EDF Case Study

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Added value through innovative product-service offers: the EDF case study

Project funded with the support from the European Commission under the GROWTH
Programme in the Fifth Framework Programme

Acknowledgements

This case study is a real life example on how the MEPSS methodology (Methodology for Product Service Systems) has enabled the French electricity provider Electricité de France (EDF) to develop a new, integrated product service offer.

The case study was conducted within the MEPSS project[1] with financial support from the European Commission, under the GROWTH programme in the fifth framework programme.

The project team was composed of:

§ Isabelle Camillieri, Research Engineer in Eco-Design and Industrial Design, EDF coordinator on the MEPSS project, EDF, France;

§ François Jégou, Manager DÀLT / Solutioning-design.net, Brussels ;

§ Jochen Krimphoff, Project coordinator on the EDF case, Senior Manager, Ecobilan, France;

§ Marie Merle, Research Engineer in the Environment expertise group, EDF Research and Development, France;

§ Capucine Vayn, Consultant, Ecobilan, France.

The project team would like to acknowledge important contributions to this report made by other EDF and Ecobilan staff.

The EDF case study was presented at the joint Suspronet / MEPSS final conference. The proceedings of the conference can be found on the following website: http://www.suspronet.org/

For more information on the MEPSS project, please:

§ Visit the following websites: http://www.pss-info.com/ or http://www.ecobilan.com/uk_mepss.php or

§ Contact us at info@ecobilan.com or at the following address:
Ecobilan
32, rue Guersant
75017
Paris, France
Tel: +33 1 56 57 60 16
Fax: +33 1 56 57 16 36

Paris, 1st of November 2004


Presentation of the context

PricewaterhouseCoopers and Ecobilan took part in a European project on eco-efficient innovations via integrated product-service offers. The aim of the project was to devise a modular methodology or ‘toolkit’ to guide companies through the innovation process to develop integrated product-service offers or ‘Product Service Systems’ (PSS). The methodology highlights the key factors of success for innovative PSS and offers a systematic framework for innovation so as to ensure that all issues are considered.

The MEPSS project, a ‘Methodology for Product Service Systems’ brought together a consortium of experts from all across Europe and was funded under the GROWTH programme of the Fifth European Community Framework Programme.

Brief outline of the MEPSS methodology

The MEPSS toolkit gathers a number of tools that enable industry to develop and analyse integrated product-services with regard to design and implementation aspects; micro-, meso- and macro-economic impacts; social and environmental impacts and issues related to consumer acceptance, culture and ethics. The tools enable participants to successfully develop and implement new product-services in line with business goals, offer optimal quality for their individual customers and minimise negative impacts on the environment, thus resulting in sustainable growth.

The tools developed for MEPSS to assist in the development of product-service system aim at addressing three main questions:

§ How can industry conceive and implement PSS in a systematic and efficient manner?

§ How can industry analyse and assess economic, social and environmental impacts of PSS?

§ What are the key factors of success or failure of a PSS?


The methodology is organised in five phases that each have:

§ Specific objectives;

§ A list of key questions to be addressed and;

§ A selection of tools to assist the process.

Presentation of the case studies carried out by Ecobilan

Ecobilan was entrusted with the task of testing the methodology through real business cases. The present case study is one of the two case studies developed in the course of the project by Ecobilan. The objective of the projects was to test the tools developed within MEPSS to ensure their effectiveness, and to provide feedback to the consortium in order to further improve the methodology and the tools.


Introduction to the EDF case study

How did the project start?

EDF R&D is working on methodologies and tools to develop services in a more sustainable way, and develop prospective services for customers. At the time being, EDF does already provide some services but its mainstream offer is based on a ‘pure product’ (i.e.: electricity sales in kWh):

Within this context, Ecobilan and Dalt, two members of the MEPSS consortium invited EDF to take part in the testing of the MEPSS methodology for developing an innovative integrated product-service offers or systems (PSS).

Objectives of the partnership

The objective for EDF R&D was to develop a new offer that reduces environmental impacts and is acceptable both economically and socially, with the help of the tools developed by the MEPSS consortium. The MEPSS Methodology was a good opportunity for EDF R&D to test a specific approach linking service design and assessment tools.

The objectives for Ecobilan and Dalt were to demonstrate the added value of the MEPSS methodology and its ability to encompass the complexity of setting up a new offer, to test the tools (assessment and design) developed during the MEPSS project and to further improve them.


Schedule of the partnership and participants

The project took place from January to October 2004 and involved a multi-disciplinary team from EDF (Research & Development), Ecobilan and DALT (consultancies). The team was composed of:

§ 4 people specialised in design;

§ 6 people specialised in assessment of environmental or technical issues;

§ 3 people with trans-disciplinary knowledge of design and assessment.

Phases tested and tools used

During this project, three out of the five phases of the methodology have been tested:

The iterative development process between design work and assessment work, inherent to the MEPSS methodology, enables to feed results from the former step and enrich the results from the next steps.

The following tools were tested in depth:

§ SWOT analysis;

§ Scenario workshop;

§ Identification of relevant activities with regards to sustainable development;

§ System map;

§ Offering diagram;

§ Interaction table;

§ Simplified life cycle analysis (LCA);

§ Life Cycle Costing (LCC).


Applying the SWOT analysis tool

Why and how was the tool used?

In order to gain a good overview of the current situation of EDF, a market analysis was carried out. The aim of the Strengths-Weaknesses-Opportunities & Threats (‘SWOT’) tool was to map the main aspects of the current situation, so as to build the PSS on the current strengths, seize the emerging opportunities and reduce the threats and weaknesses in the new offer.

The SWOT tool was applied by the project team as an input for a ‘Exploring Opportunities’ workshop for PSS design. It was prepared as “homework” by the project leaders from EDF and Ecobilan, based on background information. The SWOT analysis was then discussed and refined with input from all workshop participants.


An overview of the results is presented below:


The key issue that emerged is the project on a European Directive on Energy Efficiency that is likely to impose further constraints on electricity suppliers. The SWOT identified opportunities for EDF to develop a service to assist clients in better managing their electricity consumption. This service offering should be supported by a “enabling technology” that measures electricity consumption at the clients’ premises.

What were the benefits of using the tools?

§ Identification of the key issues at stake in the current situation;

§ Understanding of the internal / external context.


Using the MEPSS Scenario workshop – Inductive process

Why and how was the tool used?

Using the results of the Strategic Analysis phase, the Scenario workshop tool was used to generate ideas for service offering with a large group of participants. Various ideas emerged from the session (e.g. raising awareness in households; providing “all inclusive” contracts; allowing comparison in the neighbourhood; management of electrical appliances by remote control, etc.).

About 25 of such tentative ideas were elaborated in small groups (A5 format with title, baseline and quick sketch), discussed in plenary session and organised in clusters on the wall:

Then, in a second step, the ideas were clustered according to two dimensions (‘polarities’) that emerged from the session:

§ Services that make life easier for the client (i.e., Relieving) vs. services that enable the client to take action (i.e., Enabling)

§ Services that are directed towards individualistic behaviour vs. collective scenarios.

The ideas were then projected on the wall, clustered according to the polarities stimulating the generation of more ideas.

What were the benefits of using the tools?

§ Semi-structured process to generate ideas;

§ Polarity-based synthesis facilitating quick convergence of participants.


MEPSS Scenario workshop - Deductive process

Why and how was the tool used?

Starting again from Strategic Analysis, participants were invited to express through polarities the main alternatives to implement the new PSS based on the new technology enabling measurement (i.e. should the technology be implemented at individual household level or shared within a community? Should it be installed on a permanent base or rented for an initial check?).

A priority between the polarity was discussed and agreed upon according to their potentialities to meet the company’s main priorities (i.e.: which direction is most promising in terms of sustainability? Which idea is more likely to be implemented in a technology-driven company culture? Which idea is discriminating in the opening competitive market? Etc.)


Top two polarities were chosen and organised in a diagram describing four different scenarios. For each scenario, a short text provides an overview of the leading "vision" (i.e. "MyConso" is based on enhancing individual responsibility of users), company role, users benefits and expectation in term of sustainability.

What were the benefits of using the tools?

§ Cross-fertilisation between polarities that stimulate systematic exploration of opportunities;

§ Parallel between spontaneous generation of ideas and deduction of polarities that allow a more systematic creative approach.


Using the MEPSS tools to identify relevant activities with regards to sustainability

Why and how was the tool used?

Once the ideas were generated, a first qualitative assessment of environmental issues was carried out, based on the reference scenario defined.

The tool enabled to identify that the main contributor to the environmental impacts along the life cycle is household consumption. It soon became obvious that the parameters that would have a strong impact on the results of a life cycle assessment were not the actual costs and environmental implications of the PSS itself (i.e.: transport to install the measuring device, production of the measuring device) but the way in which the clients would choose to take into consideration advice on how to reduce environmental impacts.

Indeed, it is the sum of the measures that the customer chooses to implement that determines the results in terms of energy savings and investment.

Focus on the assessment of residential customer’s electricity consumption

Thus, five different client profiles were identified:

§ The radical changer: the client owns his property and is ready to implement radical changes. He achieves maximum savings by implementing all the suggested actions, including expensive measures such as changing the heating system;

§ The optimiser: the client owns his property and identifies major contributors to his electricity bill. He implements the cost effective actions and only on major contributors;

§ The thrifty client: the client is either owner or tenant and is ready to seek any potential electricity saving. He implements all the low cost and easy pieces of advice offered to him;

§ The realistic client: the client is either owner or tenant and the stakes for him is not to save energy or money but his desire to spend his money cunningly (e.g.: winning bonus points for travel is a motivation for him);

§ The rest of the population: these people would not implement any actions.

What were the benefits of using the tools?

§ Provides a first overview of the sustainable issues at stake;

§ Definition of the system’s boundaries for further quantitative assessment.


The MEPSS System Map in practice

Why and how was the tool used?

One scenario was selected from the workshop output and a map of the system of actors able to provide the related PSS was build.

From an apparently simple service idea, the map helped the project team to visualise all the actors required (energy producer, broker, contact shop, system organiser, end user), represent the multiple relationship (i.e. exchange of goods, information, money) they have as well as to imagine which secondary stakeholder may play a role or should be involved (i.e. different sale points, maintenance services, volunteers and associations relay).

In particular the team considered the various possibilities to organise the system to provide the same PSS (i.e. integration versus outsourcing).

One of the maps developed is presented below:

What were the benefits of using the tools?

§ Provide a visual representation to share and fine tune the stakeholder panorama;

§ Flexible visualisation that enable to explore different configurations, compare them and progressively complete the map.


Applying the MEPSS Offering Diagram

Why and how was the tool used?

From the selected scenario, an elaboration of the PSS offering showing the various service options and added values was made. This second visualisation form the market point of view required 2 levels of elaboration: a first hypothesis was formalised listing the main options (i.e. in terms of diagnosis, advise modalities, management of the energy consumption…). In a second time (and after a first development of the story-boards, see Interaction Table) the different service options were reorganized in order to outline coherent contracts (i.e. "basic" for first contact with the service, "plus" for advanced performances, etc).

For each dimension of the service (i.e. the advice on energy consumption) different options are listed (i.e. on-line advice versus through a technician at users home) and described in details (i.e. information available, level of personalisation, simulations).

What were the benefits of using the tools?

§ Induce to think the PSS from the users/market point of view;

§ Flexible for refinement and reorganisation.

The MEPSS Interaction Table

Why and how was the tool used?

The third dimension of visualisation of the selected PSS scenario is based on a Storyboard showing the interaction between the user and the service.

From the scenario pre-assessment, four profiles of potential users (corresponding to target groups in electricity users) were taken into consideration: the "radical changer" (owner implementing all suggested actions); the optimiser (owner or tenant interested in return on investment); the "thrifty" client (owner of tenant ready for cheap changes only); the "realistic" client (owner or tenant less motivated by consumption reduction).

For each of these four profiles a specific Storyboard was developed imagining how a typical user would like to interact with the service.

The Storyboard is illustrated with simple drawings and captions. The user role and the system role as well as the element of the solution are detailed below and above in the Interaction Table.


What were the benefits of using the tools?

§ Most immediate representation of the PSS to communicate internally in the company;

§ Very useful to develop precisely the PSS by inducing questions like: when does the customer encounter the service? Where exactly? When does the customer sign up? Where? What does the company provide in terms of tools, for the adviser, in term of products for the customer?


MEPSS Simplified Environmental Life Cycle Assessment

Why and how was the tool used?

Once the preferred PSS scenario had been chosen and refined in the Design phase, a quantitative assessment was conducted.

A simplified Life Cycle Analysis was carried out. The objectives were defined, as well as the boundaries of the system to be studied. The energy savings (kWh) as well as the carbon dioxide emissions savings were quantified for each client profile as defined in the qualitative assessment phase.

An estimate of the savings at a national scale was then established by aggregating the savings generated by each client profile.

For instance, the results for the client profile “The realistic client” are as follows:

Total electricity and CO2 savings for the client profile “The realistic client”

What were the benefits of using the tools?

§ Identification of the client profile that generates the most energy savings and that seem more promising as a marketing target;

§ Quantification of the environmental improvements (CO2 savings) brought about and normalisation of the results as compared to national emissions.


Applying the Life Cycle Costing MEPSS tool

Why and how was the tool used?

Once the preferred PSS scenario had been chosen and refined in the Design phase, a quantitative assessment was conducted, based mainly on public data.

The aim of the Life-Cycle-Costing (LCC) was to provide information on the costs incurred for the client of the new PSS, at each stage along its life cycle. This analysis takes into consideration the cost of the measuring equipment and its supply, the purchase of electricity, the cost of the energy saving actions (such as, for example the purchase of new, energy efficient class A equipment). The costs incurred before and after the PSS were calculated over a 10-year period.

For instance, the results for the client profile “The realistic client” are as follows:

Total Life Cycle Cost for the client before / after implementation of the PSS

The difference in costs over 10 years for the client profile are as follows:

§ The client saves: 802 euros over 10 years

§ Investment choice: C equipment kept until the end of its life and replacement by A in 5 years and or A now

§ Implementation of:

o Renewal of some of the client’s large electric appliances;

o Purchase of insulation but no heavy renovation;

o Purchase of less energy demanding light bulbs;

o Some change in behaviour (e.g.: defrosting of the fridge).


Savings per type of appliance for the client profile “The realistic client”

This tool helped draw the following conclusions: at a microeconomic level, implementing the PSS is not necessarily financially attractive for households and the PSS does not generate significant cost savings for the customers. However, some specific actions are very cost effective. Furthermore, the effect of the PSS is to help customers change their electricity consumption patterns and habits as well as to accelerate the rate of renewal of electric appliances.

What were the benefits of using the tools?

§ First comparative analysis of the costs incurred for the client before implementation of the PSS / after implementation of the PSS;

§ Possibility to use these results to optimise the design of the offer during the PSS Concept Design phase.


Conclusion of the EDF Case study

Main findings

The Ideas for innovative PSS offerings generated in the course of the project resulted in the development of an innovative, use-oriented PSS offering that could reduce environmental impacts. It allows EDF to make a step towards increased intangible value added, away from a ‘pure product’ (i.e.: sale of kWh):

The aim of the potential new offer is to provide a service to assist customers in better managing their electricity consumption, using new technologies enabling this solution to be put into practice. This idea makes sense in a context where regulatory constraints on energy efficiency are becoming more stringent.

Furthermore, EDF was able to acquire knowledge on PSS and the specific tools developed by the MEPSS consortium and to test their practicability. The project was able to demonstrate the added value of the MEPSS tools: the overall approach, the relevance and quality of the tools the obtained results were perceived as valuable to EDF.

Finally, EDF made valuable recommendations for improvement of the tools, which have allowed the MEPSS consortium to improve the tools. EDF’s key recommendations were as follows:

§ Improve the explanations as to how the tools relate to each other;

§ Enhance the interaction between design tools and assessment tools and how they interlink and feed in information to each other;

§ Clarify how long the implementation of each tool takes.


Outlook and next steps

At this stage, EDF is communicating internally on the results of the project. The results of the project generate interest within the company.

The next step that EDF will take if it wishes to carry on with the development of the offer is the PSS Concept Design phase. This development phase will enable them to develop a detailed definition of the offer’s functionalities, interaction between actors and costs incurred by both the customers and the service providers.

At this later stage, EDF will be able to involve stakeholders to weave the right partnerships and ensure the success of the PSS.


Further information on the participants to the project

Isabelle Camillieri

Engineer Researcher in Eco-Design and Industrial Design, EDF Research and Development, France.

EDF coordinator on the MEPSS project.

Isabelle Camillieri has joined EDF Design (part of EDF R&D) in 2001. She is working on developing a methodology for EDF to design products and services in a more sustainable way. More precisely, she is engaged in projects coupling “Service Design” and “Environmental Assessment”. She is also involved in the design of new products and services. In the context of a deregulated market, EDF Design develops products/services in order to bring value to the EDF supply and to keep its customers satisfied.

François Jégou

Manager DÀLT / Solutioning-design.net

François Jégou has 15 years of experience in strategic design. He has a degree in industrial design and teaches as visiting professor at the Faculty of Design of the Politecnico in Milan and La Cambre School of Visual Art in Brussels. Since 1990 he has been running the consultancy DALT based in Paris and Brussels, specialising in co-designing scenarios and new product-service system definition. DALT is active in various fields including: sustainable design, interaction design, cognitive ergonomics, senior friendly design, compliance and security of pharmaceutical products, innovation in food products. DALT is active in the Solutioning-design.net network and several EU research projects.

Jochen Krimphoff

Senior Manager, Ecobilan

Jochen has ten years of experience in environmental management, corporate social responsibility, sustainability and environmental, health & safety (EH&S) reporting for corporations, governments and public agencies in Europe. With Ecobilan, he is in charge of sustainability advisory services for European Commission and the public sector. As part of this responsibility he was in charge of Ecobilan’s contribution to the MEPSS project (DG-Research). Other key assignments included the assistance to conduct stakeholder consultation for the European Commission to prepare of the World Summit for Sustainable Development in Johannesburg (DG Environment), and sustainability impact assessment (SIA) of trade negotiations (DG Trade).


Marie Merle

Engineer Research in the Environment expertise group, EDF Research and Development, France.

Marie manages the EDF project which deals with the integration of sustainable development into EDF offers; this project includes the MEPSS case study.

Marie Merle has joined EDF Environmental Evaluation team in 2000. She works on life cycle assessment and especially on the methodology and on its applications to EDF. She is in particular involved with the LCA project ‘EDF kWh’.

Moreover, she works on the knowledge of other environmental evaluation tools, and their appliances to the EDF context. She is involved in the development of sustainable development indicators for EDF commercial offers.

Capucine Vayn

Consultant, Ecobilan, France

Capucine has over three years experience in the area of sustainable development and environmental management. She has worked with a wide range of clients in the industry sector and within European projects on issues relating to industrial ecology, climate change, and communication on sustainable development issues. Before joining Ecobilan early 2003, she was in charge of developing and implementing the environmental reporting system for Dalkia, the Energy subsidiary of Veolia, within the Strategic Department.



[1] Contract G1RD - CT-2001-00585