The document discusses the importance of consumer engagement for realizing the full benefits of smart meters and smart grids. It notes that while utilities focus on operational efficiencies through new technology, consumers must also change their energy usage behaviors for consumption-related benefits. To motivate consumers, visibility into energy usage and opportunities for control are needed. Segmenting consumers and providing actionable, personalized information can help drive behavior change through a process of revealing energy habits, reducing usage, and renewing supply through self-generation. Maximizing engagement across utilities, telecom companies, and device makers can help increase awareness and adoption as the energy market transforms.

1. Releasing the full potential of Smart Meters & Smart Grid
Consumer engagement is critical to maximising ROI
Pilgrim Beart, Founder Director, AlertMe
2 Dec 2010

2. Agenda
• Market transformation
• Objectives, opportunity and challenges
• Consumer psychology: Engaging consumers
• Visibility & Engagement
AGENDA
1

3. Market is evolving rapidly
• Energy industry undergoing significant technological change,
driven by
• The need to provide certainty and security of supply
Energy Industry • De-carbonise supply to meet challenging Govt/Regulatory targets
Consumers must
Investing in Smart Metering Capital Cost believe and see that
Efficiency Smart Grid (passed to consumers) there is a tangible
benefit to them
• Investment in smart metering/grid holds
considerable promise
MARKET TRANSFORMATION
Forecasts and Trends
• Operational efficiencies
• Up to 300 million smart meters forecast
• Overhead reduction, timely and globally by 2015
Utilities accurate bills, demand smoothing • Principally in Europe and US
• Almost half to have a HAN
• Consumption efficiencies gateway for in home energy
management
• Changing consumer behaviour • 47 million smart meters in the UK by 2020
or sooner
“60% of the business case for smart meters lies in • 1.5bn ZigBee devices in the home (HEM &
Demand Control) by 2015
operational benefits, 40% consumption related” Source: ONWorld Research
Boston Consulting Group, April 2010 2

4. The Challenge
• Both utilities and consumers play an important role in
delivering smart grid benefits
… the 60% … the 40%
OPERATIONAL EFFICIENCIES CONSUMPTION RELATED
through technology deployment through Consumer engagement
• Building a new communications network • Consumer benefits needed to unlock potential
• Unprecedented access to data • Visibility
• Connecting to customer for first time • Actionable Information
• Increased control over peak demand • Control
MARKET TRANSFORMATION
• Choice
THE CHALLENGE
• To take consumers along in this transformation
• Create a win-win situation
• Those engaging the consumer can expect a valued customer relationship,
in an increasingly competitive and converged world
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5. Delivering consumption side benefits
• Key mechanisms to deliver efficiencies, alleviate peak
demand improve reliability of supply
TIME OF USE TARIFFS DEMAND RESPONSE MICROGENERATION
CONSUMER IMPACT CONSUMER IMPACT CONSUMER IMPACT
• Potentially higher bills • Interference in consumer’s life • Up front cost
• Increased complexity in tariffs and choices - ‘Big Brother’ • Adds further complexity
& bills – confusing • No benefit
CONSUMER POTENTIAL CONSUMER POTENTIAL CONSUMER POTENTIAL
MARKET TRANSFORMATION
• Visibility of tariffs and zones • Involve, engage & reward • Alleviate dependency on the
provides choice customers – opt in, not impose grid
• Opportunity to benefit from • Dynamic engagement at peak • Export as well as generate
lowest tariffs demand times for reward • Visibility of energy generated,
• Alerts at peak crossover, and • Customer automation of used and exported, the P&L for
easy control of appliances to preferences for maximum home energy use
avoid peak pricing benefit and convenience
• Future opportunity for further
• Automation to balance best use integration – EVs/Storage
of tariffs
4

6. Consumer Psychology
• How do consumers think?
Abstract Concrete
Consuming Energy Using a washing machine
CONSUMER PSYCHOLOGY
Motivation - Empowerment = Frustration
Motivation + Empowerment = Action
5

7. Consumer Psychology
Motivation: Money (mainly as a “stick”)
• Energy bills ≈9% of disposable income
• 90% of householders concerned about bills
• Energy bills viewed like mortgage/rent
• Standing charge exactly the wrong model
• Rule of thumb: 1W = £1/year
CONSUMER PSYCHOLOGY
6

8. Consumer Psychology
Motivations: Competition, Collaboration, Reputation
• We are social animals
CONSUMER PSYCHOLOGY
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9. Consumer Psychology: Segmentation
“He who would do good to another, must do it in Minute Particulars.
General Good is the plea of the scoundrel, hypocrite and flatterer”
Blake
Challenges for every segment
• Sociable middle class – community peer pressure
• Children and young adults – education and online
• Social housing – local government
• Home Workers – as extension to CRC
CONSUMER PSYCHOLOGY
Some offer a particular challenges:
• Elderly – ensure they don‟t economise, help with insulation
• Illiterate/Innumerate – non numerical visual representation
• Less well off – help with false economies, helping to budget
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10. Consumer Psychology
What empowers consumers?
• Householders today feel unempowered
• View energy bill as outside their control
• Bring energy costs into the here-and-now
• Associate cost with use
• Cost-per-use
CONSUMER PSYCHOLOGY
9

11. Making energy visible
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12. Analytics: Turning data into actionable information
• Simple intuitive reporting, clear and engaging interface
Partners
In Home
Display
PARTNER INTERACTION
Aggregated data across user base
Demand profiling
ANALYSE Customer profiling for retention
Appliance usage profiles
REPORT
VISIBILITY & ENGAGEMENT
Extract patterns
STORE High level data in a Identify appliance
meaningful way: fingerprints USER INTERACTION
CAPTURE Record data over - Totals Determine appliance Actionable information
time at individual - Averages conditions of use
Data from home level and in - Comparisons Personalised tips
electricity clamp aggregate Engaging dialogue (goals)
or smart meter in
real-time
Most competitors
stop here
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13. A stream of new applications
Live Energy…
Comparative…
Predictive…
Explanatory…
Appliances…
Heating…
Connected Home…
Microgen…
VISIBILITY & ENGAGEMENT
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14. Consumer Partnership
• AlertMe works alongside the utility to benefit consumer through 3 phases of the journey
• Provides visibility, control & automation
• Enabling consumers to reduce energy use, cost and CO2
• Takes consumer on a journey through behaviour change, control and onto self-generation
• Active behaviour change can offset energy price rises
Overall home energy usage and bill over time
“Usage Shock” Possible Net Bill Position
Better tariff
VISIBILITY & ENGAGEMENT
Turn off standby Reductions necessary to offset likely future
Identify consumer energy price rises
appliances Smarter use
using most More efficient appliances
energy
Use
Sustained usage levels “Free” energy contribution - self
appliances
more cost generation (eg. Solar panels)
effectively
REVEAL REDUCE RENEW
(Diagnostics) (Establishing Active Behaviour Change) (Self-Generation)
Stages of Behaviour Change 13

15. Maximising Engagement
• Nascent market with low awareness
• Conserving energy not new, but tangible benefits of „Smart‟ not obvious for consumers and managing energy is not
„front of mind‟
• All companies with large customer bases have potential to deliver maximum awareness and engagement
• Different motivations and challenges for each sector – all sectors have a green agenda
DIRECT • Early adopters • Consumers can take independent control of their energy use
UTILITY TELCO OEM
• External pressure to • Looking to next services– Beyond Connectivity • Seeking to connect the multitude of
meet challenging targets home devices as home gateway
• Home monitoring is next growth phase in online
• Vested interest in services space • Creating a point of differentiation for
changing consumers‟ their equipment
energy use behaviour
• ARPU growth potential
VISIBILITY & ENGAGEMENT
• An explosion of data opens e-commerce opportunities
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16. Conclusions
• Vital to engage Consumers to release full potential of the Smart Grid
• 30% of all energy is used in the home, and it‟s 8-10% of disposable income
• Effect 15-25% reduction in consumption, through visibility & control
• Need to engage & empower customers
• Visibility, control and choice
• Reveal, Reduce, Renew
• Motivated customers create a „pull‟ for services (rather than „push‟)
• Learn lessons from markets where change is imposed or pushed onto
customers
• They will push back!
• Transformation happens when consumers are motivated and
empowered to adopt
• E.g. Broadband adoption and Digital TV Switchover: affordable, self-
CONCLUSIONS
installable, relevant
• Driven via education & awareness (consumers can understand the benefits)
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17. Releasing the full potential of Smart Meters & Smart Grid
Consumer engagement is critical to maximising ROI
Pilgrim Beart, Founder Director, AlertMe
2 Dec 2010