2007 IBM Energy and Utilities Global Residential/Small ... · Reliability and power quality needs • Dependency on reliable power ... • Buyer values for non-energy purchases •

© Copyright IBM Corporation 2007

IBM Institute for Business Value

IBM Global Business Services

2007 IBM Energy and Utilities Global Residential/Small Business Consumer SurveySelected Results

IBM Institute for Business Value

2007 IBM E&U Consumer Survey | 12/12/20072 © Copyright IBM Corporation 2007


� Introduction to the Consumer Survey

� Energy demand demand and spending

� Reliability and power quality needs

� Buyer values and influences

� Competition and consumer choice

� Prospects for self-generation

� Survey demographics

2007 IBM Energy and Utilities Global Residential/Small Business Consumer Survey



The survey’s objective was to get the opinions of households and small businesses in North America, Europe, and Asia-Pac for the 2007 E&U POV

Energy demand and spending• Expected changes in consumption• Expected changes in overall energy costs

Reliability and power quality needs• Dependency on reliable power• Attitudes toward power quality

Buyer values and influences• Buyer values for non-energy purchases • Relative importance of cost, convenience, quality and environmental considerations • Energy usage patterns• Importance of corporate social responsibility and ethics

Competition and consumer choice• Knowledge of and availability of alternative providers• Interest in supplier choice and alternative products• Consumer information security

Prospects for self-generation

Introduction to the Consumer Survey



The twenty-one question survey was targeted for three geographic regions

Sample respondents

1,894 responses from bill-paying households over 18 years of age in six countries – one in North America (United States), three in Europe (Germany, Netherlands, England), and two in Asia-Pac (Japan, Australia)

Questionnaire structure

21 multi-part questions in four languages covering a wide variety of topics including attitudes towards energy and environment, corporate social responsibility and ethics, interest in renewables and other self-generation, and energy costs

The survey was conducted during June-July, 2007.

Note: For the purposes of these results, the terms consumer and customer refer to this set of residential and small business energy users.

Source: 2007 IBM Institute for Business Value Residential/Small Commercial Consumer Survey.

Introduction to the Consumer Survey













Close to one-third of consumers expect their energy use to increase over the next 5 years…

7%

23%

54%

14%

2%

0%

10%

20%

30%

40%

50%

60%

Increase a

great deal

Increase

somewhat

Remain the

same

Decrease

somewhat

Decrease

significantly

How do you expect your energy usage to change over the next five years?

Source: 2007 IBM Institute for Business Value Residential/Small Commercial Consumer Survey; electric customers (n = 1,894).

Energy demand and spending



… but almost 60% expect their energy bills to increase as a result of changes in their usage of power over the next five years

18%

39%

31%

11%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Increase a

Great Deal

Increase

somewhat

Remains the

same

Decrease

somewhat

Decrease

signficantly

What will be the impact of changes to your electric power and / or natural gas usage on you total energy bill?


Energy demand and spending













The growing need for reliable power for health needs in an aging populace will increasingly drive demand for uninterrupted power and quality

Source: UN Department of Economic and Social Affairs, World Population Prospects Population Database: The 2006 Revision

7%

8%

6%

7%

12%

11%

0%

2%

4%

6%

8%

10%

12%

14%

18-24 25-34 35-44 45-54 55-64 64 and

older

Total Utility Consumers with Health-Critical Electric Powered Devices By Age

0

5

10

15

20

25

30

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

North AmericaEuropeAsia

Percentage of Population Aged 60+

In mature economies, senior populations will grow by 50-100% over the next 15-20 years, and their reliance on electrically-powered health equipment will expose utilities to unprecedented risks if power outages are not virtually eliminated

Do you have health-critical electric-powered devices in your home that are required for regular usageby someone in that home?


Reliability and power quality needs



Long outages and frequent voltage fluctuations are the most disruptive to consumers’ day-to-day activities

68%

62%

46%

40%

37%

22% 45%

3%

5%

11%

10%

15%

33%

50%

29%

33%

43%

49%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Long Outages (> 2 hrs.)

Frequent Voltage Fluctuations

Frequent Momentary Outages

Short Outages (< 2 hrs.)

Occasional Voltage Fluctuations

Occasional Momentary Outages

High to Severe Impact Low to Moderate Impact No Impact

How seriously would your daily activities be affected by each of the following types of electric power problems?





To those who know what power quality means, over 90% believe it is important and 30% would pay a premium for it

73%

27%

Knows What "Power Quality" Means

9%

91%

Power Quality Is Important

8%

58%

34%

Would Pay More for Guaranteed Power Quality

Yes

No

Yes

No

Do you know what the term power quality means?

If you answered yes, is power quality important to you?

If power quality is important to you, would you be willing to pay extra for guaranteed power quality?















While the environment is important, cost and quality are still moreimportant considerations for consumers in their choice of products

88%

9%

3%

79%

17%

4%

88%

9%

3%

70%

21%

9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Important Neutral Unimportant

Cost of Product

Convenience

Quality

Environmental Impact

How important are cost, convenience, quality and environmental considerations in your choice of products?


Buyer values and influences



Consumers in the Netherlands put the least emphasis on the environment least in their choice of products and services

79%

73%71% 70%

67%65%

16% 15%

23% 23% 22%

27%

5%

12%

6%8%

10%8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Australia Germany Japan United Kingdom United States Netherlands


Q2R: How important are environmental considerations in your choice of products?





Supplier reputation for cost stability and quality of service are the most important considerations in consumers purchasing decisions

90%

7%3%

88%

9%

3%

77%

16%

7%

75%

17%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Quality of Service

Cost Stability

Ethical Behavior

Good Environmental Actions

How important is a reputation for ethical business behavior, cost stability, good environmental actions, or quality of service in your

purchasing decisions?





Nearly half of consumers pay more for environmentally friendly non-energy products

50% 50%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No

Do you pay more for environmentally friendly products that are non-energy related?





Responses were similar across North America and Europe, but Asia-Pacific respondents did exhibit somewhat higher tendency to “buy green”


61%

52%

47%

45%

45%

43%

39%

48%

53%

55%

55%

57%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Australia

Japan

U.S.

U.K.

United Kingdom

Netherlands

Yes No

Do you pay more for environmentally friendly products that are non-energy related?




While “carbon footprints” and other analyses of personal environmental impact have attracted media attention, almost 80% have not performed one

21%

79%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No

Have you performed any evaluation of the impact of your energy consumption on the environment?





One in three Germans reported having evaluated their personal environmental impact, but only one in seven Americans


34%

25%

22%

19%

18%

14%

66%

75%

78%

81%

82%

86%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Germany

Australia

United Kingdom

Netherlands

Japan

United States

Yes No

Have you performed any evaluation of the impact of your energy consumption on the environment?




Over one-quarter of consumers who have renewable power options available to them purchase them, but most of those who do not have them say they would like the option to do so

31%

46%

33%

0%

20%

40%

60%

80%

100%

Don't Know

No

Yes

27%

73%

0%

20%

40%

60%

80%

100%

65%

24%

11%

0%

20%

40%

60%

80%

100%

Does your electric power provider offer renewable energy sources (such as solar

and wind power) as an option for your household energy use?

If you answered yes, do you purchase power under renewable energy option?

If you did not answer yes, would you like to be able to choose renewable energy

sources?





Over 65% of consumers will pay more for lower greenhouse gas emissions, though most would only accept a very small increase

2%4%

16%

44%

34%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

50 percent or

more

35 percent 20 percent 5 percent Would Not

Pay More

What is the maximum increase in your monthly electric bill you would accept for power that could be definitively shown to have lower emissions of greenhouse gases (and no other unrelated benefits)?





The cost of electricity has a greater impact on when consumers perform their energy-consuming activities than environmental considerations

84%

57%

61%

65%

5%

14%

14%

11%23%

11%

30%

26%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

50% Reduction Off-Peak

10% Reduction Off-Peak

Claims of Positive

Environmental Impact

Demonstrable Positive

Enviromental


How important would each of the following considerations be in any decision you would make to change the times you do your energy-consuming housework (e.g., clothes washing,

dishwashing)?





The cost of electricity has a greater impact on when consumers perform their energy-consuming activities than environmental and peer influence

87%

79%

71%

40%

4%

7%

10%

32%38%

10%

15%

19%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Lower cost of energy

Month cash-back or similar

incentive

Positive Environmental Impact

Friends and Family Believe It is

the Right Thing to Do


If you make decisions to change your energy consumption behaviors at home, how important would each of the following considerations to your decision to make those changes?





Most customers believe strongly that their utilities should be good corporate citizens, but their geographic location is not critical

84%

76%

32%

72%

12%

18%

28%

15%

4%

6%

40%

13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Behave Ethically

Contribute to Community

Corp. HQ near home

Corp. HQ in Country


83% also said that “excellent customer service”was critical

How important is it to you that your utility companies:





Respondents in Australia, and the United States felt strongly that corporate leaders should be domestically located

60%

56%

42%

33%

29%

24%

21%

20%

26%

28%

30%

33%

9%

13%

21%

17%

19%

27%

6%

6%

5%

6%

12%

10%

4%

4%

6%

16%

10%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Australia

United States

United Kingdom

Netherlands

Germany

Japan

Very Important Somewhat Important Neutral Somewhat Unimportant Not important

How important is it to you that your utility companies have their corporate HQ located in your country?





Feelings that utility corporate values matched those of the community varied widely across countries

81%

70%

56%

51%

50%

3%

19%

30%

44%

49%

50%

97%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

United States

Japan

United Kingdom

Netherlands

Germany

Australia

Yes No

Do your utility companies’ values reflect those of the community?















Consumers in the United Kingdom have the greatest choice among electric providers while those in US and Japan are the most limited

83%

63%

61%

56%

16%

12% 56%

8%

13%

21%

13%

16%

32%

31%

9%

24%

17%

68%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

United Kingdom

Australia

Germany

Netherlands

United States

Japan

Yes No Don't Know

Can you currently choose a different electric power provider than you have now?

The United Kingdom appears to have the most competitive industry structure while Japan and the U.S. are the least competitive


Competition and consumer choice



Consumers in the United Kingdom have the greatest choice among natural gas providers but those in US have the most limited choice of suppliers

68%

47%

40%

24%

23%

13% 40%

11%

23%

15%

22%

22%

20%

13%

3%

29%

7%

32%

27%

24%

16%

27%

8%

47%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

United Kingdom

Netherlands

Australia

Japan

Germany

United States

Yes No Don't Know No Natural Gas

Can you currently choose a different natural gas provider than you have now?

The United Kingdom appears to have the most competitive and ‘market’ Natural Gas Utility industry and the U.S. is the least competitive





Most consumers want the option to choose their electric or gas utility provider, but majority either cannot or do not know they can

42%

32%

16%

38%30%

42%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Electricty

Natural Gas

Yes No Don't Know

Can you currently choose a different electric power or natural gas provider

than you have now?

83%

84% 16%

17%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Electricty

Natural Gas

Yes No

If you did not answer yes, would you like to be able to choose your provider?





Utility respondents generally feel uninterested in buying other products/ services from utilities but more than half may be open to the “right offering”

6% 8%

84%

46%

9%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Currently buy non-energy products from utility Interested in buying non-energy products from utility

Yes No Don't Know

Do you use any products or services provided by your electric power or natural gas service provider other than the energy they provide?

Are there other products or services that you could imagine could be provided by your electric power or natural gas service provider which you might be interested in purchasing?





Except in the Netherlands, a strong majority of consumers want their electricity usage information made available to promote competition

96%

82%

72%

72%

70%

49%

4%

18%

28%

28%

30%

51%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Japan

United States

United Kingdom

Australia

Germany

Netherlands

Yes No

Q20. Should your electricity usage information be made available to ALL qualified energy providers to promote greater competition for your business?















Cost is a potentially big driver to small, off-grid generating systems for consumers


62%

57%

32%

21%

22%

31%

18%

20%

37%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Could sell power back to utility

Total cost 50% lower

Total cost 10% lower

Likely Neutral Unlikely

How likely would you be to install, maintain, and operate your own electric power generation system …

If the total cost of electricity were 10% lower than that from your utility?

If the total cost of electricity were 50% lower than that from your utility?

If you could sell power you do not consume back to your utility?

The slightly better reaction to the ability to sell power back versus getting very low cost power may be part of the indication that consumers want to be on a more equal footing with their providers




Some consumer interest exists in small generation for environmental reasons – but primarily if there is no cost premium

46%

27%

31%

25%

23%

47%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Zero Env. Impact/Same Cost

Zero Env. Impact/50% Higher

Cost



If the system had zero impact on the environment and the cost for the electricity from

each source was roughly the same?

If the system had zero impact on the environment and the cost for the electricity from

each source was 50% higher long-term?





Reliability issues may also be a factor in deployment of small power systems by non-industrial electricity users – but again, at low cost

50%

21%

31%

14%

19%

39%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

100% reliability/Same Cost

100% reliability/50% higher cost



If the system had 100% reliability and the cost for the electricity from each source was roughly

the same?

However, there appears to be a solid core of respondents –approximately ¼- for whom 100% reliability is an important factor

If the system had 100% reliability and the cost for the electricity from each source was 50%

higher long-term?















Six countries were represented in the 2300+ responses drawn fromNorth America, Europe, and the Asia-Pacific region

United States &

Canada

43%

United Kingdom

17%

Australia

16%

Germany

12%

Netherlands

6%

Japan

6%

Respondent country of origin

Asia-Pac

22%

Europe

35%

North America

43%

Survey demographics



Responses were distributed well across all age groups, and 82% of respondents had responsibility for paying energy bills

19%

22%

19%

20%

11%

8%

0%

5%

10%

15%

20%

25%

18-24 25-34 35-44 45-54 55-65 Over 65

82%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes No

Age distribution

Responsibility for household energy bills

Survey demographics



The vast majority of respondents live in 3-4 bedroom dwellings or smaller

2%

11%

25%

55%

6%

1%

0%

10%

20%

30%

40%

50%

60%

Single Room/

Small Loft

One

Bedroom

Two

bedrooms

Three - Four

Bedrooms

Five - Six

Bedrooms

More than

Six

Bedrooms

Size of Dwelling

Survey demographics



85% of respondents use electric or natural gas heating systems; a majority have air conditioning as well

26%

11%

22%

26%

3%

6%

1%

1%

1%

2%

0% 5% 10% 15% 20% 25% 30%

Electric Heat/ AC

Electric Heat / No AC

Natural Gas Heat/ AC

Natural Gas Heat / No AC

Oil Heat/ AC

Oil Heat / No AC

Wood/Coal Heat/ AC

Wood/Coal Heat / No AC

No Heat/ AC

No Heat / No AC

Type of Heating / Cooling System in Use

Survey demographics



Over 80% incur an average monthly energy bill of no more than US$250, and approx 40% pay less than US$150 per month

43%

41%

13%

3%

1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Less than $150

$150 - $250

$250- $350

$350 - $500

$500 or more

Monthly Energy Bill

Survey demographics

Documents

2007 IBM Energy and Utilities Global Residential/Small ... · Reliability and power quality needs • Dependency on reliable power ... • Buyer values for non-energy purchases •