customer service is one of the highest operational expenditure line-items on a utility’s balance sheet. This cost will be driven down because utility call-centers will be in lower demand. Rather than call the utility, consumers will have the power of information at their fingertips be it information about energy usage, basic FAQs, online databases or chat assistance over the internet.

Jevan Fox is a research analyst contributing to Pike Research’s smart energy practice.

Article appearing courtesy Matter Network.

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