=Paper=
{{Paper
|id=Vol-479/paper-9
|storemode=property
|title=Design of Energy-Management Services - Supporting the Role of the Prosumer in the Energy Market
|pdfUrl=https://ceur-ws.org/Vol-479/paper9.pdf
|volume=Vol-479
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==Design of Energy-Management Services - Supporting the Role of the Prosumer in the Energy Market==
https://ceur-ws.org/Vol-479/paper9.pdf
Design of Energy-Management Services – Supporting
the Role of the Prosumer in the Energy Market
Wim Timmerman1, George Huitema2
1
Hanze University of Applied Sciences, Energy Competence Centre,
P.O. Box 3037, 9701 DA Groningen, The Netherlands
w.h.timmerman@pl.hanze.nl
2
University of Groningen
Faculty Business and Economics, The Netherlands
g.b.huitema@rug.nl
Abstract. This paper describes the PhD project on service design in the energy
market. More and more households invest in home energy generation facilities
like solar panels. The generated energy can be used for their own energy
demand, but delivery to the central energy network or other consumers is also
possible. Households become producers, thus creating a new role in the energy
value network. Energy-producing consumers (prosumers) need to be supported
in order to become a serious actor. This research focuses on the development of
an approach for designing energy-management services to support the role of
prosumers. The result will be a suite of guidelines, tools and methods that can
be used in the service design process.
Keywords: service design process, service design methodology, service
development.
1 Introduction
The energy business is in a state of change. The energy market is one of the last
industries that transforms from analogue to digital. Environmental, political, and
technological developments ask for a radical change: the energy infrastructure has to
be transformed into an active network, with intelligent components and advanced
communication facilities. This change will give rise to the development of new
business concepts and the coming into existence of new services.
The inclusion of renewable energy sources and decentral energy generation are
important issues. Households generate their own energy with their home installation
(e.g. solar power, µCHP, heat pump), becoming both consumer and producer, thus
playing a new role in the energy market place. This role is still rather limited, but in
time this role will evolve into a more grown-up energy player in the energy value
network. How this role will evolve and how energy-producing consumers (so called
prosumers) can be supported by services, is the subject of the research described in
this article.
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2. Decentral Generation and the Role of the Prosumer
Decentral generation and inclusion of renewables will become more and more
important in the future energy market, as it will contribute to the sustainability of the
energy market place. Decentral generation, and consumption close to the source of
generation, can contribute to more efficient energy usage. Households are stimulated
by government to invest in sustainable energy by providing subsidies on installing
generation facilities and on guaranteeing feed back tariffs on “home-generated
energy”, thus providing security on return on investments. Surplus of generated
energy is delivered to the traditional energy supplier, and payment is settled by letting
the meter run backwards. This makes that the consumer is both on the demand and the
supply side. Today the role of the energy-producing consumer in the energy value
network is new and rather limited in scale and importance. Large-scale deployment of
prosumers is foreseen, but still many barriers have to be broken down. How can the
energy-producing consumer play a role in the energy value network, where large
companies play a dominant role?
Producer Trade
Prosumer Supplier
Grid
operator Metering
Fig 1: The prosumer, operating in a complex value network
The prosumer needs to be supported to play a role in the energy market. He is one
of the actors in a complex value network, as is shown in figure 1. He wants to be in
control of his own energy and he wants to decide whether or not he wants to deliver,
to whom and when, and at what price. Intelligent energy-management services are
needed that support him in his role of prosumer. These services need to be designed
and developed. There are many uncertainties in this service design process with
respect to demand and value, fast technology developments (e.g. smart energy grids,
smart metering [22]), as well as regulatory aspects. The services have to be developed
in a complex environment of continuous changing services and market circumstances,
with multiple stake holders involved. The challenge is to develop services in these
complex value networks that create value for both the prosumer and the other actors
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involved. The objective of this research is to develop and validate an approach for
designing energy-management services to support the role of the prosumer.
3 Service Design Theory
Extensive research has been conducted on product design and product development.
With the emergence of internet in the 1990’s, services became more and more
important, and also academics defined research into the area of service design and
service development. This section describes some important work in the field of
service design processes and service design methodologies, which will be used as a
reference point for this PhD study.
Technological developments, afforded by ICT, as well as globalization, put pressure
on companies to compete on new service offerings [3]. Offering new services is
beneficial because: (1) it enhances the profitability of existing offerings, (2) it attracts
new customers, (3) it improves the loyalty of existing customers, and (4) it opens
markets of new opportunities.
Offering new services is a competitive issue. Menor [3] recognizes the need to
consider both the newness of the service offering (what service is offered?) and the
service concept (how the service is offered?). He defines a new service as an offering
not previously available to a firm’s customers, resulting from the addition of a service
offering, or changes in the service concept that allow for the service offering to be
made available. The distinctions of what constitutes a new service are meaningful,
both to strategic planners determining the appropriate mix of services in the portfolio
they offer, and in terms of understanding how the customer—or the marketplace—
perceives the new service.
For developing new services the service development process is a critical factor for
success or failure. Therefore it is crucial to adopt a good service design process. Many
studies have been conducted into service design and service development processes
[4, 5, 6]. Johne et al. [14] provide an extensive review of literature on New Service
Development (NSD). Johnson et al. [15] give an evaluation of the NSD process from
the perspective of integrating service design and service innovation. De Jong et al.
[17] classify literature on organising NSD into two evolutionary stages: managing key
activities in the NSD process, and creating a climate for continuous innovation.
Important work in service process design is performed by G. Lynn Shostack. In [13]
he presents the service blueprinting methodology, a graphical technique for
documenting processes that displays process functions above and below the line of
visibility to the customer. The graphical display of the processes provides insight into
potential failure points in the service offering. Furthermore, each activity in the
process is assigned with a cost and time parameter, so that the total cost and
profitability of the total process can be derived.
A service design process is multi-dimensional: requirements from the various stake
holders in the value network, each with their own discipline, should be considered.
Normann and Ramirez [18] state that product and service innovation constantly needs
Proceedings of CAISE-DC 2009
to be mapped onto customer requirements and customer satisfaction. They call it a co-
production of value: innovation needs to be performed in partnership with customers
and its suppliers in a flexible and mutual dependent way. Ramaswamy [9] states that a
total design approach is needed. This implicates that both technical-engineering
functions, as well as customer-focused requirements, must be taken into account.
Focus should be kept on the customer throughout the design process, in order to
satisfy, excite, or delight customers’ expectations. Meyer Goldstein et al. [1] argue
that the service concept plays an important role in service design and development.
The service concept defines the how and what of service design, and helps mediate
between customer’s needs and an organization’s strategic intent.
Total design, according to Pugh [19], is a multidisciplinary iterative process that
takes an idea or market need forward into a successful product or service. Five
principles need to be followed: (1) involve the customer in all stages, (2) derive
specifications from the customer, (3) derive technical aspects from the customer’s
specifications, (4) the design team should be multifunctional from relevant
organizations, and (5) test in the market place, not in the lab.
One of the total design approaches is Quality Function Deployment (QFD). QFD is
a systematic, matrix-based visual approach for designing quality products and
services [9].
Keen & Sol [21] state that effective support for service development is expressed
using a combination of three U’s: usefulness of the tools and methods i.e. the value
they add to the decision processes; usability of the tools i.e. the mesh between people,
process and technology; and usage i.e. their flexibility, adaptability, and suitability to
the organizational, social, and political context. The development of services requires
an environment that places equal emphasis on all three U’s.
4 Research Approach
In this section the research approach will be described, as well as the strategy and the
instruments being used in the various phases of the research.
4.1 Research Questions and Objective
Section 2 describes the changing energy playing field and the new role of the
prosumer in the energy value network. The prosumer needs to be supported by value-
added services in order to enable him to play a full-fledged role in this network. A
design approach can help to develop these energy-management services in a multi-
disciplinary context. In this approach the end-user value (i.e. value for the prosumer)
is the starting point.
The main research question is:
How can actors in the energy value network design energy-management services
that support the role of the prosumer?
This raises a number of other questions that are dealt with in this research:
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1. How does the value network, where the prosumer acts in, look like?
2. What are the requirements of the stake holders involved, with respect to energy-
management service design?
3. What are possible services that can support the prosumer?
4. What are the methods currently used for service design? What are advantages and
disadvantages?
5. What are the critical elements when designing energy-management services, and
what are the possible solutions?
The prosumer acts in a complex value network with multiple actors. Designing
services in this context means that a multi-disciplinary approach is necessary in order
to satisfy the stake holders involved.
This leads to the following research objective:
To develop and validate an approach for designing energy-management services
for prosumers, which can be used to support actors in the energy value network to
develop these services.
The approach can be described as a suite of do’s’ and don’ts’, of guidelines, and a
coherent set of tools and methods, which can be used in the service design process.
The scientific contribution of this research will be the development of a design
approach for services that support prosumers in the fast changing energy world. The
approach can be used to solve problems in the real world of service design.
Businesses in the value network are provided with a validated and tested design
approach.
4.2 Research Strategy
The role of the prosumer in the energy value network is new. Developing services in
this complex, fast developing environment is not straight-forward. A first step is to
achieve an understanding of the playing field and the incentives and barriers that play
a role. Only then a strategy can be developed to tackle the perceived problems and to
develop an approach for designing services for the players in the value network.
The nature of the research area and the problem definition represent a typically ill-
structured problem [20]. According to Sol [20], ill-structured problems are vague and
do not fulfil the following requirements:
° the set of alternative courses of action or solutions is finite and limited
° the solutions are consistently derived from a model of the problem situation that
shows a good correspondence with reality
° the effectiveness or the efficiency of the courses of action can be numerically
evaluated
The inductive-hypothetic cycle can be used for this kind of research [20]. The main
advantages of the inductive-hypothetic strategy are that it:
° emphasizes the specification and testing of premises in an inductive way
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° opens up possibilities for an interdisciplinary approach
° enables the generation of various alternatives for the solution of the problem
° permits feedback and learning
These benefits make the inductive-hypothetic strategy very useful for new and
emerging research fields such as service design in the energy market.
The inductive-hypothetic research strategy consists of four model types, which are
linked by five activities, as is illustrated in figure 2 below.
1. Initiation Descriptive 5. Evaluation Prescriptive
empirical empirical
model model
2. Abstraction 4. Implementation
Descriptive 3. Theory formulation Prescriptive
conceptual conceptual
model model
Fig. 2: Inductive-hypothetic research strategy
1. Initiation: based on an analysis of the specific field of study (i.e. service
design for prosumers) one or more descriptive empirical models are
constructed, each describing a perceived situation. Analysing these perceived
situations should provide a better understanding of the research area. The
empirical model can be based on both practice and theory.
2. Abstraction: the essential aspects are abstracted into a descriptive conceptual
model (the “as is” model). This model describes the problems in the
perceived situation at a generic level, and gives indications of possible
solutions.
3. Theory formulation: the solutions are combined into a general theory (a
prescriptive conceptual model ) for solving the problems found.
4. Implementation: to test the theory the model is implemented in one or more
prescriptive empirical situations (the “to be” model, or an experimental
model). This implies that the approach developed is applied in practice.
5. Evaluation: the effectiveness of the proposed theory is evaluated by
comparing the prescriptive empirical model and the prescriptive conceptual
model. This may result in additional requirements for improving the
prescriptive conceptual model and an iteration of the cycle.
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4.3 Research Instruments
Various research instruments are being applied in the different phases of the research.
The research instruments provide the means with which data is collected on the
subject of study and subsequently analysed.
Initiation phase
In the initiation phase literature is studied on service design methodologies. Stake
holders in the energy value network will be interviewed to get a better understanding
of the current situation and their requirements with respect to services and service
design (requirement engineering). Pilots and experimental projects with
implementation of prosumer models will be studied and analysed (case studies).
Business modelling [2, 7] will be used to reflect the value network and the
interactions.
Abstraction and theory formulation phase
In these phases literature review, focus groups, surveys and case studies will be used
to discuss and develop preliminary ideas on the conceptual model and possible
solutions to the perceived problems. Experts will be consulted to validate the
developed conceptual model.
Implementation phase
The researcher participates in the Flexines project, a cooperation between GasUnie,
RijksUniversiteit Groningen, ECN, TNO, Esha and the Hanze Hogeschool. Within
the project an Energy Management System for households will be designed,
developed and tested. Flexines will function as a test bed for the developed approach
for service design (action research). Observations, questionnaires and interviews will
be used to get feedback on the design approach and the results.
Evaluation phase
The results of the implementation will be evaluated with the Flexines project
members and other experts. Feedback will be collected by presenting the results at
various meetings.
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