Which digital energy services improve energy efficiency? A multi-criteria investigation with European experts
Introduction
The current market environment for energy providers has been changing dramatically. On the one hand, companies are under pressure to take on environmental responsibility given the European Union’s policy emphasising climate mitigation. As such, EU member states are obliged to reduce primary energy consumption by 20% by 2020 (EEA, 2013) and additionally to achieve an energy efficiency target of 27% or more by 2030 (EC, 2016). While decentralised energy resources increase, energy providers are required to tackle the inherent complexities of distributing energy. This includes collaborating with those end-customers which will become empowered stakeholders in the market, by providing, storing and consuming energy in their houses (Giordano et al., 2013, Roelich et al., 2011, Valocchi et al., 2010).
The smart meter roll-out in the EU has offered an initial step to measuring and communicating energy related information remotely and bilaterally between consumers and energy providers as a way to improve energy efficiency. Based on these new capabilities, information and communication technologies (ICT) based services have been created and tested. Much of the research has demonstrated that ICT-based services, or digital energy services, offer energy-saving potentials (EC, 2014), an opportunity to change energy-consumption behaviours of customers through motivational and informational functionalities (see EEA, 2013; Harter et al., 2010; Krishnamurti et al., 2012; Martiskainen and Coburn, 2011; McHenry, 2013) and to provide economic potentials by managing demand (Faruqui and Sergici, 2010, Haney et al., 2009, Haustrup Christensen et al., 2013). Its application has been supported by the policy of the European Union with the Energy Services Directive (2006/32/EC), the Third Energy Package Directive (2009/72/EC) and the Energy Efficiency Directive (2012/27/EU) with regards to the political aim of climate change mitigation. As such, these services are being promoted as promising business models for energy providers in the market.
However, many stakeholders, including energy companies, are still struggling with the still-evolving complexities of adopting the service-oriented operation of digitalised energy systems (Giordano et al., 2013). This may be due to the organisational inertia of how companies and organisations wait until other organisations initiate the implementation of new services to better judge the consequences of such activities (Azevedo et al., 2013). Another reason may be that existing solutions have mainly been offered either as electricity or as heating services. Partly due to the fact that heating can be provided through renewable resources (for example heat pumps), recent research has emphasised an integrated energy perspective, where the sectors for electricity and heating can no longer be viewed in separation, but are instead understood to merge together (Connolly, 2017, Mathiesen et al., 2015). One synergy relates to the customers, giving them a complete solution to tackle their energy consumption (and production), not only for one sector, but for their entire energy system at home or work. However, this approach poses a new challenge in the way such services are offered to customers. Since energy providers usually are composed of separate departments that have been treating heating and electricity largely in a disjointed manner, the offering of new services for energy may pose a drastic change to their internal management and structure.
We argue that despite the growing availability of case studies, which have tested different functionalities and proved energy-saving potentials, especially in the electricity sector, their market-wide diffusion is still rare and lagging behind expectations. As many stakeholders such as utilities, service providers, agencies and local governments are still new to deciding on which digital energy services for customers may help them to stay competitive and in line with policy targets, this research aims to assist these organisations in choosing a potential ICT-based service. According to Saaty (1990), organisations relate such a decision to several criteria by evaluating and ranking several options (Chapter 2). As such, this paper provides a model describing an organisation’s approach to evaluations when not all necessary information can be easily compared (Chapter 3). Therefore, this article aims to model a decision-process of organisations choosing ICT-based services upon several decision criteria. We therefore dismantle the decision-process that we assume organisations go through. The innovative features of the assessment include the confluence of subjective evaluations from surveying experts’ opinions with the consideration of objective factors in assessing ICT-based energy services’ potential on energy efficiency (Chapter 4). It will provide a ranking of services targeting both residential and public users, and includes heating and electricity for a more general assessment level, thereby expanding the scope of previous research (Chapter 5). Subsequently, this paper will discuss these findings within the context of necessary requirements for the energy market and policy development (Chapters 6 and 7).
Section snippets
How to make decisions: the Analytic Hierarchy Process (AHP)
When an organisation wants to implement an ICT-based service this can be defined as a type of product innovation process. A product innovation includes all new outputs from an organisation, such as services or new products (Totterdell et al., 2002). In a process of dealing with such an implementation or adoption, organisations usually face several sequential phases (1) idea generation, (2) idea evaluation, (3) planning, (4) project implementation and (5) market launch. This research
The integrative model
In principle, the AHP orders the decision-making process into a hierarchy with three levels (Fig. 1).
Methodology
After identifying all objective parameters, the model foresees an empirical evaluation by the people who are likely to choose suitable services in a straightforward manner.
Parameters
The estimated impact of the four parameters (the second level of the hierarchy) was derived from the comparison-values of each expert’s response.8
Parameters
Generally, it was shown that the most important parameters for energy efficiency measures were impact on behavioural change and business potential, and neither the level of innovation nor technical feasibility seem to play as much of a role. This latter point can be explained by the fact that sufficient field experiments have already proven the technical applicability of most ICT-based services presented in this research, making it less relevant to consider for organisations’ decisions now.
Conclusions and policy implications
The article aimed to model a decision-process of organisations choosing ICT-based services upon several decision criteria for their impact on improving energy efficiency. By using the AHP, the decision-process could be broken down into factors that influence the decision-making to assess their impact on finding an appropriate solution. As energy providers are still relatively new not only to the integration of digital services, but also considering electricity and heating sectors in an
Acknowledgements
The research has been conducted within the project “iURBAN – intelligent URBAn eNergy tool project” (FP7-SMARTCITIES-2013-608712) which started in October 2013 and ended in September 2016. We want to thank all people who have participated in the survey and to the reviewers for providing valuable feedback.
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- 1
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Present address: Deloitte Audit SRL, 4-8 Nicolae Titulescu Road, 011141, Bucharest, Romania. Tel.: +40 21 207 54 12.
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Present address: ICLEI European Secretariat, Leopoldring 3, 79098 Freiburg, Germany. Tel.: +49 0 761 368 920.