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Theme 5: Digital Society

26 September, 2018

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The research in this theme will be guided by three overarching questions: What are the historical and potential future impacts of ICTs on sectoral and economy-wide energy consumption? What factors and mechanisms explain those impacts? How can the future energy-saving potential of ICTs be maximised?

Foxon and Sorrell, Sussex

The research in this theme will be guided by three overarching questions:

  1. What are the historical and potential future impacts of ICTs on sectoral and economy-wide energy consumption?
  2. What factors and mechanisms explain those impacts?
  3. How can the future energy-saving potential of ICTs be maximised?

The research will be organised under three sub-themes that address macroeconomic, business and user perspectives respectively, namely: (5.1) ICTs and energy productivity; (5.2) Business models in the digital economy; and (5.3) Smart systems and user practices. Each sub-theme will involve two or more research projects in Years 1-3, encompassing a range of empirical topics, theoretical frameworks and research methods, and including engagement with stakeholders. In combination, the research will improve understanding of the co-evolutionary changes in technological systems, institutional rules, business models and user practices that determine net impacts on energy demand (Foxon, 2011). The work programme allows room for further projects in Years 4 and 5 (potentially in collaboration with other themes), together with synthesis activities.

Sub-theme 5.1 ICTs and energy productivity

Research in this sub-theme will investigate the aggregate impact of ICTs on economy-wide energy consumption. While it has been argued that the ICT revolution is net ‘energy-saving’ (Kander et al., 2013) and can form the basis of a new surge of ‘green growth’ (Perez, 2013), this conclusion is contested. The complexity of impact pathways (e.g. the emergence of entirely new services) makes the quantification of historical impacts challenging, as well as creating uncertainty over future impacts. To address this challenge, we will undertake three initial projects: a systematic review of the evidence on the impact of ICTs on energy consumption; econometric analysis of the historical impact of ICTs on energy consumption; and a prospective assessment of the potential future impacts of ICTs on energy consumption. These projects will draw upon ideas and techniques from economics and innovation theory.

Project 5.1.1: Reviewing the evidence on ICTs and energy consumption (Sorrell, Sussex)

There is a large literature on the impact of ICTs on energy consumption, encompassing a range of ICT definitions, empirical methods (e.g. LCA, econometric), impact pathways (e.g. direct energy consumption, substitution of energy-intensive services), and system boundaries. The diversity of this literature, the variations in coverage and the patchy and contradictory nature of the results make it difficult to draw any firm conclusions. The aim of this project is to rigorously examine the current state of knowledge of the impact of ICTs as a whole on economy-wide energy consumption. The evidence base will include studies of ICTs in general, together with studies of individual ICT applications such as smart logistics. The project will use the methodology of systematic reviews, including: systematic and exhaustive searching of the available literature; explicit criteria for including or excluding studies; and reliance upon the most rigorous studies for drawing conclusions. The review will pay particular attention to the classification of different impact pathways, the relative coverage of those pathways in different studies, and the relative importance of different ICT technologies – both in terms of their direct energy consumption and their potential for enabling energy savings elsewhere in the economy. This should allow some broad conclusions to be drawn about the relative contribution of different ICT applications to changes in energy productivity. The outputs will include a report and an academic paper.

Start date: April 2018. End date: September 2019. Resource: 15 person months.

Project 5.1.2: Estimating historical impacts of ICTs on energy consumption (Sorrell, Sussex; Chitnis, Surrey)

One approach to capturing a wide range of impact pathways is to estimate statistical relationships between measures of ICT capital services and energy consumption at the sector and economy-wide level. This approach applies concepts and techniques from neoclassical production theory and involves estimating equations for the cost share of electric and non-electric energy inputs in different industrial sectors, specified as a function of energy and labour prices, ICT- and non-ICT-capital services, value-added and other variables. This specification controls for a range of determinants of energy demand, thereby allowing the elasticity of energy demand with respect to ICT-capital services to be estimated. We propose to use the 2017 update of the EU KLEMS database, which provides a panel dataset of the relevant variables for 34 sectors in 29 countries from 1995 onwards (O’Mahoney and Timmer, 2009). The KLEMS data will be supplemented with additional data on energy prices, energy consumption, purchasing power parities and other variables. The project will test a range of specifications with the aim of assessing the robustness of the results and their sensitivity to different assumptions. While this methodological approach is well-established and has been extensively applied to the relationship between ICTs and labour demand (Cardona et al, 2013), there are relatively few applications to energy demand. The outputs will include a dataset and two academic papers.

Start date: July 2018. End date: March 2020. Resource: 21 person months.

Project 5.1.3: Anticipating future impacts of ICTs on energy consumption (Foxon, Sussex; Fouquet, LSE)

This project will explore the potential future impacts of ICTs on UK energy consumption, by developing quantitative scenarios and related qualitative pathways. The aim is to examine the potential for ICTs to drive future improvements in aggregate energy productivity (Vivid Economics, 2016). Combining literature on projections of future ICT deployment with insights from the systematic review and econometric analysis, we will develop two or more quantitative scenarios for impacts of ICTs on energy productivity – for example, via improvements in the energy efficiency of ICTs; ICT-enabled improvements in the energy efficiency of specific sectors; and substitution of ICT-services for more energy-intensive services (Laitner and Ehrhardt-Martinez, 2009). The potential contribution of these scenarios to achieving decoupling of energy consumption from GDP will be tested in collaboration with macro-economic modelling in sub-theme 3 of the Materials and Products theme, by integrating measures of ICT-capital services into the MARCO model. The scenarios will be tested through stakeholder workshops to assess: the plausibility of the scenarios; the factors that could accelerate or decelerate the identified trends; and any energy-saving opportunities that have been overlooked. Drawing on the insights from these workshops, the project will develop qualitative pathways, outlining the types of changes that could maximise future ICT-enabled energy savings. The outputs will include two academic papers and a policy brief.

Start date: April 2019. End date: March 2021. Resource: 19 person months.

Sub-theme 5.2 Business models in the digital economy

Research in this sub-theme will investigate the potential for innovative, ICT-based business models to deliver end-use services with much lower energy use and carbon emissions. New business models are proliferating as entrepreneurs take up the multiple opportunities offered by ICTs and challenge established forms of economic organisation (e.g. taxi services, electricity markets). We will undertake two initial projects on: ICT-enabled ‘sharing economy’ business models, and ICT-enabled energy service business models. These projects will draw upon ideas from innovation theory (e.g. ‘servicisation’ (Gallouj and Savona, 2009)) and business studies (e.g. ‘value proposition (Foxon et al., 2015)).

Project 5.2.1: Digital platforms for the sharing economy (Foxon, Sussex)

This project will investigate the growth of digital platforms for facilitating the ‘sharing economy’ (Frenken and Schor, 2017), aiming to identify conditions under which the use of these may lead to net energy-saving. These platforms enable consumers to gain temporary access to under-utilised physical assets, such as accommodation (e.g. Airbnb), domestic equipment (e.g. Streetbank) and private vehicles (e.g. car sharing), including both business-to-consumer (e.g. Uber) and consumer-to-consumer (e.g. BlaBlaCar) initiatives. Such initiatives may contribute to energy-saving through improving the efficiency of delivering energy services (e.g. increasing vehicle occupancy) and reducing the energy required to produce the relevant assets (e.g. fewer car sales), but may also encourage increased consumption of energy services (e.g. more car journeys). First, we will conduct an online survey and/or in-depth interviews with users of one or more platforms with the aim of identifying their motivations for joining, their ownership and use of the relevant assets and their experiences with the platform, and contrast with those prior to joining the platform, and/or those expected in the absence of the platform. Second, we will conduct interviews with a number of platform providers and other stakeholders with the aim of identifying their business strategies (e.g. value creation and capture), motivations, expectations and challenges and the anticipated impacts on energy consumption. The outputs will include two academic papers and a policy brief.

Start date: April 2018. End date: June 2019. Resource: 15 person months.

Project 5.2.2 Use of ICT for new energy service business models (Foxon, Sussex)

There is growing interest in new ‘consumer-centric’ business models that will enable users to purchase high-quality energy services, whilst capturing more of the value from the energy system – for example, through peer-to-peer local energy trading platforms. In an institutional innovation, Ofgem’s Innovation Link has set up an energy ‘regulatory sandbox’ to allow innovators to trial business propositions that will benefit consumers was bypassing many of the usual regulatory requirements. We aim to conduct one or more case studies, working with Ofgem and selected innovators, to examine both the potential benefits of these trials to users and to the energy system, and the regulatory changes required for these innovations to be replicated more widely.

Start date: July 2019. End date: June 2020. Resource: 12 person months.

Sub-theme 5.3 Smart systems and user practices

Research in this sub-theme will investigate how diffusion of ICTs influences energy-related user practices (e.g. working remotely, changing leisure patterns) and how those changes may affect energy consumption. We will undertake four initial projects: accelerated diffusion of smart meters; expectations for automated vehicles; user acceptance of smart homes; and potential for teleworking. These will draw upon ideas from innovation studies (e.g. ‘accelerated diffusion’), sociology (e.g. ‘expectations’) and science and technology studies (e.g. ‘domestication’).

Project 5.3.1: Accelerated diffusion of smart meters (Sovacool, Sussex; Geels, Manchester)

This project will investigate the accelerated diffusion and adoption of smart meters – a technology being promoted on the grounds that it can both reduce energy demand enable flexibility in energy use patterns (Darby 2010). The UK has an ambitious target to fit all households with smart meters by 2020, whilst other EU countries are accelerating smart meter diffusion, although often with different targets (Sovacool et al. 2017). This project will investigate the drivers and obstacles to smart meter diffusion, comparing the UK rollout to that in other countries, and will consist of two parts. The first will be a qualitative, comparative case study of smart meter diffusion in the UK and Germany, investigating the drivers and obstacles to smart meter diffusion, such as social acceptance, technical standards and policy choices. The second part will be a quantitative meta-analysis of smart meter diffusion in at least ten countries, identifying the rates of diffusion and the relative influence of factors such as technology costs, adoption requirements (obligatory or optional), modes of information provision, roll-out models (utility or DNO-led), emissions reductions, and policies (targets, incentives). Particular attention will be paid to the anticipated benefits for energy demand reduction and demand shifting. The outputs will include two academic papers and a stakeholder workshop.

Start date: April 2018. End date: March 2019. Resource: 11 person months.

Project 5.3.2: Expectations for automated vehicles (Schwanen, Hopkins and Brand, Oxford)

This project will investigate the expectations regarding the potential energy-saving benefits of autonomous vehicles (AVs). AVs could represent the most profound technological change in road transport since the rise of Fordism, with reductions in energy demand being one of the many anticipated benefits (IMechE 2016; Schwanen 2017). Key uncertainties concern: a) how the diffusion of automation will co-evolve with transformations in propulsion technology (e.g. EVs) and changes in vehicle ownership regimes (e.g. car sharing); and b) whether AVs will trigger new usage and activity patterns in private mobility and logistics. The project will investigate the expectations of different groups about the impact of AVs on passenger and freight transport energy demand and how these are influencing the diffusion process. A ‘dissensus-oriented’ Delphi method is proposed because this recognises deep uncertainty and the value-laden character of expertise and expectations. This method will be deployed twice, first with ~300 experts and then with a representative sample of ~1,200 members of the public. The Delphi approach will enable the identification of key differences and segments among experts and the public regarding a) the expected impacts of AVs on energy demand; b) the pathways through which those impacts will be realised. Outputs will include two academic papers and two stakeholder workshops.

Start date: September 2018. End date: August 2020. Resource: 11.5 person months.

Project 5.3.3: User acceptance of smart homes (Sovacool and Martiskainen, Sussex)

This project will explore user perceptions and acceptance of smart home technologies (Wilson et al. 2017), including what we know (and do not know) about the impact of those technologies on energy consumption. The first task will identify a selection of market leading, app-enabled, smart technologies (e.g. thermostats, appliances, lights, plugs, bundled products) that appear to offer the greatest potential for energy saving. This will be achieved through a review of grey literature and interviews with a small number of smart home experts. The second task will be a survey of a representative sample (N~1000+) of the UK population, with the aim of identifying the respondents’ understanding and perceptions of smart technologies, their motivations for adopting or rejecting them, the relative importance of different benefits (e.g. comfort, security, convenience, cost savings, environmental) and their expectations about how they would use the technologies. Unlike earlier work, this survey will not only discuss adoption and use but will also pose a series of questions about anticipated benefits and drawbacks, possible concerns (e.g. privacy, data security), technical literacy etc. The survey will be followed by two small focus groups (N<10), using demographically contrasting household groups with the aim gaining a more in-depth understanding of the factors shaping perceptions and attitudes. The outputs will be two academic papers, one for each component.

Start date: April 2019. End date: March 2021. Resource: 23 person months.

Project 5.3.4: The potential for teleworking (Sovacool, Sussex)

This scoping project will investigate whether and under what conditions teleworking can reduce energy demand (Mathews and Williams 2005; Anable et al. 2012). The primary method will be a critical review of the academic and policy literature, encompassing: a) quantitative estimates of actual and potential impacts; b) qualitative investigations of the mechanisms and determinants of those impacts; and c) assessments of the conditions under which demand reductions can be maximised. The review will examine the working practices associated with different forms of teleworking; the relative use and potential of different types of teleworking; the use of different working spaces (e.g. offices, cafes, libraries, homes); the substitutability/complementarity of ICTs and work-related travel; the associations between teleworking and other energy-using practices; and the trends in each of these over time. It will outline a typology of different types of telework and the people undertaking them, and assess the historical and potential future influence of each on energy consumption. The output will be one academic paper.

Start date: April 2019. End date: March 2020. Resource: 6 person months.

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