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Activating the Smart Future: Customer Incentives in the Transforming Energy Market

Edwards, Philip LU ; Luo, Lushi LU ; Moneva, Nadezhda LU ; Sun, Yi LU and Williams, Laurence LU (2012) MGTN04 20121
Department of Business Administration
Abstract
Background:
Pressure from volatile fossil fuel prices, an increased awareness of climate change and technological advances has resulted in a changing relationship between utility companies and their customers and has created a demand for more efficient and controllable electricity products and services. Smart services are seen as a tool to meet the demands of the market and to encourage consumers to take more control of their energy usage. However, smart services are still in their infancy and knowledge of how to encourage their adoption in Sweden and therefore stimulate Swedish consumers to take a more active role in electricity consumption is insufficient.

Purpose:
This is a mixed method study of residential and commercial... (More)
Background:
Pressure from volatile fossil fuel prices, an increased awareness of climate change and technological advances has resulted in a changing relationship between utility companies and their customers and has created a demand for more efficient and controllable electricity products and services. Smart services are seen as a tool to meet the demands of the market and to encourage consumers to take more control of their energy usage. However, smart services are still in their infancy and knowledge of how to encourage their adoption in Sweden and therefore stimulate Swedish consumers to take a more active role in electricity consumption is insufficient.

Purpose:
This is a mixed method study of residential and commercial electricity consumers in Sweden. The purpose is to assist E.ON in meeting the demands of the transforming energy market by collecting and analyzing data concerning the awareness, drivers and willingness of consumers to adopt smart services, and to suggest incentives that could encourage consumer engagement with electricity use, including market segmentation of residential consumers.

Method:
This study uses a mixed method analysis. Primary data for residential Swedish electricity consumers was collected through 528 completed questionnaires whereas interviews were conducted with representatives from ISS Facility Services, Sony Mobile Communications and Midroc Property Development in order to obtain a commercial perspective on smart services.

Conclusions:
This study suggests that there is currently a very low level of awareness of smart services both in the residential and commercial sectors but that despite this a high proportion of respondents are willing to adopt smart services at some level with the ability to monitor energy use in real time being the most popular. Cost was identified as the most important consumer driver to adopt smart services and ultimately change energy consuming behavior but the ability to control ones energy use and environmental considerations were also significant drivers. Trust in the utility company was recognized as the most significant barrier to smart service adoption. However, the level of knowledge about smart services showed a positive correlation with consumers’ willingness to adopt smart services suggesting that barriers can be broken down by information. A residential consumer market segmentation matrix was constructed from which tailored incentives were derived to cater to the increasingly heterogeneous market.
Commercial consumers were more receptive than residential consumers and put more significance of the environmental benefits of smart services however, cost still remained a decisive issue. Incentives must be specific to the size and type of commercial consumer with simplicity and customer support being desired. (Less)
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author
Edwards, Philip LU ; Luo, Lushi LU ; Moneva, Nadezhda LU ; Sun, Yi LU and Williams, Laurence LU
supervisor
organization
course
MGTN04 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Awareness, Customer Incentives, Drivers, Electricity, E.ON, Energy, Hyllie, Market Segmentation, Smart Grid, Smart Services, Sustainable Development, Swedish Consumers, Willingness to Adopt.
language
English
id
2607340
date added to LUP
2012-06-29 10:50:12
date last changed
2012-06-29 10:50:12
@misc{2607340,
  abstract     = {Background:
Pressure from volatile fossil fuel prices, an increased awareness of climate change and technological advances has resulted in a changing relationship between utility companies and their customers and has created a demand for more efficient and controllable electricity products and services. Smart services are seen as a tool to meet the demands of the market and to encourage consumers to take more control of their energy usage. However, smart services are still in their infancy and knowledge of how to encourage their adoption in Sweden and therefore stimulate Swedish consumers to take a more active role in electricity consumption is insufficient. 

Purpose:
This is a mixed method study of residential and commercial electricity consumers in Sweden. The purpose is to assist E.ON in meeting the demands of the transforming energy market by collecting and analyzing data concerning the awareness, drivers and willingness of consumers to adopt smart services, and to suggest incentives that could encourage consumer engagement with electricity use, including market segmentation of residential consumers.

Method:
This study uses a mixed method analysis. Primary data for residential Swedish electricity consumers was collected through 528 completed questionnaires whereas interviews were conducted with representatives from ISS Facility Services, Sony Mobile Communications and Midroc Property Development in order to obtain a commercial perspective on smart services. 

Conclusions:
This study suggests that there is currently a very low level of awareness of smart services both in the residential and commercial sectors but that despite this a high proportion of respondents are willing to adopt smart services at some level with the ability to monitor energy use in real time being the most popular. Cost was identified as the most important consumer driver to adopt smart services and ultimately change energy consuming behavior but the ability to control ones energy use and environmental considerations were also significant drivers. Trust in the utility company was recognized as the most significant barrier to smart service adoption. However, the level of knowledge about smart services showed a positive correlation with consumers’ willingness to adopt smart services suggesting that barriers can be broken down by information. A residential consumer market segmentation matrix was constructed from which tailored incentives were derived to cater to the increasingly heterogeneous market. 
Commercial consumers were more receptive than residential consumers and put more significance of the environmental benefits of smart services however, cost still remained a decisive issue. Incentives must be specific to the size and type of commercial consumer with simplicity and customer support being desired.},
  author       = {Edwards, Philip and Luo, Lushi and Moneva, Nadezhda and Sun, Yi and Williams, Laurence},
  keyword      = {Awareness,Customer Incentives,Drivers,Electricity,E.ON,Energy,Hyllie,Market Segmentation,Smart Grid,Smart Services,Sustainable Development,Swedish Consumers,Willingness to Adopt.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Activating the Smart Future: Customer Incentives in the Transforming Energy Market},
  year         = {2012},
}