Europe will spend €56B on smart meters by 2020. How can utilities and consumers make the most of their investment?

Between now and 2020, Europe will spend €56 billion rolling out smart meters. What value will they deliver for the 170 million homes and business that receive them? We asked nearly 500 energy professionals to weigh in. The response was overwhelming: nearly half said that smart meters' greatest value will be in enabling customer-driven, value-added services — that is, programs that fall outside of utilities' traditional core business. Roughly one-fifth felt that smart meters will deliver greater value through energy efficiency or renewables integration. graph 1 The informal poll was one of three we conducted last month regarding the evolution of the smart grid in Europe. The result got at a deeper truth: successful smart meter programs — the ones that deliver real value — are those that engage, educate, and empower utility customers. Those that don’t are bound to fail. Our own Emily Hallet and Neel Gulhar explained why during a recent webinar.
It’s essential to highlight the consumer benefits of the smart grid in a way that’s personalized, proactive, and accessible.

To start with, smart meters, like other energy products and services, aren’t inherently interesting to the vast majority of customers. Energy itself is low-interest and low-engagement by default — Accenture famously found that on average, people spend just nine minutes a year actively engaging with their energy service provider. In order to overcome that barrier, which prevents utilities from unlocking the full value of their smart meters, it’s essential to highlight the consumer benefits of the smart grid in a way that’s personalized, proactive, and accessible. In the United States, for example, utilities like Baltimore Gas & Electric introduced smart meters to their residential customers by sharing personalized energy insights. They went out of their way to demonstrate why more energy data is beneficial to everyone, including the end user.

As a result, those utilities saw smoother, more productive smart meter rollouts than those that didn’t deliver energy insights to their customers. Moreover, as consumers came to accept and appreciate smart meters, they were more open to other value-added services, like high bill alerts, utility web portals, and demand response programs. Of course, utilities can’t simply play back smart meter data to consumers. They have to make it engaging — giving homes and businesses the clear, actionable insights they need to better manage their energy use.

In their webinar, Neil and Emily highlighted Mercury Energy as a case study. To get an edge over the competition in one of the world’s fiercest retail energy markets, Mercury used smart meter data and Opower’s software platform to offer personalized energy advice and automated billing alerts to their residential customers. Consumers responded in a big way: email open rates increased, customer sentiment improved, and call volume to customer service centers fell. Even more importantly, customers started feeling greater loyalty toward Mercury. The more engaged they were, the less likely they were to churn.

graph 2.1 The larger takeaway: utilities that adopt robust, consumer-centric smart meter strategies will unlock greater value from smart meters over the long haul. 

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