Smart grids don’t come cheap.
They are typically projects costing in the order of hundreds of millions of dollars (or Euro’s, or pounds or whatever your currency of choice). Just think, the most fundamental piece of the smart grid, the smart meter, alone costs in the order of $100. When you factor in the costs of installation, etc., you are looking at over $200 per smart meter. Therefore if you have in the order of one million customers it’s going to cost you around $200m just for the smart meter rollout.
Given that they are so costly to implement, you’d think utility companies would do everything possible to protect these projects from failure – not so, according to the latest smart grid research from Oracle.
The report from Oracle surveyed 150 North American C-level utility executives about their vision and priorities for smart grids over the next ten years. The findings are both interesting and disturbing.
It is interesting but not too surprising for example, that when asked to select their top two smart grid priorities over the next 10 years, they chose improving service reliability (45%) and implementing smart metering (41%) at the top of the list.
What is worrying though is that while 71% of utilities say securing customer buy-in is key to successful smart grid roll-outs, only 43% say they are educating their customers on the value proposition of smart grids. This is hugely problematic because, as I have written about previously, customer push-back can go a long way to de-railing smart grid projects.
And those who are educating their customers, how are they doing it?
Well, from the report, to communicate with their customers 76% of utilities use postal communications, and 72% use their own website. Only 20% use social media (and who knows how well those 20% are using their social media channels).
Tellingly, the report also mentions that only 38% of utility customers take advantage of energy conservation programs when they are made available. There are a number of reasons for this:
- the savings from these programs often require work on the part of the customer for no immediately visible benefit
- the savings are typically small (or put another way, energy is still too cheap) and
- Because of the extremely poor job utility companies have done on communications to-date, their customers don’t trust them, or their motivations. There is no quick fix for this. It will take time and a significant improvement in how utility companies converse with their customers before they start to be trusted
I have written lots of times over the years about the need for utilities to improve their communications.
Utilities have a lot of work to do rolling out their smart grids – but if they don’t step up their customer communications, they risk their considerable smart grid investments.
Photo credit Tom Raftery
Hi Tom, this blog really touched a few nerves with me. I’m going to bullet point this, so that I don’t become too long winded 🙂
– Communications Enabled Business Processes (CEBP) is when you use communications such as email, sms, voice, and now social media, in a way that helps a process complete more effectively. Often this means “faster” by removing such issues as “human latency” which is a fancy way of saying, we don’t tend to do things quickly. That utility bill sitting on the kitchen table is a prime example of a latency. As long as that bill is on the table, the customer is not responding to the request to deal with the bill.
– Many Utility companies can use CEBP to get very specific jobs done. For instance, getting to an accurate and timely meter reading. Sure their are places where the rate of automated meter reading capture is high, but just up the road, there are old fashioned meters, that have to be read. So how do you organise to have those readings taken? (1) Meter reader goes around the houses and asks to read the meter (2) Customers are phoned and asked to read it back to the call center agent. (3) Customers can SMS their reading to a short code “Meter” (4) Customers go online and enter it via web. Point is, Utilities are only starting to see that the full job here is to use ALL modes, in a coordinated way, to get accurate and timely readings.
– So instead of the Utility being an infrastructure “with customers attached”, the utility needs customers to move from being completely passive, to being active co-creators of service. The simple act of texting in your meter reading requires your co-operation. Sure, the utility can prompt you with an outbound SMS, but the Utility still needs you to be co-creating, co-reporting, co-exploring how you use energy.
– Co-creation, Social Media, Seamless Communications are all on a continuum from a customer service point of view. Often we just want our interaction to be “painless, almost invisible”. We’ve all being lost in an inbound IVR menu at some stage, and then finally, we reach the right dept, and we’re put on a ten minute hold. That’s not invisible, and that’s not painless, and we hate or Utilities for doing it to us (I think of this as Utilities externalising the total cost of waiting to its customers). At the other end of the spectrum how many utilities are using social media, and co-creation principles in new ways to enable communities to engage with the objectives of smart grid initiatives?
– Before this gets lost in some kind of social media utopia why don’t you give yourself a scare, and go online, and find “how much it costs global utilities to send letters to it’s customers”. Hell, break it down again, “how much does it cost to send paper bills to utility customers”? There’s a lot of money to be saved out there by just communicating the simple things, simply.
Hi Tom,
One thing that comes to my mind is that when I get my utility bills, the primary instruction I receive is to pay the bill.
The homeowner lacks feedback on individual equipment performance, energy leaks or ways to conserve.
Indirect feedback such as monthly utility bills can show trends over time and how heating or cooling is spread throughout the year. Utility bills can also be used to compare the present period with the previous year to determine fluctuations due to new occupants, extreme weather or equipment upgrades.
Nevertheless, the use of direct debiting for making payments implies many miss out from receiving this critical feedback.
As well as communicating with customers, the *kind* of feedback information is critical to get the message across. This just isn’t computing very well for your average household.
There are also deep security problems to consider, as nefarious control of smart meters could potentially destabilise the whole grid. There are also deep questions of data quality – how can you be absolutely certain you don’t cut off the wrong customer by remote control. Then there are questions about variable charging. Can the necessary savings really be obtained? Customers will need a lot more information in order to actually take advantage of the savings that smart meters might bring. Customers will certainly resist signing up to pay double the price for peak hour electricity. They just won’t want to change their behaviour.
These are deep questions that telcos have been working on for years and years (although in a less sensitive context). Power companies are only looking at these issues for the very first time now.