What did we learn from European Utility Week 2017 in Amsterdam It was a really big event Here are some statistics about it: 12,000 + attendees 100 + countries 500 + utilities and grid operators 600 + exhibitors 550 speakers The future is here There is so much going on in the energy field today and all the companies who participated in the exhibition proved it. MClimate’s booth became very popular and we were excited to showcase our new products: Vicki and Bobbie. We were amazed to meet people from all around the world: USA, Portugal, Spain, France, Sweden, Australia, New Zealand, Côte d'Ivoire, Croatia, United Arab Emirates, etc. We talked to utility experts from E.ON, Enel, Regaz, Enedis, Duferco Energia, EDP, Igdas, SEWA (Sharjah Electricity & Water Authority), EDF, etc and found that most of the utilities have already started the energy revolution with their businesses. We met energy trading companies that have implemented smart home devices in their customers’ offers. We discussed demand response opportunities for residential with companies who have already started pilot projects to balance the grid with interactive devices. All of the experts we talked to proved that customers are the main focus of energy companies today. We learned more about different customer engagement program for boosting energy efficiency. Energy business is not boring If you think that energy business is done by middle-aged old-fashioned engineers you are wrong. During the exhibition, we met many young people (not only males but a significant number of females which proves that energy business is not a male territory) representatives of utility companies who were very knowledgeable and experienced. We learned about many ongoing projects in the energy field that apply innovative technologies like blockchain. Challenges for energy companies During the exhibition, it was proved that the “smart home concept” is not anything revolutionary for utilities. Not anymore. It is an ongoing topic for energy companies. The market of smart home devices is already competitive and we could see this from the other exhibiting companies: Nest, Tiko, Hive, Develco, Fifthplay, etc. Energy companies have already assessed all the benefits they can get through smart home devices and they are deploying smart home technologies in their businesses. However, all these devices that are becoming part of people’s lives raise new questions. What to do with the collected behavioral data? How energy companies can benefit from household’s data for consumption, savings, what temperature people like or when they are at home. Big data concerning customers might be a gold mine for energy companies and they need to figure out how to take most of it. Big thanks to Andy Bradley who featured MClimate in one of the industry's top blogs Delta EE: "We were fascinated to meet this Bulgarian start-up, MClimate, who seems to have a bunch of talented young people!" Read his article "EUW 2017 - The hot topics" here!
How Utility Companies Can Benefit From Smart Home Devices
The rise of the renewable source connected to the grid, the development of distributed energy resource (DER) solutions, energy markets deregulation, technology innovations, new customers’ behavior, etc. are changing the traditional business model of electric utilities.
Electricity demand is slowing down
According to Eurostat report in the between 2004 and 2014 household electricity consumption fell by 1,3 % in all EU-28 countries. There was a great reduction in Belgium (almost 29%), Sweden and UK (more than 10%). The trend of decreasing electricity demand has been observed in Germany since 2011 too. Total electricity demand in U.S.A. is projected to keep slowing down between 2016 and 2040 according to Annual Energy Outlook 2017. The reasons for this trend are different but the most important are: regulatory energy efficiency measures, as well as innovative household devices (e.g. smart home solutions) and new appliance standards.
DER solutions and independent communities
There is a growing number of energy communities in the USA which are considered to be “green power communities” – cities, villages or counties in which the local government, business, and residents collectively use green power. The European Federation of renewable energy cooperative -REScoop.eu has already a member network of 1,250 renewable co-operatives and their 650,000 citizens.
Energy efficiency policies help households save money on energy bills
EU is in the process of updating its Energy Efficiency Directive which purpose is to set 30% energy efficiency target by 2030. The reports show that energy intensity in EU industry decreased by 16 % between 2005 and 2014. In the meanwhile European households are expected to save almost 465 euros annually from electricity bills due to more efficient appliances.
Electric utilities experience customer behavioral changes. According to the latest Accenture’s (https://www.accenture.com/us-en/insight-new-energy-consumer-thriving-new-retail-ecosystem) Energy Consumer Research:
- 82 % from interviewed customers would be more satisfied if offered an in-home system that automatically limits electricity usage at peak periods.
- 79% percent would be more satisfied if offered an in-home device providing energy usage feedback and suggesting customized products and services.
- 61 % would sign up for an app that can remotely monitor and control home elements
Due to new technologies and connected renewables, the grid is turning from a “wire for electricity” to a platform with connected devices, prosumers, smart meters, electric vehicles. Data collection and analytics, smart and interconnected devices will allow advanced energy management and smarter energy use, reducing utilities’ kWh sales even further.
The “utility death spiral”
All these factors are just a part of the big picture of the energy revolution that is going on. Peter Klein calls them “disruptive challenges”. When grid costs go up while in the same time capital costs for renewables go down, more customers are willing to be energy self-supplied. This leads to higher grid costs for the remaining customers who will have the reason to also leave the grid. In the meanwhile assets’ maintenance costs are a permanent part of the utility budget. This repetitive process is called the “utility death spiral”
In order to escape from the utility death spiral, traditional electric utilities need to adopt new business models and go out of the box. Smart home devices offer differеnt ways for saving utilities operational costs or improving customers’ engagement. Here are some examples:
- Demand response: Smart thermostats like Nest or devices like Bobbie help utility companies to develop demand response programs and shave the peaks, as well as lower the costs for balancing the grid.
- Customer behavior tracking: through smart home devices utilities can collect ” behind -the- meter” data about their customers’ behavior at home and develop personalized tariffs and energy engagement programs.
- Sales business opportunities: already many utilities are selling third party’s smart devices and products to their customers and thus generate additional revenues, e.g Italian multi-utility Estra, San Diego Gas and Electric, Scotish utility, etc.