IOT BASED HEMS DELIVERS ENERGY EFFICIENCY IN STOCKHOLM ROYAL SEAPORT 4 th of October, 2017 Johan Ander Program Manager Active House, Program Director until December 2017 Head of Development Smart Home Solutions, Fortum and CEO, Tingcore johan.ander@fortum.com Marcus Törnqvist Program Director SmartEnergyCity, since January 2017 Head of Energy & Utilities, Northern Europe & Central Asia, Ericsson marcus.x.tornqvist@ericsson.com
Power generated in EU (TWh) Rapid growth of Power generation from renewables in EU last decade 4,000 120 CO 2 emission in EU, total, Index (1990 = 100) Declining demand 3,000 1% 90 17% 2,000 60 1,000 30 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 Renewables, excl. hydro Hydro Nuclear Gas Coal Oil Based on Worldbank statistics
Index (2008 = 100) Utility Industry is in A financial stress 140 Declining revenue 14.0% 120 12.0% 100 10.0% 80 60 40 8.0% 6.0% 4.0% Revenues Day ahead system spot Nordpool EBIT% ROA% 20 2.0% 0-20 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0% -2.0% Based on annual reports from:
Utility industry shows the symptoms of being on the verge of disruption 1 Your products and services are widely desired, but largely unaffordable 2 Customer trust and satisfaction are in steep decline 3 A highly concentrated business model with high fixed costs 4 A high degree of hidden assets outside organizational boundaries 5 A lack of assets needed to meet changing customer needs 6 A lack of awareness and/or capabilities necessary to learn customers true needs IoT Based HEMS delivers energy efficiency in Stockholm Royal Seaport 2017-10-04 Page 4 Source: former Harvard Business School professor Shoshana Zuboff, Creating Value in the Age of Distributed Capitalism. McKinsey Insights, Sept. 2010.
SMART HOME IN STOCKHOLM ROYAL SEAPORT - What drives people to change their behaviour? SRS Reference area (124 new homes) SRS Pilot area (154 new smart homes) Cost savings CO 2 emission compensation 00:00 24h 00:00 00:00 24h 00:00 2017 Pilot period 2018
Energy Utilities has a strong position to deliver Smart home services 39.0% 32.3% 31.0% 30.8% 30.6% 26.6% 25.1% 23.8% 22.6% 20.6% 19.9% 17.9% 14.0% 13.1% 12.0% 11.3% Alarm/Home Security companies Electronics manufacturers Wireless/ mobile/ telecom providers Electric/Gas/ Heating Utility companies Internet Service providers Home appliance companies Technology/ Software companies (Google, Microsoft) Consumer Home electronics improvement stores retail stores Mass Merchant stores City/local municipality (provided as public service) Cable televisio n Computer companies (Dell, Toshiba) Local telephone companies Emerging companies (Nest, Quirky) Online retailers (Amazon) Source: Ericsson ConsumerLab, Connected homes, 2015 IoT Based HEMS delivers energy efficiency in Stockholm Royal Seaport 2017-10-04 Page 6 Base : Those highly/moderately interested in any of the 8 areas and interested in integrated home solutions (Rated 7 or above )
Welcome to IoT Safety Smoke Alarm Maintenance Measuring Alarms EV s Community spirit PV s Lighting Energy efficiency Smart White Gods Local energy production Electricity charging
Fortum's strategy Mission We engage our customers and society to drive the change towards a cleaner world. Our role is to accelerate this change by reshaping the energy system, improving resource efficiency and providing smart solutions. This way we deliver excellent shareholder value. Strategy Drive productivity and industry transformation Grow in solar and wind Megatrends Climate change and resource efficiency Urbanisation Active customers Digitalisation, new technologies Create solutions for sustainable cities Build new energy ventures 8
SMART CITY SOLUTIONS
Tingcore provider of energy IoT solutions Platform Hardware Solutions Competence
Under development at Fortum Smart Homes B2B Solar Cell Solutions Energy Efficiency Demand/Response solutions Smart Homes B2C Energy Storage solutions Electric Vehicle Charging B2B Electric Vehicle Charging B2C 11
Changed customer view from the utilities 1900 2000 ICT 12
Smart Homes - we did this years ago! 13
A digital revolution that is changing everything Internet Internet of People Internet of Things Industrial Internet 1960 2000 2010 The Internet of Things revolution will pave the way for next generation of living 14
Many combining factors working in parallel Internet of Things Protocols Sensors & Technology Big Data 15
A new energy experience in Stockholm Royal Seaport
- the Smart Home from the energy perspective
Continued selling Smart Plug Smoke Detector Smart Lights Endless Solutions Multi Sensor Flood Sensor Fall Sensor Window/Door Sensor Baby Watch Siren Doorbell Camera Keypad Keyring control IP/Camera Emergency Button Chock vibration sensor All sensors from SmartLivings provider Leedarson also provider to IKEA Gas sensor Glass break sensor
Conclusions Revenues Churn NPS Revenues follow market penetration. Proposed strategy is to go in with a competitive entry price for base solution and try to upsell to a more advanced solution. Main gain the churn goes down substantially compared with customers that only have a energy or a communication contract. Indication of over 50% improvement. Good improvement the NPS goes up with a good number but still dependent on the NPS of the main brand. 19 *Experiences shared by Centrica (Hive) and Deutsche Telecon AG / Smart Home Forum Berlin 7 th -9 th of September
What learnings do we have of the disruption that Utilities are in? 1 Find better way to monetize the value to the society and your customers than /kwh 2 Build competitiveness by having access to assets rather than owning them 3 Invest in IoT based services to enable new revenue streams and operational excellence 4 Deserve your customers everyday at every moment easy entry and easy exit 5 Do not underestimate security and data integrity concerns - handle it 6 Take clear position(s) in value chain and become a successful ecosystem player
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