Consumer engagement in the future electricity system

Background and context

Our team addresses several technical, economic and social issues relating to the smart power system and market developments. Our aim is to aid and inform the strategic decisions of Member States and European Institutions on security of supply, competitiveness and sustainability issues linked to the electricity system transformation. Our studies mainly contribute to the scientific support provided by the JRC to the policy decision making process in the context of the EU energy and climate change policies.

The search for innovative regulatory, technical and market solutions – such as anticipating the consumers' patterns and preferences or installing Advanced Metering Infrastructure – to change the way consumers perceive commodity electricity is on the increase. However, many energy providers still need to further examine the best ways to present information on smart grids to the consumer, and to advance the development of social marketing strategies in which information is tailored to the needs, wants, and perceived barriers of individual segments of population.

The current smart grid engagement strategies strongly focus on the residential sector and distribution system operators take a leading role. Indeed, the latter are very interested in enhancing flexibility and improving the customers' responsiveness through energy efficiency projects or dynamic pricing (the price is adapted to real-time demand and supply) as they are faced with the challenge of integrating increasing shares of variable renewable energy sources into the electricity network, while at the same time ensuring the security of the system.

As most of the obstacles to consumer engagement have to do with a high-level of consumer skepticism and wariness, the key to successful strategies for consumer engagement lies in building trust and confidence among consumers. The continuous work of the JRC on consumer engagement activities related to smart grids will enable knowledge-sharing and the dissemination of best practices among smart grid stakeholders, contributing to faster inclusion of consumers. A non-exhaustive list of our activities and products is reported below (additional ones will be added once completed).

 

2017 - An agent-based model of electricity consumer: smart metering policy implications in Europe

This paper discusses results from an agent-based model is developed, where the electricity consumer behaviour due to different smart metering policies is simulated. EU Regulation 2009/72/EC concerning common rules for internal market in electricity calls upon 80% of EU electricity consumers to be equipped with smart metering systems by 2020, provided that a positive economic assessment of all long-term costs and benefits to the market and the individual consumer is guaranteed. Understanding the impact that smart metering systems may have on the electricity stakeholders (consumers, distribution system operators, energy suppliers and the society at large) is important for faster and effective deployment of such systems and of the innovative services they offer. Consumers are modelled as household agents having dynamic preferences on types of electricity contracts offered by the supplier. Development of preferences depends on personal values, memory and attitudes, as well as the degree of interaction in a social network structure. We are interested in exploring possible diffusion rates of smart metering enabled services under different policy interventions and the impact of this technological diffusion on individual and societal performance indicators. In four simulation experiments and three intervention policies we observe the diffusion of energy services and individual and societal performance indicators (electricity savings, CO2 emissions savings, social welfare, consumers’ comfort change), as well as consumers’ satisfaction. From these results and based on expert validation, we conclude that providing the consumer with more options does not necessarily lead to higher consumer’s satisfaction, or better societal performance. A good policy should be centred on effective ways to tackle consumers concerns.

2016 - Evolving role of distribution system operator in end user engagement

This paper discusses the evolving role of the distribution system operators towards end user engagement approaches and strategies. The European Commission communication on delivering a new deal for energy consumers places the citizens at the centre of the Energy Union, "where they take ownership of the energy transition, benefit from new technologies to reduce their bills, participate actively in the market, and where vulnerable consumers are protected". Smart metering infrastructure is an enabling technology towards consumer empowerment, allowing for consumers' active participation in the energy market and promoting system flexibility through demand response schemes and other innovative services. It is the consumer’s use of the smart metering systems however - and not the infrastructure in itself - that will improve system efficiency and ultimately lead to energy savings. In this context, the present paper will provide an overview of some surveys carried out at European level to help shedding light on which attitudes, preferences and concerns drive the consumption behaviour of European consumers and influence their engagement with new smart grid technologies. These insights will be taken into account to analyse the distribution system operator's (DSO) position in the future development of local distribution grids and energy related services. In particular, the role of technology acceptance and consumer engagement with the new technologies and solutions will be highlighted. Finally, conclusions on the need to further investigate different solutions, putting consumers at centre stage of their development, will be drawn.

2016 - Exploring Community-Oriented Approaches in Demand Side Management Projects in Europe

This paper seeks to investigate if the theoretical and political trends towards a more collective dimension of energy use are reflected in the design and development of demand side management (DSM) pilot projects in Europe. Specifically, the paper analyses DSM projects in the database of the JRC to capture signs of a new attention towards the wider context in which consumers live and towards the social dimension associated with energy consumption. To this end, the paper investigates the projects’ scope (in terms of project’s partners, end-use sectors and targeted services) as well as the consumer engagement strategies that projects use.

These elements reflect the projects’ consideration for the socio-economic dimension of the community where the pilots take place and their inclination to build on community dynamics. The analysis shows that DSM projects in the EU are increasingly being designed and developed with a collegial approach to energy consumption in mind, although an integrated approach is still missing. In addition, research is still needed to link the use of this innovative approach to project results. A closer look at the developments and results of these projects can help to identify what works and what doesn’t in real life experiences, thus supporting effective policy making at the EU and national level.

2014 - Consumer and Community in the Future Electricity Network: an Insight from Smart Grid Projects in Europe

Integration of growing shares of renewable energy sources into the electricity networks have resulted in the need for electricity network upgrade through pervasive deployment of information and communication technologies. Having power sources close to the consumer premises and exploiting the potential of smart metering infrastructure may lead to consumers’ empowerment and energy savings. Therefore, the consumer should be approached with clear engagement strategies in the early stages of the technological system development. The analysis of European smart grid projects points to an increasing interest in consumers and communities as focal players for the success of the future electricity system. This necessitates characterization of the consumer as well as the community from what concerns values, beliefs and goals that are culturally and geographically located. In this context, this contribution presents and discusses some EU smart grid projects with a focus on consumers and on their interactions within the community. The abstract also demonstrates successful consumers’ engagement strategies in large-scale deployment of smart metering systems at national level, highlighting the need to address social needs and concerns at an early stage of the technological system development.

2013 - Consumer engagement: An insight from smart grid projects in Europe

This paper provides an insight into consumer engagement in smart grid projects in Europe. Projects analysed are those included in the catalogue annexed in the JRC Report "Smart Grid projects in Europe: lessons learned and current developments”. The analysis suggests an increase in the interest in consumer engagement projects at European level and a strong focus on the residential sector, and emphasizes the key importance of public funding to support these projects.

The study also reveals that projects involving consumers are characterized by the pursuit of two main objectives: gaining deeper knowledge of consumer behaviour (observing and understanding the consumer) and motivating and empowering consumers to become active energy customers (engaging the consumer). The paper reviews the main activities undertaken to obtain these objectives and highlights trends and developments in the field. Finally, the paper discusses obstacles to consumer engagement and the strategies adopted by the projects surveyed to tackle them, highlighting the need to build consumer trust and to design targeted campaigns taking into consideration different consumer segments. The conclusions are in line with findings and analyses presented in the literature and underscore the need for further research and action at European level.

2013 - Enabling consumer engagement in the future electricity networks

Today’s electricity systems confront the challenge to respond to growing environmental concerns while assuring sustainable, secure and cost-effective power system operation. Although large scale integration of generation close to load appears as a promising solution to cope with these challenges, much effort is still needed in engaging consumers to take on a bigger role in managing their power consumption. In this sense, the engagement of the electricity consumers may play a key role in sustaining policies development that involves: 1) increase share of renewable energy sources in the electricity use and 2) more efficient use of electric energy. Promoting sustainable electricity consumption would therefore require two-way communication and power flow between the consumers and power suppliers in such a way that an optimal use of renewable energy sources is achieved while minimising the use of fossil fired generation and network infrastructure investment. In this context, the aim of the present paper is to provide an insight on the current trends and developments on consumer engagement and behaviour in smart grid projects in Europe. The paper will present some of the results of an ongoing survey on European Smart Grid projects that JRC is presently carrying out. The survey, along with other data, aims to collect information on ongoing activities at European level on consumer engagement and behaviour in smart grids. The initial analysis points out an increase in the interest in consumer engagement in the European smart grid, in particular in the residential sector. In this respect, the results show that successful demand side integration is based on gaining deeper knowledge of consumer behaviour, engaging and empowering the consumer to become an active energy player. Along with these objectives, uncertainties associated with the consumers behaviour need to be addressed, in particular: 1) lack of trust and 2) use of different motivational factors, such as electricity bill reduction, environmental concerns, better comfort provision, etc. Distribution System Operators (DSOs), challenged by the need to integrate increasing shares of renewable and distributed energy sources while ensuring security of system supply, are inherently interested in enhancing flexibility through energy efficiency and dynamic pricing so as to enable consumers’ responsiveness. A first analysis of the survey shows that DSOs have started developing projects aimed at getting to know consumers’ preferences and behaviour and the impact of their choices on system‘s operations. For that reason, the DSOs have started acting as one of the key enablers for consumer integration in the distribution network operation and planning. The paper will also discuss potential solutions for enabling consumers’ engagement such as advanced network concepts, like microgrid and multi-microgrid. In the context of these concepts, central to the consumers’ engagement is adoption of Advanced Metering Infrastructures (AMI) and decentralised control approach that also allow for growing capacity of distributed (in particular renewable) generation while playing a significant role in the future evolution of the electric distribution networks.

 

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