Market potential of HEMS

It is important for the service providers, which develop future HEMS, to be able to es- timate the market potential for the HEMS. The amount of potential customers is impor- tant in any service or product development. In this chapter the results from the larger customer survey are evaluated. In addition the results are further discussed to estimate how the market potential could be estimated and which issues affect the potential.

Customer survey

The customer survey that was conducted during this work included 187 customers using Vattenfall Verkko Oy’s OnLine-service. As earlier mentioned the full results are pre- sented in appendixes. When examining the results one must notice that not all the cus- tomers answered to every question. These blanks cause some inconvenience to the re- sults. There have been numerous studies related to the demand response and how it would be technically executed. On the other hand there is not that much research on what is the current customer stance towards the demand response, load control and real- time consumption monitoring. The one of the goals for the customer survey was to get a picture of those issues. In this chapter the most important questions of the survey are being discussed.

The background of the answerers was quite diverse. The different age and education groups were all represented. The distribution of annual energy consumption can be re- garded as typical. There were 42 customers consuming more than 20 MWh annually. As discussed earlier these ones could potentially have the biggest incentive towards HEMS-solution as they would have most potential for reducing the energy consumption and achieve savings by load steering. Still, when considering the results one must take into account that the answerers were the users of OnLine-service. This means that most likely they are more interested of their energy usage more than average person.

To be able to somehow examine if the results vary according to the answerers’ background the customers were divided into three groups. “High potential” group in- cludes the answerers that are using direct or reserving electric heating and have annual consumption higher than 25 MWh. “Potential” group includes the rest of the answerers using some kind of electric heating. “Rest” group includes the answerers outside these two previous groups. In the results HP stands for “High Potential” and “P” for “Poten- tial”

All except one in HP group answered that one has a need for real-time consumption monitoring and they also believed that it would bring at least some kind of benefits for them. This one is easy to understand as they were the ones consuming biggest amount on electricity. Furthermore, the interest rate was high among the whole answer group. When asked that how much the customers would be willing to pay for the real-time consumption information the most common answers were between zero to five euros per month or zero to 50 euros as a onetime payment. Onetime payment can be regarded as an in-home display or similar. It must be pointed out that great majority would be interested of the opportunity but not willing to pay for it.

When asked whether the answerer would be interested of hourly pricing of electrici- ty 23 % of HP group and 11 % of P group answered yes. What is interesting was that once they were provided with a table showing price fluctuation during a common day and this same question was asked again the rates increased to 39 % and 17 %. For some of the answerers this was the information they needed to be able to form an opinion of

the subject. Furthermore, around 72 % of the answerers would also be ready to adjust the energy consumption according to the hourly prices.

The survey described HEMS-solution as a system that gives opportunity to follow real-time consumption data and to steer the electric heating cost-efficiently. They were provided with a picture of user interface of the piloted HEMS showing the real-time consumption data. Furthermore it was said that this could help to achieve 10 % saving in the electricity bill. Around 75 % of the answerers were interested of this kind of sys- tem. Generally, the answerers would be ready to pay 0-20 euros per month for this kind of solution or maximum of 500 euros as a onetime payment. For example none from the HP group would be willing to pay more than 500 euros. This would mean that for ex- ample the cost of the piloted system would be too high. On the other hand the pilot cus- tomer said that they would be ready to pay even 1000 euros for a system, if they would be assured that the 10 % savings would be possible to reach. Naturally the pilot custom- er did have a better understanding of the HEMS than the survey customers who only received couple of line explanation of what the HEMS is. Therefore the pilot customers did put more value on it. The repayment period of maximum of two to three years were generally considered as acceptable time period. This is in line with the answers about the investment costs.

Discussion

The evaluation of the potential market for HEMS-solutions is challenging as there are so many variables that needs to be taken into consideration. First of all the private cus- tomer segment in itself is very diverse as there are many different types of households that can have very different peak power demand and electrical energy consumption. The technical possibility to install home-automation vary also as the electrical installations are different between the houses. Also the customers are different. Some of them are willing to do great deal of effort to reduce the electricity costs while some of them use electricity in a more carefree way.

Some DSOs are already offering their customers a possibility to monitor the hourly consumption data. This data comes usually available after couple of days of the actual consumption. The customers using the internet services can be seen as a potential cus- tomer group for the future energy efficiency products. At least they already have interest towards their energy consumption and are using the current possibilities and services.

It would seem reasonable that the customers with the electric heating and high an- nual consumption would be the most potential ones being interested of the HEMS- solutions. This is because they are the ones with the most potential for reducing the electricity consumption and to achieve savings. Also, the electric heating can be steered without causing inconvenience for the customers. It has been estimated that there is ap- proximately 600 000 electrically heated houses in Finland (Bröckl 2011). In addition there are approximately 400 000 holiday homes, of which increasing number are heated with electricity (Bröckl 2011). One possible way to start to define the market size would be to find out how much the DSO has customers with electric heating and how much of

those would be consuming for example more than 25 MWh annually. Some kind of estimation could be made by studying the customer distribution between different ta- riffs. For example majority of customers using reserving electric heating are using night-time distribution tariff.

There is a high interest towards the real-time consumption monitoring but based on the survey the customers are not willing to invest to acquire this information. Perhaps they think that it should be a free service in the future like the internet services currently are. The limit for the HEMS-solution investment is around 500 euros based on the sur- vey. This would mean that currently the costs of HEMS are maybe too high. In addition to this the automatic savings which can be achieved by steering of the electric heating seems to be relatively low in the stable market situation. Still, the results from the re- search have concluded that even only with the real-time consumption data the savings around 5-15 % would be reachable. One solution would be to have some extra addition- al services for the HEMS-platform that would reduce the relative investment cost.

The investment costs would not feel to be that high in a case of a new house. Even one thousand euros investment could feel reasonable because the HEMS solution costs would be low related to the overall costs of the house project. Still, there is doubts that whether the future homes have electric loads to be steered. The passive houses use smaller amount of heating energy and for example the reserving fireplace is relatively common in new houses. Also the heat pumps are becoming more general all the time. These reduce the need for electric heating.

It could be the next step to run a larger customer survey to find out what is the true interest and potential towards the real-time consumption monitoring and steering of the electric heating. Still, this could not be a highly current task at present. It must also be considered that all kind of plug in switches for the remote control of small electronic devices and plug in energy meters are currently coming even in to the grocery shops. This will increase the peoples overall knowledge about the possibilities of remote load steering and consumption monitoring ultimately raising an interest towards HEMS- solution that would include all of these functionalities. On the other hand, these devices are also relatively cheap. This put pressure for example for the service providers design- ing future HEMS regarding the costs of the system.

Also the electricity market environment is under changes when the enrollment of smart metering is on and the hourly based balance settlement is starting to become more general. This will give a possibility for suppliers to develop new contract types, like the ones based on spot-prices and demand response products which could be contracts with the customers for load steering. There is also discussions going on whether the distribu- tion tariffs should be develop to be more demand power based. These all are changes that can open new service opportunities for HEMS platform. For example in the future if the distribution prices are highly depended on the peak power demand of the custom- er, one could need services to be able to control the demand power level more efficient- ly and more easily.

One interesting topic is that could the government participate in order to make HEMS-solutions and therefore also load steering more lucrative. The customers invest- ing to HEMS and load steering could be rewarded as a lower level electricity tax rate. Alternatively the investment costs of HEMS-solution could be made tax-deductible like the current possibility to have support for the renovation costs of one’s household. These could be options for the government to support the generalization of the demand response of the small consumers.

Finally, the one of the most important issues is to make the end user aware of the changes that are currently happening or starting to happen. The need to increase the customers awareness is essential in order to raise interest towards new services. Cus- tomers need to know what kind of opportunities the changes in the electricity market environment arise and how they could benefit from them. The efficient marketing is needed.