(Too long) Christophe_Dromacque_VaasaETT_Empower_Demand

Empower Demand

Potential of residential Demand Response and smarter homes: some

answers from a mass pilot comparison

Christophe Dromacque Market Analyst Smart Power Europe 2011 8th November 2011 - Copenhagen

Agenda

Who we are and what we do

Background on residential Demand Response

Design and goal

Overall results

Example of a successful pilot turned into an offering

Conclusions

The Empower Demand project

VaasaETT Global Energy Think Tank Who we are A leading independent strategic think-tank for the Global Energy Industry, based on a highly collaborative network of thousands of senior executives, officials, researchers and other experts.

Our Key Focus Marketing and Competition

Customer Psychology, Behaviour, Loyalty & Value Market Structures, Drivers & Requirements Smart Energy Demand Innovations, New Offerings & Visions

Recent clients include: EDF, Microsoft, Duke Energy, NPower (RWE), ADEME, World Energy Council British Gas, BC Hydro, European Commission, E.ON, Panasonic, Central Research Institute of the Electric Power Industry of Japan, Aurora Energy, Bordgais Energy, Dong, ESMIG, Union Fenosa - Gas Natural, Capgemini, Israel Electric, E-Control, NordREG


VaasaETT Global Energy Think Tank What we do

Public research projects

Collaborative multi-client research


VaasaETT Global Energy Think Tank What we do

Founding member of the Smart Energy Demand Coalition

Exclusive round-tables Business facilitation


Residential Demand Response

Background

By 2020

• 238,000,000 smart meters deployed in Europe

• € 40,000,000,000 investment

• Households will partly foot the bill

Background

Creates many opportunities…

SM/SG

New energy related services and new offers

Lower overall consumption

Lower consumption at peak times

Lower energy bills

Businesses Businesses Customers+Utilities

Background

Creates many opportunities…

SM/SG

New energy related services and new offers

Lower overall consumption

Lower consumption at peak times

Lower energy bills

Businesses Businesses Customers+Utilities

Background

…and raises many questions

• How to achieve this? • By how much? • For how much? • Will customer be interested? • How do different factors

influence customers’ response and interact with one another?

• How to reach different customer groups?

• How can technology help?

Background

Empower Demand research project

Mass pilot comparison

• 100 pilots worldwide

• 460 sample groups

• 450,000+ residential participants

• Over 60% of pilots organized after 2000 and 45% after 2005

• Results measured: peak clipping, electricity conservation and financial savings

Project funded by ESMIG

Empower Demand project

Pilots we looked at


Feedback Pilots

In-house displays

Ambient displays

Website

Informative bills


Display, Electricity Smart Metering Customer Behaviour Trials, Ireland

The Energy Orb, PG&E O’POWER

O’POWER

Dynamic Pricing Pilots

Time-Of-Use (TOU)

Critical Peak Pricing (CPP) / Critical Peak Rebate (CPR)

Real Time Pricing (RTP)

Can be combined


ePowerment

Home automation systems (if coupled with dynamic pricing and/or feedback)

• From “simple” automation of water boilers controlled by the Utility to full range automation of home appliances coupled with smart thermostats and dynamic electricity prices

Empower Demand project Home Area Network IJENKO

Influence and interaction of key variables on pilot success • Climate/season of peak • Regional differences • Duration of pilots • Automated source of load • Education of participants • Methods of communication for pricing alerts • Frequency of feedback • Feedback channel • Content of feedback • Pricing and feedback combined • Type of feedback • Interaction before and during pilot • Length of peak hour tariffs • Multiple of peak price of base price • Sample size • Pilot uptake rates • Consumption levels • Market competition levels • Capacity issues within Market • Participant segmentation


Pure Feedback Pilots Results

Reduction in overall energy consumption (in %)

4 %

6 %

8 %

11 %

0 % 2 % 4 % 6 % 8 % 10 % 12 %

Webpage

Informative Bill

IHD

Ambient Display

Energy Conservation (%)


VaasaETT, 2011

Dynamic Pricing Pilots Results

Energy consumption reduction at peak times (in %)

16 %

12 % 12 %

5 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

Critical Peak Pricing Critical Peak Rebate Real-Time-Pricing Time-Of-Use

Peak

Clip

ping

(%)

Without automation


VaasaETT, 2011

The added value of automated sources of load

31 %

20 %

16 %

9 %

16 %

12 %

5 %

12 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

Critical Peak Pricing Critical Peak Rebate Time-Of-Use Real-Time-Pricing

Pea

k C

lip

pin

g (%

)

With automation Without automation

Energy consumption reduction at peak times (in %)

+ 100%

+ 61%

+ 215%


VaasaETT, 2011

What was automated?

CPP/CPR: Energy consumption reduction at peak times (in %)

The more the better

37 %

34 %

28 %

24 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

40 %

Temperature/Water heater/Home

appliances

AC/Home appliances Temperature AC

Pea

k C

lipp

ing

(%)

Automated Load

4 most common cases


VaasaETT, 2011

What can successful pilots turn into?

Gulf Power of Florida: Energy Select • Successful pilot conducted in 1991 - 1994

• The company started marketing the program to customers in March 2000

• All major sources of load can be automated (air-conditioning, electric

heating, spa, pool pumps, heat pumps and electric water heater)

• Customer controlled thermostat coupled to TOU and CPP prices. The settings could be programmed directly from the thermostat or from a secured webpage.

• Gulf Power expects approximately 10% to 12% of its residential customers to eventually sign up for the RSVP price structure.

Example of a successful pilot

Main Marketing Messages


You are in control


Source: www.gulfpower.com

Convenience / ease to use



Comfort



Save money/ lower your bill



Help protect the environment



• Results from summer 2002:

Average energy reduction = 22% during high price period (TOU)

Average energy reduction = 41% during critical period (CPP)

Customer satisfaction = 95%, highest ever for Gulf Power program


Did I mention it’s 100% free for the customer?


How does that apply to much colder Europe?

CPP/CPR: Energy consumption reduction at peak times (in %)

32 %

15 %

30 %

18 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

With automation Without automation With automation Without automation

Summer Winter

Pea

k C

lip

pin

g (%

)


VaasaETT, 2011

Main conclusions of the research

Don’t forget your customers

Conclusions

Know your customers

• Different customers will respond to different incentives, different messages, prefer different channels of communication

Factors rarely taken into account PRIOR to pilots:

Participant age, income, education etc…

Participant environment (how many people in the house, are their children?, teenagers?)

Conclusions

Communicate with your customers

• Timely, relevant and appropriate messages lead to successful programs

• Impact: Overall, participant to TOU pilots who were not provided with feedback did not save electricity. Those who were saved 4%

Reduction at peak hours is 40% higher when participants are provided with feedbacks

Conclusions

“Educate” your customers

• How to take advantage from information on energy consumption or dynamic pricing is not obvious • Impact: Overall, participant to TOU pilots who were not properly “educated” as to how to benefit the most from TOU prices did not save electricity. Those who were saved 4% • In TOU, reductions at peak hours were 50% higher when they were “educated” • In CPP/CPR pilots, reductions at critical peak hours were 23% higher

Conclusions

Empower your customers

• No significant differences in results when appliances are controlled by Utilities and when they are controlled by participants. People tend to choose the “thrifty” profile

• If you want to automate every day life appliances; to avoid suspicion and backlash, you have to give your customers control over how and if they want their appliances to respond to peak prices

Conclusions

One step at a time

• Consumer knowledge when starting a program is low,

however this changes and knowledge increases over time. Full scale packages need not be offered at first. Services and complexity may be added step by step or added to a basic package

Conclusions

Create a win-win situation

• It is not necessary to provide all services to all customers in a

market if only a few will benefit and/or are willing to pay

Conclusions

Thank you for your attention!

Christophe Dromacque [email protected] Smart Power Europe 2011

For more information about the Global Energy Think Tank or to download the full “Empower Demand” report please visit our website at:

www.vaasaett.com

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