The importance of localization in energy disaggregation models
- Dora Kromlidou
- 2 days ago
- 5 min read
Energy retailers need a customized approach to analyzing residential energy consumption data and not a universal solution which often lacks accuracy. This happens because geographic location is a key driver in shaping how energy is generated, distributed, and consumed. From diverse generation sources, like solar power in Spain and hydropower in Norway, to varied asset adoption such as heat pumps in Mediterranean countries, each region presents unique characteristics. Climate, legislation, socioeconomic factors, and infrastructure all contribute to distinct consumption patterns, requiring localized approaches to meet specific customer needs and facilitate a sustainable energy transition.
Diverse energy generation
Geographical conditions and natural resource availability lead countries across the globe to adopt different energy generation strategies.
As the European Union regulations promote renewable energy generation, member countries have developed energy generation portfolios based on their geographic conditions and natural resources to meet sustainability goals. For example, Spain's climate conditions make it ideal for solar power generation, with photovoltaic plants producing 20.3% of the country's energy in 2023. On the other hand, Norway’s mountainous terrain and abundant water resources make it possible for hydropower to generate around 88% of its overall electricity production.
In the United States, natural gas remained the largest electricity source in 2023, accounting for about 43% of electricity generation. This dominance reflects a natural gas boom: abundant, cheap, domestic gas tends to replace coal, while many coal plants retire due to the current environmental regulations. Despite state renewable energy mandates and federal tax credits driving growth in wind and solar power, gas-fired power remains the backbone. These examples highlight how individual countries leverage their unique characteristics to invest in renewable energy sources that best suit their needs.
Grid infrastructure also plays a crucial role in shaping energy generation trends across countries. Its quality, capacity, and flexibility directly influence how energy is produced, distributed, and integrated, especially when it comes to renewable energy. Advanced grids equipped with smart technologies, real-time monitoring, and energy storage can accommodate high shares of variable renewable energy like wind and solar by balancing supply and demand efficiently.
This mix of energy generation sources directly affects production costs and, consequently, consumer energy prices. These price signals can significantly influence residential consumption patterns. For example, the implementation of time-of-use electricity rates can incentivize end-users to shift their energy-intensive activities to off-peak hours, influencing when energy is consumed. Moreover, the adoption of certain residential appliances and DER assets is also affected. For instance, if natural gas is a budget-friendly option in a specific market, alternatives such as heat pumps for space heating may be less economically attractive. Therefore, the energy generation mix in each country can significantly influence how residential consumers use electricity, even in indirect ways.
Energy consumption patterns
Geographical locations can directly influence residential consumption behavior and the types of appliances typically found in households, shaped by climate, legislation, and socioeconomic factors. Climate and weather conditions dictate whether a region is heating dominated or cooling dominated, directly affecting the type and amount of the energy consumed as well as the timing of peak demand. In regions with harsh winters, energy is mostly used for space heating; for instance, it’s unlikely that a resident in Alaska will use space cooling appliances, even during summer, since the average temperature typically ranges between 10°C to 11°C.
Government policies also play a critical role in asset penetration. According to LCP Delta, the rollout of residential PV panels in the Netherlands reached almost 35% by the end of 2023 due to their net-metering scheme that encouraged residential investments in panel installations. Such initiatives, supported by national authorities, can shift focus to electrification through green tech adoption.
Legislations can also become the catalyst for shaping the actions and choices of end-users. These frameworks are typically defined and enforced regionally, creating localized standards that consumers must follow. This localized nature of legislation means that compliance is not universal but rather dependent on local laws and where a person lives.
Socioeconomic factors also play a crucial role. High-income regions tend to have higher per capita energy consumption due to larger homes and a greater number of appliances. Regional variations in dietary and cultural practices significantly affect energy consumption for cooking activities. Portuguese consumers use cooking appliances frequently, accounting for up to 45% (sources 1, 2) of their energy consumption, in contrast to Australian households where cooking accounts for 5% of their total energy consumption.
Regional disparities in the overall consumption are evident as demonstrated in the following example. Sweden's household energy consumption exhibits a seasonal pattern in comparison with that of the U.S. In winter, the average monthly consumption in Sweden can reach 1,900 kWh, a number significantly higher than the approximately 500 kWh used by American homes.
Conversely, during summer, American households typically consume more energy than their Swedish counterparts.
The following examples showcase variations in European consumption habits across two distinct categories. Initially, the share of electricity consumption for space heating in the residential sector is presented. The Nordics present an increased energy usage in comparison to countries located closer to the Mediterranean sea due to the higher adoption of heat pumps.
Similarly, the chart below illustrates the average share of electricity consumption dedicated to water heating across European nations. In countries where gas boilers are widely used (e.g. the Netherlands, Italy), electricity consumption for electric water heating is typically lower.
The need for localized solutions
Utilities face the challenge of providing tailored disaggregation services to diverse customer bases with varying energy consumption patterns and needs. A one-size-fits-all approach to customer engagement solutions often falls short, leading to inefficiencies and unmet customer expectations.
Understanding these interconnected factors is essential for analyzing and predicting energy consumption behaviors at the individual consumer level. Variations in these elements across different geographical locations and demographics lead to diverse energy usage patterns. This necessitates localized approaches to the design of solutions that cater to the specific needs and characteristics of different end-user groups. Therefore, providing highly personalized customer engagement services that resonate with the unique characteristics of each region's consumers is important for utilities to provide actionable and accurate insights, build trust, and drive meaningful change.
To effectively plan infrastructure development, optimize service offerings, and ensure customer satisfaction, utilities must understand the specific localized energy insights that drive consumption behaviors within their service areas. This requires detailed knowledge of technology adoption rates, preferred energy sources, peak demand periods, and the impact of local regulations on consumer behavior, all of which vary significantly across different regions. Without this granular understanding, utilities risk inaccurate forecasting and ineffective customer engagement, ultimately hindering their ability to meet evolving energy needs and support the transition toward a sustainable energy future.
NET2GRID EnergyAI®
NET2GRID EnergyAI® is an AI-powered service that transforms smart meter data into detailed household energy profiles and insights. With over a decade of experience, NET2GRID supports utilities and energy providers across Europe, North America, and Australia, making our solution trusted and available globally. At the core of our service is a continuously expanding ground-truth dataset, built from millions of data points across a wide range of household appliances. This rich foundation enables us to train and fine-tune robust disaggregation models that accurately identify energy consumption patterns regardless of geography or household variability.
By combining deep domain expertise, proprietary data collection infrastructure, and advanced AI, NET2GRID equips energy retailers and utilities with the tools to better understand residential consumption, detect behind-the-meter assets, and plan effectively for a more flexible and informed energy future.
