What are the main barriers to smart energy information systems diffusion?

Abstract

The aim of this study is to identify the main barriers to smart energy information systems (SEIS) diffusion. We used the grounded theory method (GTM), with its repetitive cycles, to develop a theoretical model that illustrates these barriers. As a starting point, we discussed the discrepancy between the potential and the actual status of smart energy information systems diffusion. Having conducted a literature review and 23 interviews, we discovered that the main barriers to SEIS diffusion are adoption costs, switching costs, a collective action dilemma, and a lack of business cases for all stakeholders. Our study contributes to the literature on IS-enabled smart energy solutions in the industrial sector by deriving propositions for SEIS diffusion and by developing a theoretical model of the main barriers to SEIS diffusion that explains the discrepancy between the advantages and the actual diffusion of such systems.

Appendices

Appendix 1

Process memo 1: Based on the research question, we focus on the barriers to SEIS.

Theoretical memo 1: First, we need to define SEIS → SEIS is a bidirectional electricity and information network.

Process memo 2: We need to agree on special terms. The general terms are often too vague and require further adjustment. We need to create a catalog of used terms and how we define them.

Theoretical memo 2: Legal barriers and uncertainty seem to be the main barriers to SEIS. These barriers are well investigated in IS literature. Furthermore, the interviewees provide no new insights from an energy perspective.

Appendix 2

Table 1 Overview of interviews

Appendix 3

Table 2 Initial interview questions

Appendix 4

Table 3 Theory development across studies

Appendix 5

Table 4 Extract with coding (I)

Appendix 6

Table 5 Extract with coding (II)

Appendix 7

Table 6 Open representation of axial coding of the phenomenon under study based on Fiedler et al. (2010) and Wolff (2005)

Appendix 8

Relation between adoption costs, switching costs, and the collective action dilemma as well as their individual effects on SEIS diffusion.

Appendix 9

“For smart homes, the utilization is still difficult, because it costs 200 euros to install. The question is how to get that money back, because the advantages are not that great. So I don’t think anything is going to happen there.” (Interview 3)

Appendix 10

“We have a producer, a network provider/transmission, a measuring point operator, and a supplier, and it is necessary to develop processes between the individual market participants, not only in terms of data, but also in terms of administration, purchasing management, mistake clarification, etc., to create standards for data exchanges.” (Interview 3)

Appendix 11

“Data formats, aggregations of real-time readings — these have enormous data volumes.” (Interview 3)

“At the moment, we have a problem involving the large amount of data — there are no mechanisms to analyze and generate added value from this data. However, this will change in the future and it is an interesting application to increase forecast quality.” (Interview 4)

Appendix 12

“The data streams will increase exorbitantly. The speed of data exchanges will increase. The need for information will increase. Consequently, the reaction rate must be increased.” (Interview 14)

“I must say, I do not consider it appropriate. If the customer wishes to have SEIS installed, that is fine. However, it should not be forced, because the flood of data will be so immense that, in the end, it will be impossible to process all of it.” (Interview 16)

Appendix 13

“That is why I say we need legal clarity. We need to know where the journey is going.” (Interview 14)

Appendix 14

“We have survived the nationwide telecommunications history from which various horror stories arose. Today, nearly everyone is willing to share private data or banking details via the internet. No one really worries about his or her data. In the near future, the same development will occur in the energy industry.” (Interview 22)

Appendix 15

“[The components that are] going to cost money are the computing systems, data processing systems, and data security.” (Interview 19)

Appendix 16

“I think everything must take place within a certain legal framework for two main reasons. On the one hand, everything that concerns data protection and data security must be placed in a meaningful framework for the customer. On the other hand, I think investment security is provided by appropriate regulations.” (Interview 23)

Appendix 17

“No, the processing (of data) has not yet been standardized in Germany.” (Interview 1)

“As far as I can see, each corporation or supplier is still using its original systems, be it power plant control or grid control or others. I’m not aware of any discussions about a comprehensive standard.” (Interview 2)

“I’m not aware of any standard. At the moment, there is a wide range of solutions on the market. However, I assume that sooner or later a system will prevail. Although I cannot judge which systems, as the protocols that are currently traded on the market are still completely different.” (Interview 10)

Appendix 18

“There is currently no standard. However, I would like to see a standard applied.” (Interview 19)

Appendix 19

“I do not see a business case.” (Interview 7)

Other interviewees mentioned the added value for each stakeholder.

“I think a business case, which consists of a profitability analysis and potential efficiency, should be seen as a whole. However, one also needs to calculate the effects for individual actors.” (Interview 18)

“I consider these the biggest barriers: First of all the acceptance of SEIS on the client side. Often the clients choose the analog technology, as they cannot see any added benefit of the higher priced technology. Furthermore, the energy sector needs to determine whether there is any benefit at all, or whether it is just a prestige object that they desire.” (Interview 13)

Another interviewee mentioned the need for smart grids in business cases.

“Following this line of thought, I think there will be areas in which business cases will develop. When it comes to network management and intelligent networks, there will be a business case.” (Interview 19)

Interviewee 16 considered a business case necessary for energy providers.

“Energy providers are only interested in a business case if they reach at least a two-digit percentage return. Smaller energy utilities are satisfied earlier and therefore I would imagine that they will create a successful business case at an earlier stage.” (Interview 16)

Others mentioned that SEIS have not yet been applied.

“The application is missing. It is a technology-triggered innovation that requires commercial legitimization.” (Interview 4)

“Basically, it’s a conceptual approach or a new direction, which, at this point, is driven thematically and strategically and not yet by IT. I think IT follows strategy. … But one of the reasons may be that it is still not clear how the market for which comprehensive software might be developed can be defined.” (Interview 2)