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Smart Energy and The Digital Economy

Tuesday, 11 September 2012.

The energy market is undergoing a major transformation. It’s moving towards a so-called Smart Grid, which will not only manage supply and demand of energy more effectively, but also integrate new, lower-carbon sources of electricity.

131113smartenergyThis sort of transformation comes with massive infrastructure investment, often influenced by government policy. That can be a good thing.

In Britain, which may be seeing the biggest move towards smart energy anywhere (the rollout of 43 million smart meters to 26 million homes by 2019) and in North America, conservative estimates predict around 95 million electricity smart meters alone by 2015.

Smart meters are the essential end points of a Smart Grid connecting up the home, meaning a new meter connected directly to the utility. It collects up-to-date usage data and transmits it back to the utility for billing and it also allows the supplier to send data such as tariff information to the meter in the home.

But experience of other markets tells us that changes to infrastructure will not necessarily lead to a successful transformation.  The real magic only happens when we effectively combine infrastructure investment with customer innovation. Only then can the industry create compelling services at the right price, and ensure mass-market customer adoption.

Take the mobile market, which in the U.K. only achieved 7% penetration in 10 years from 1985 to 1995.  Operators saw this as a service for premium customers and the market lacked the vision or ambition to become a mass-market consumer service.  Then the network moved from analogue to digital in 1995 and the industry started to innovate with new customer propositions.  Pre-pay packages, more accessible handsets and huge marketing campaigns became the catalysts for a mass-consumer service driving adoption from 7%, to 46% by 1999.

This article originally appeared on Forbes.com. To read the full blog, click here.

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