IBM Sheds New Light on the Smart Energy Consumer

ARMONK, NY - IBM (NYSE: IBM) Global Business Services today unveiled its new report, “Lighting the Way: Understanding the smart energy consumer,” that shows consumers around the globe are willing to become more involved with managing their energy use.

The study shows while in the short term, changes in customer needs will occur based on personal initiative and income, in the long run, even more radical changes may yet emerge as the Millennial Generation continues to move into adulthood and the energy customer base.

Those respondents age 18 to 34 were most eager for the types of “self-service” and automated energy management that ’smart’ metering and smart grids will bring. Precisely at this juncture, major changes are evident in the ways consumers learn about companies and products, what they value and what they will pay for, as well as how they communicate with each other and the companies with which they do business. This age group -- and particularly those under 25 -- is the most willing to pay a stated premium for these services: approximately US$100 as a one-time fee, or a monthly fee of US$5. Having a message sent to a mobile device when power is out at the consumer’s home also garnered significantly higher interest from the under-25 age group (about 30 percent were more likely than the other age groups to be willing to pay US$1 per month for such a service). The fact that well over half of the under-25 age group is willing to pay these premiums is remarkable because they generally have lower incomes.

IBM surveyed over 5,000 energy consumers in twelve countries: Australia, Belgium, Canada, Denmark, Germany, France, Ireland, Japan, the Netherlands, New Zealand, the UK and the U.S. Exploring some of the most important issues facing consumers today, the questions covered a range of topics including preferences for green offerings (both energy-related and in general), future views on costs, usage and control options, sources of information on energy, and willingness to pay for new products and services. The complete report on the survey, with detailed recommendations for energy companies, can be found at: http://www.ibm.com/services/gbs/lightingtheway

“We see new ways the energy consumer is seeking information in order to make more educated and proactive decisions about their energy use,” said Michael Valocchi, Global Energy & Utilities Industry Leader, IBM Global Business Services. “Utilities around the world are modernizing their networks to stay competitive and respond to the needs and values of their customers.”

Infrastructure investments are at the forefront of stimulus packages around the world to spur economic growth. Smart systems are transforming energy grids, supply chains, water management and the healthcare industry to name a few. Modernizing the power grid, for instance, provides consumers with the information to understand their energy usage and take actions to reduce wasteful use and integrate renewable energy sources like solar and wind.

The survey found that many consumers are actively seeking this information as climate change concerns, volatile energy prices and a growing awareness of technological advancement in energy leads them to learn about how much energy they are using and when they are using it. In fact, over 90 percent of respondents indicated that they would like a smart meter and tools for managing their energy usage. Over 40 percent of consumers are actively seeking new ways to interact with their utility company, and up to 70 percent are willing to at minimum experiment with new programs and services.

This area of study is not new to IBM. The company’s 2007 report, “Plugging in the consumer: Utility business models for the future,” also explored the radically changing relationship between consumers and energy providers. The 2007 report can be found at: www.ibm.com/energy/plugin

The 2008 survey results suggest that energy providers must leverage consumers’ newfound openness to change, and then provide information, influence behavior, and teach consumers new ways to meet their goals. To be successful, they will need to analyze their consumer base and the interactions that they will have with consumers over a more dynamic and data-rich network.

IBM and Smart Grid
IBM is working with clients in nearly 50 Smart Grid engagements across emerging and mature markets. More about IBM’s vision to bring a new level of intelligence to how the world works--how every person, business, organization, government, natural system, and man-made system interacts, can be found here: http://www-03.ibm.com/press/us/en/presskit/26094.wss

About IBM:
For more information on smart utilities at IBM visit: http://www-03.ibm.com/industries/utilities/us/index.html