Energy Awarenessin the U.S. and Europe – How to connect with customers on both sides of the Atlantic? - Interviewing Michaela Ballek part two

"The market in Europe is certainly different, and different social norms and behaviours have to be taken in to account."

European utilities have often remained disconnected from their customers. Customers were considered black boxes with a certain annual electricity consumption for a long time. In many European countries, utilities are rather regarded with suspicion and the rollout of Smart Meters is often perceived as an intrusion into people’s privacy. Do you think a model like Opower could work here as well and even help to overcome specifically European biases against Smart Grids?
Yes, the market in Europe is certainly different, and different social norms and behaviours have to be taken in to account. But some of the Opower services are interesting for Europe as well.
Curiously, even though Opower’s success in the US is not based on utilities competing with each other, it turns out that this fact is helping Opower to gain traction in Europe. Even though utilities have been deregulated in most (or all?) European countries, most of the newcomers’ market share has been achieved by aggressive pricing and marketing rather than good customer relationships.
With good and individualized customer service – for the most part non-existent at utilities so far – they have the opportunity to avoid costly churn and potentially gain market share. This customer relationship can and has been built with Opower-style reports, particularly in countries where smart meters are already installed in a larger amount.
But even in Germany, for example, where smart meters are still rare, and data security issues are preventing a speedy roll-out, there are ways to work with customer data – for example by voluntary self-reporting. BEN Energy, for example, has shown this already quite successfully. I could imagine that customers of smaller regional utilities, or utilities only selling renewable energy, would be quite willing to enter their data online if they see an upside, such as just saving energy, or receiving rebates. The resulting customer relationship would likely be quite strong, result in lower churn rates, and higher amounts of customer recommendations thus potentially increased market share – which in turn would get noticed by larger utilities for sure.
A good customer relationship could of course also be achieved by other means – but transparent and timely information is always relevant, as well as a comprehensible, manageable number of options to choose from.
In addition, a well-working smart grid creating a high level of energy efficiency is absolutely necessary for achieving the German (and European) goals of including higher and higher amounts of renewable energy in the energy mix.
Could one deduce that on a European level, relatively aware customers meet a supply side that is still lagging behind tapping the potential of those customers, whereas in the U.S., regulators, policy makers and utilities have realised that things have to change, whereas larger segments of society still have to be encouraged to become aware and active at all?
It is difficult to generalize this, but case studies, facts and personal experiences do point to a similar conclusion, with exceptions in both European utilities and U.S. customer segments.
However, both in Europe and in the U.S., one issue in smart grid projects is in common: Where rollouts were not mandatory, it was time-consuming to recruit customers to participate in these projects. As in many European trials, in U.S. projects, either target participation numbers were decreased and budgets increased.
Interestingly, although there are probably quite a few smart grid-related research trials in the U.S., it seems like there is a higher emphasis on commercial projects, for example on demand response. These are usually initiated by utilities, in cooperation with software companies or similar. Often, they have a very limited project focus but are based on a large number of households. The expectation is to successfully reach measurable goals of let’s say, savings through actual demand response on heavy load days or less energy consumption.
An exchange about learnings and conclusions from smart grid projects would be very valuable for both sides and should be encouraged.
What, in your opinion, could American utilities learn from their European counterparts?
For the most part, utilities and cleantech companies don’t generally seem to be interested in learning from European organizations. But in my opinion they should be.
One of the major goals of the introduction of smart grids is the U.S. is to increase the security of supply in the entire country. Many regions are suffering from power outages, not only under extreme weather conditions. Many European utilities, however, have built and optimized a more reliable system that could serve as a role model.
Even though customer communication has not been one of the European utilities’ strongholds so far, their quality of service is generally quite high. The education of their staff, especially their technical employees, is quite high and guarantees a high level of security of supply. In addition, in the U.S., it seems like troubleshooting is generally more time consuming and often could be organized more efficiently.
Beyond Opower, are there any new businesses emerging in the field of smart grids in the U.S. in general, or in the Silicon Valley in particular?
There are still many companies emerging and growing in the Silicon Valley and elsewhere that are built around big data, cloud computing and SaaS (Software as a Service). Some of them are indeed engaged around the smart grid and energy efficiency. One of the buzzwords I keep hearing is "intelligent efficiency” that means the intelligent application of technology toward energy efficiency, leading to cost savings.
For example C3 Energy, a company with currently about 120 employees and growing, specifically offers smart grid analytics across the entire value chain of energy creation, distribution and consumption. They integrate data from disparate sources and analyze them for (potential) failures, efficiencies, demand response opportunities and consumer behavior. I think they are a company to watch.
Also, there are quite a few companies targeting commercial customers directly, such as EnerNoc, selling energy management software. Energy efficiency and therefore monetary savings is a big selling point. In addition, other companies such as MyMeter or Tendril are selling energy management software to utilities – again, cost savings being the main sales argument.
As Americans are generally more technophile than many Europeans, and not much concerned about data security issues, cleantech companies are being founded all over the place, and some are becoming successful rather rapidly. It is not as difficult as it is in Europe to convince US customers to use new technology. New technologies are considered as being fun and interesting, thus gadgets and apps can serve as a greater incentive for many, rather than being considered a "green” or environmentally aware person. In fact, the gamification approach and excitability leading to active engagement, that the S3C project has found, is relevant for the U.S. and Europe alike.
Part one of the interview with Michaela Ballek: "Energy Awarenessin the U.S. and Europe – How to connect with customers on both sides of the Atlantic?"
 
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© THE S3C CONSORTIUM 2013