PREPARING FOR SMART METERS APPLICATION: EFFECTS OF

CONSUMER PERCEPTIONS, EXPECTATIONS, AND INTENTIONS

Jui-Sheng Chou1, Novi Yutami2
1
P.E., Ph.D., Professor, Department of Construction Engineering, National Taiwan University of Science and
Technology, 43, Sec. 4, Keelung Rd., Taipei, Taiwan, jschou@mail.ntust.edu.tw
2
Graduate Research Assistant, National Taiwan University of Science and Technology, 43, Sec. 4, Keelung Rd., Taipei,
Taiwan, m1015818@mail.ntust.edu.tw

ABSTRACT
Since sustainable development and energy efficiency are being pursued in many countries, use of smart meters is
considered a first step in allowing residential consumers to control their energy consumption remotely. Despite the
growing interest in smart meters, many consumers are still sceptical due to their limited awareness, knowledge, and
understanding of these devices. Social acceptability is a crucial determinant of the failure or success of plans by policy
makers to implement smart meter systems. Therefore, this study investigated the factors that affect consumer acceptance
of smart meters in residential buildings. Data obtained in a survey of energy consumers in Indonesia were analysed by
Structural Equation Modeling (SEM) to determine the interacting factors in consumer acceptance of smart meters. The
findings of this research reveal several factors that affect consumer decisions related to their acceptance of smart meters
in residential buildings.

INTRODUCTION
Energy efficiency and sustainable development are important global issues and are major concerns in most countries. In
terms of energy efficiency, the resource use must be rationalized and overall energy system must be monitored. It causes
simply monitoring consumption is no longer sufficient. In response of this demand and respect to energy efficiency, this
moment is perfectly aligned with the changes to propose smart meter as an automatic remote metering and sub metering
of energy consumption. On the other hand, several studies show that the public is still confused about what can be
achieved through smart meters application. This phenomenon reinforces the notion that the technology availability does
not guarantee its widespread adoption.
Related to smart meters issue, many researches were conducted and most of them used a detailed technical
perspective or general conceptual perspective as the initial approach. Whereas, social acceptability is an important
determinant of the success or failure of policy maker decisions. The first step in smart meter development is to ensure
consumer acceptance of smart meters in their residences (McKenna et al., 2012). Smart meter deployment could be easily
refused if consumers underestimate their benefits or overestimate their problems. To design an appropriate policy, a clear
understanding of consumer concerns and preferences about smart meter deployment is crucial. For utility companies,
measuring consumer tendencies to adopt smart meters is crucial for accurate forecasting and effective targeting of high-
tech product and services.
This research investigates factors that affect consumer acceptance of smart meters installed in residential buildings in
Indonesia. A research model is developed based on technology acceptance theory. The findings of this study improve
understanding of consumer perceptions and behaviors related to smart meters. The data can be used by energy utility
companies in Indonesia and by policy makers when developing strategies for implementing a “one-size-fits-all” program
related to smart meter use in residential buildings.

LITERATURE REVIEW AND RESEARCH HYPOTHESES

Smart Meter as a New Technology
The smart meter is one of the smart grids for next-generation energy power systems being developed as a promising
solution and response to the energy crisis. This advanced energy metering technology enables remote metering of energy
consumption (electricity, water, and gas) and provides more detailed information compared to a conventional energy
meter. An important feature of smart meters is the integration of a high speed, reliable, and secure data communication
network to manage the complex power system effectively and intelligently. Smart meters also enable dynamic and real-
time pricing and tariffs, which benefits consumers as end-users to save their money. In additional, consumers who install
smart meters in their residences can also benefit by receiving feedback information. The role of feedback is to enable
visualization of energy consumption. Smart meters also help utility companies and power supply companies improve
distribution efficiency by detecting damage, unauthorized consumption and energy theft.

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However, a potential risk of smart meter installation is that consumers may object to increased electricity bills
resulting from improved billing accuracy or from the use of flat billing compared to bills based on manual meter reading.
Manual meter reading is subject to human error in recording, and since smart meters are digital devices, they would
avoid this problem. However, the increased billing accuracy could result in increased bills for consumers who have been
previously undercharged. Another potential risk of implementing smart meters is violation of consumer privacy. Detailed
billing data could reveal personal data of consumers such as when they are home, their habits and routines, and how they
use their appliances. For instance, such data may allow hackers to disconnect power to large areas remotely and to obtain
decrypted personal information.
Consumer Acceptance of New Technology
In terms of technology acceptance concerns, the most frequently used model of user acceptance of information
technology (IT) is the technology acceptance model (Krishnamurti et al., 2012). The technology acceptance model (TAM)
explains the acceptance of information technology in performing a task and identified two beliefs that influence the
information system (IS) usage: Perceived usefulness (PU) and ease of use (PEU). Prior studies of TAM regarded actual
IT usage as an indicator of acceptance. Here, however actual usage was not used as an indicator of acceptance because
smart meters have not been widely implemented by energy consumers in the research setting (i.e., Indonesia).
Previous studies in related management disciplines (e.g., organizational behavior, marketing, and information
systems) have examined the relationship among factors such as user involvement, satisfaction, usage, and behavioral
intentions. Hence, this study focused on behavioral intention to use the system rather than actual system usage and
posited it as an indicator of technology acceptance. Figure 1 shows that, compared to TAM, the model developed in this
study is more comprehensive and provides a better understanding of the factors that affect behavioral intention to use
smart meters. The model also incorporated variables related to social issues (social influence/subjective norms),
individual issues (energy tariff/cost, privacy and safety), and technical issues (program content/feedback features and
technological complexity). From the initial proposed model, we derived 20 hyphoteses.

ETC 1
ETC 2
H16
ETC 3 Energy Tariff/Cost PERCEIVED RISK
ETC 4
ETC 5

H17 PR 1 PR 2 PR 3 PR 4 PR 5 PR 6 H11

PSC 1
ATB 1 ATB 2 ATB 3 ATB 4 ATB 5
PSC2
PSC3 Privacy/Savety Concern H9 H12
PSC4
PSC5
H8
ATTITUDE TOWARDS
UES 1 UES 2 UES 3 H4 BEHAVIOR
H10
H13
SIN 1
SIN2 H18
Social Influence/ PERCEIVED EXPECTED USER EXPECTED
SIN3 H15
SIN4 Subjective Norms USEFULNESS H1 SATISFACTION
SIN5
H6 H14

PEU 1 PEU 2 PEU 3 PEU 4 PEU 5 PEU 6 UES 4 UES 5 UES 6

H19 BEHAVIORAL INTENTION
PCF 1
PCF 2 Program Contents/ TO USE
PCF 3 Features Available H2 H5
PCF 4 H3
PCF 5

BIU 1 BIU 2 BIU 3 BIU 4 BIU 5

H7

TCC 1
TCC2 H20
TCC 3
Technological Complexity PERCEIVED EXPECTED
TCC4
EASE OF USE
TCC5

PEEOU 1 PEEOU 2 PEEOU 3 PEEOU 4 PEEOU 5 PEEOU 6

Fig. 1: Proposed hypothetical model

In the following discussion, the term “expected” is used to emphasize post technology usage (potential usage)
(Rossiter and Braithwaite, 2013). Hence, the definition of construct is changed to “the degree to which an individual
expects that using particular IT would enhance his/her job performance” for perceived expected usefulness and “the
degree to which an individual expects that using a particular IT would be free of effort” for perceived expected ease of
use. Thus, we derived two hypotheses.
H1: Perceived expected usefulness significantly affects user expected satisfaction
H2: Perceived expected ease of use significantly affects user expected satisfaction
Perceived ease of use (PEU) is generally believed to increase the perceived usefulness (PU) of an IT. Previous
studies have shown strong empirical support for a positive relationship between PU and PEU (Cheung and Vogel, 2013).
H3: Perceived expected ease of use significantly affects perceived expected usefulness
H4: Perceived expected usefulness significantly affects attitude
H5: Perceived expected ease of use significantly affects attitude
H6: Perceived expected usefulness significantly affects behavioral intention to use
H7: Perceived expected ease of use significantly affects behavioral intention to use

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Perceived Risk (PR) or uncertainty affects the confidence of decision makers. Risky situations include those in
which the probabilities of outcomes are unknown, regardless of whether the outcome is unknown. Prior research argued
that perceived risk negatively impacts consumer satisfaction (Udo et al., 2010).
H8: Perceived risk significantly affects user expected satisfaction
H9: Perceived risk significantly affects perceived expected usefulness
H10: Perceived risk significantly affects perceived expected ease of use
H11: Perceived risk significantly affects attitude
H12: Perceived risk significantly affects behavioral intention to use
User satisfaction is a mediating factor in the services or system performance improvement perceived by users and a
successful information system. Other researcher defined user satisfaction as “the degree of meeting the information
needed by users”. This study added the term “expected” for a precise and clear differentiation between potential adopters
and current users. Prior research found that satisfaction affects behavioral intention to use technology (Son et al., 2012).
H13: User expected satisfaction significantly affects attitude towards behavior
H14: User expected satisfaction significantly affects behavioral intention to use a technology
The capability to measure attitudes toward a new system is a central feature of TAM. Prior researcher defined
attitude as “an individual’s positive or negative feelings (evaluative effect) about performing the target behavior” and
suggested that attitude can be affected by both psychological factors and the situations encountered. Other researchers
have found that attitude positively affects behavioral intention to use a technology (Liu et al., 2013).
H15: Attitude towards behavior significantly affects intention to use a technology
Behavioral intention to use is defined as a measure of the strength of the intention to perform a specific behavior; the
behavior considered here is the use of information technology. This research model uses behavioral intention as an
individual-level variable to measure the acceptance of smart meters. The literature suggested that the determining factors
in the behavioral intention to use a system must be analysed to identify their role in the successful implementation of
information systems.
Determinants of Success in Smart Meter Device Implementation
Energy tariffs/costs
Mah et al. (2012) found that energy consumers are sensitive to tariff increases related to the policy of smart meter
deployment in their country (Mah et al., 2012). This study argues that energy tariffs/costs have a significant positive
effect on perceived risk and a significant negative effect on technology adoption.
H16: Energy tariffs/costs significantly affect perceived risk

Privacy & safety

Safety is defined as a process, activity, system, or task that protects the confidentiality, integrity, and accessibility of
information or an object (Mah et al., 2012). Since privacy and safety concerns are uncertain and can inhibit technology
adoption, this research argues that this privacy issue could negatively affect consumer adoption of smart meter
technology by increasing perceived risk.
H17: Privacy and safety significantly affect perceived risk

Social influence/subjective norms

In the context of IT use, social influence is the “individual's perception that most people who are important to him/her
think he/she should/shouldn't do the behavior in question”. Social forces affect the decision of individual to adopt a new
technology due to the desire to reconcile opinions or behaviors with those of others. Empirical studies also indicate that
social influence/subjective norms affect perceived usefulness (Son et al., 2012).
H18: Social influence/subjective norms significantly affect perceived expected usefulness

Program contents/features
Studies show that user behavior toward technology is affected by feature, which is defined as “vendor-created software
tools designed to complete tasks requested by user”. Stromback et al. (2011) argued that program content/ features can
affect consumer behavior related to smart meters (Stromback et al., 2011).
H19: Program contents/features significantly affect perceived expected usefulness
Technological complexity
Technology complexity is defined as “the individual's perception of the degree of difficulty involved in understanding
and using new technology”. Since most users are unfamiliar with smart meters, technological complexity is usually the
main obstacle to smart meter adoption. Empirical data show that complexity directly affects perceived ease of use (Son et
al., 2012).
H20: Technological complexity significantly affects perceived expected ease of use

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DATA ANALYSIS AND RESULT

Socioeconomic Characteristics
This study distributed 400 questionnaires in Indonesia as follows: 85 questionnaires to Sumatra Island (21.3% of
population), 230 questionnaires to Java Island (57. 5% of population), 23 questionnaires to Kalimantan Island (21.3% of
population), 29 questionnaires to Sulawesi Island (7.3% of population), 6 questionnaires to Papua Island (1.5% of
population), and the rest of the questionnaires to Bali Island (1.5% of total population)(http://www.bps.go.id).

Tab.1: Socioeconomic characteristics of respondents

Measure Items Frequency Percentage
Gender Female 125 58.50%
Male 176 41.50%
Age ≤ 20 14 4.70%
21 – 25 62 20.60%
26 - 30 70 23.30%
31 - 35 48 15.90%
36 -40 27 9%
41 - 45 29 9.60%
46 - 50 19 6.30%
50 55 18 6%
56 - 60 13 4.30%
≥ 61 1 0.30%
Education completed Junior high school 5 1.70%
Senior high school 97 32.20%
University/College 168 55.80%
Graduate 31 10.30%
Current occupation/industry Student 25 8.30%
Commercial services 26 8.60%
Industrial, Manufacturing 114 37.90%
Military, Government 16 5.30%
Homemaker 16 5.30%
Forestry, Fishing, Animal husbandry,
Mining 4 1.30%
Entrepreneur 20 6.60%
Retired 5 1.70%
Other 75 24.90%
Average monthly income ≤ Rp. 1.000.000 35 11.60%
Rp. 1.000.000 - Rp. 5.000.000 139 46.20%
Rp. 5.000.000 - Rp. 10.000.000 101 33.60%
Rp. 10.000.000 – Rp. 20.000.000 20 6.60%
≥ Rp. 20.000.000 6 2%
Responsibility for managing energy bill < 2 years 56 18.60%
2 - 5 years 82 27.20%
6 - 10 years 67 22.30%
11 - 15 years 15 5%
16 - 20 years 52 17.30%
> 20 years 29 9.60%
Average monthly electricity bill ≤ Rp. 100.000 77 25.60%
Rp. 100.000 - Rp. 300.000 147 48.80%
Rp. 300.000 - Rp. 500.000 60 19.90%
Rp. 500.000 - Rp. 1.000.000 16 5.30%
≥ Rp.1.000.000 1 0.30%
Average monthly gas bill ≤ Rp. 100.000 175 58.10%
Rp. 100.000 - Rp. 300.000 115 38.20%
Rp. 300.000 - Rp. 500.000 10 3.30%
Rp. 500.000 - Rp. 1.000.000 1 0.30%
Average monthly water bill ≤ Rp. 100.000 168 55.80%
Rp. 100.000 - Rp. 300.000 109 36.20%
Rp. 300.000 - Rp. 500.000 20 6.60%
Rp. 500.000 - Rp. 1.000.000 4 1.30%
Current residence area Sumatera 155 51.50%
Java 69 22.90%
Kalimantan 15 5%
Sulawesi 29 9.60%
Papua 6 2%
Bali 27 9%
Complaint No 172 57.10%
Yes - frequent outages 71 23.60%
Yes - unstable voltage 27 9%
Yes - difficulty adding new/additional
power 13 4.30%
Yes - slow service 18 6%
Knowledge of smart meters Unfamiliar 204 67.80%
Somewhat familiar 61 20.30%
General 15 5%
Familiar 16 5.30%
Very familiar 5 1.70%
Experience using smart meters No 292 97%
Yes 9 3%

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The questionnaire was initially written in English and translated into Indonesian by native speakers. To avoid
misconceptions, the orientation of the 7-point Likert scale was applied uniformly; low scores represented negative
settings while high scores represented favorable situations. The appropriatess of the measurements were also evaluated
in a pilot study performed in 100 Indonesia students attending National Taiwan Universities of Science and Technology.
The pre-test result showed that the constructs and their indicators were easily understood and answered. Out of 400
questionnaires, 309 questionnaires were returned; of these, eight contained incomplete or incomprehensible responses
and were excluded. Therefore, the response rate was 77.25%, and 75.25% of the questionnaires were valid. Among valid
questionnaires retrieved from each surveyed area, 22.9% from respondent who living in Sumatra, 51.5% were from Java,
5% were from Kalimantan, 9.6% were from Sulawesi, 2% were from Papua, and 9% were from Bali. Most (58.5%)
respondents were male, and 41.5% were female. Most (43.9%) were aged 21-30 years.
The respondents were engaged in various occupations: 8.3% were students, 8.6% from commercial service field,
37.9% work in industrial and manufacturing, 5.3% work in military or government, 5.3% were homemakers, 1.3% work
in forestry, fishing, animal husbandry fields, 6.6% were entrepreneurs, 1.7% were retired, and the rest (approximately
24.9%) worked in other fields, including a doctor and employees of a public company. Most respondents had a senior
high school (about 32.2%) or university or college (about 55.8%) education. Most (about 57.1%) had no complaint about
current electricity service, and the most common (approximately 32.6%) complaints were frequent outages and unstable
voltage. Additionally, 67.8% respondent had never seen/heard about smart meters, 20.3% had seen/heard about smart
meters but did not understand their function, 5% were general , 5.3% were familiar with smart meters, and 1.7% were
very familiar with smart meters. Most (approximately 97%) had no experience with smart meters. All respondents who
indicated that they were familiar or very familiar with smart meters or indicated that they had experience using smart
meters were employees of the national electricity company of Indonesia. Compared to the studies about sampling data
reported in the literature, this study had a comparable sample size (4 times of the indicators/variables).
Confirmatory Factor Analysis and Model Modification
The data analyses in this study were performed using structural equation modeling (SEM), a family of statistical
methodologies for using a confirmatory approach to analysing a structural theory bearing on some phenomenon. The
SEM is also an emerging statistical tool in the social sciences (Kline, 2011). The adequancy of the measurement model
was assessed by reliability test, confirmatory factor analysis (i.e., convergent and discriminant validities), and model fit
test.
Reliability of results
Before model assessment, the internal consistency of the results was tested by calculating Cronbach α (Hu and Bentler,
1999). The Cronbach α reliability coefficient obtained for each instrument ranged between 0.867 and 0.967 (Table 2),
which is well above the minimum acceptable threshold of 0.70. Thus, the measurement instruments were deemed
reliable gauges of the constructs.
Convergent validity
The relative convergent validity among item measures can be estimated in several ways. Fornell and Larcker (1981)
suggested using item reliability for each measure, composite reliability for each construct, and the average variance
extracted (AVE) to assess the convergent validity of the items measured (Fornell and F.Larcker, 1981). For a given
measure, item reliability is confirmed by a factor loading of 0.70 or greater, which indicates a well-defined structure. To
ensure adequate composite reliability, a value of 0.70 or higher is recommended. The composite reliability values
obtained here ranged from 0.872 to 0.965, which far exceeded the recommended value of 0.7. The AVE is a measure of
the overall variance attributed to the construct relative to the variance attributed to measurement error. Each construct
should have an AVE of at least 0.50, the point above which the variance captured by the construct exceeds the variance
due to measurement error. Table 3 shows that AVE values ranged from 0.763 to 0.874, considerably above the threshold
of 0.50. Factor loading, Cronbach , AVE, and CR coefficients were used to assess the reliability and validity of the
proposed model. In the originally proposed model, some coefficients were lower than the recommended limit due to the
high complexity of the model, and some paths and indicators were insignificant. After modification, All AVE, CR and
Cronbach coefficients obtained for the constructs were within recommended ranges (Table 2).
Discriminant validity
A given construct has discriminant validity when the variance between that construct and another construct in the model
is smaller than the variance among the indicators for that construct (Hair et al., 2010). Discriminant validity was assessed
by comparing the square root of the AVE for a given construct with the correlations between that and all other constructs
(Son et al., 2012). If the square roots of the AVEs are greater than the absolute values of the off-diagonal elements in the
corresponding rows and columns of the correlation matrix, the construct has a stronger correlation with its own indicators
than with the other constructs in the model.

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Tab.2: Reliability and validity tests results

Composite Cronbach
Construct Indicator Factor Loading AVE Reliability Alpha (α)

ETC 2 0.820
Energy tariff/ cost 0.773 0.872 0.867
ETC 5 0.935
PSC 3 0.989
Privacy & safety concerns 0.805 0.891 0.880
PSC 4 0.795
SIN 2 0.885
SIN 3 0.931
Social influence/subjective norms 0.871 0.964 0.963
SIN 4 0.962
SIN 5 0.954
PCF 3 0.892
Program contents/features 0.817 0.899 0.900
PCF 4 0.916
TCC 2 0.934
TCC 3 0.949
Technological complexity 0.874 0.965 0.967
TCC 4 0.925
TCC 5 0.932
PR 2 0.930
PR 4 0.959
Perceived risk 0.838 0.954 0.961
PR 5 0.933
PR 6 0.834
PEU 4 0.858
Perceived expected usefulness + PEEOU 4 0.933
Perceived expected ease of use PEEOU 5 0.864 0.767 0.929 0.928
PEEOU 6 0.845
UES 1 0.894
User Expected Satisfaction UES 2 0.945 0.831 0.937 0.946
UES 3 0.895
ATB 2 0.926
Attitude towards behavior + ATB 3 0.947 0.763 0.941 0.948
Behavioral intention to use ATB 4 0.920
BIU 3 0.779
BIU 5 0.780

Tab.3: Correlation matrix and discriminant assessment

PEU + ATB+
ETC PSC SIN PCF TCC PR PEEOU UES BIU
ETC 0.773
PSC 0.000 0.805
SIN 0.000 0.000 0.871
PCF 0.000 0.000 0.000 0.817
TCC 0.000 0.000 0.000 0.000 0.874
PR 0.291 0.283 0.000 0.000 0.000 0.838
PEU + PEEOU 0.147 0.143 0.148 0.413 0.107 0.506 0.767
UES 0.135 0.131 0.086 0.241 0.062 0.463 0.669 0.831
ATB +BIU 0.079 0.077 0.047 0.131 0.034 0.272 0.374 0.505 0.763
Notes: Diagonal elements (bold) are the AVE values
ETC (energy tariff/cost), PSC (privacy & safety concern), SIN (social influence/ Subjective norms), PCF (program contents/features),
TCC (technology complexity), PR (perceived risk), PEU (perceived expected usefulness), PEEOU (perceived expected ease of use), UES
(user expected satisfaction), ATB (attitude towards behavior), BIU (behavioral intention to use).

Tab.4: Goodness of fit indices; initial model vs. modified model

Fit indices X2/df GFI AGFI PGFI NFI IFI TLI CFI RMSEA
Recommended value <5 > 0.8 > 0.7 > 0.5 > 0.8 > 0.8 > 0.8 > 0.8 < 0.1
Initial model 3.504 0.608 0.574 0.560 0.769 0.823 0.814 0.823 0.091
Modified model 3.475 0.759 0.705 0.622 0.881 0.912 0.899 0.912 0.091

The original model did not satisfy the discriminant validity test. The correlations between some constructs were
larger than the square roots of their AVE values. Hence, the constructs were merged. After confirming its discriminant
validity, the modified model showed increased goodness of fit. In Table 3, the diagonal elements of the matrix are the
modified AVE values, and the elements below the diagonal are the correlation coefficients. The square root value of each
diagonal element in the matrix is greater than the absolute values of the off-diagonal elements in its row and column,
which confirms its discriminant validity. Figure 2 shows the indicators, constructs, and paths remaining after
modification of the model. Because of the merging process, the proposed hypotheses differed between the original model
and the final model. The final model retained 11 of the original 20 hypotheses.

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Model fit
In this study, eight different indices were used to measure model fit: the chi-square test (χ2/degree of freedom (df)), the
goodness of fit index (GFI), the adjusted goodness of fit index (AGFI), parsimony-goodness of fit index (PGFI),
incremental fit index (IFI), the root mean square error approximation (RMSEA), the comparative fit index (CFI), and the
Tucker Lewis index (TLI). These indices were chosen because of their relative stability and insensitivity to sample size.
In these eight indices, the criteria for a good fit are as follows: χ2/df<5 (Mokhtarian and Ory, 2009), GFI<0.8, AGFI<0.7,
PGFI<0.5, CFI>0.80, TLI>0.80, and RMSEA<0.1 (Hair et al., 2010). The AGFI is set to < 0.7 because it is adjusted to
GFI. The AGFI values are typically lower than GFI values in proportion to model complexity.
ETC 2
Energy Tariff/Cost
H7'
ETC 5
PERCEIVED RISK

PSC3 Privacy/Savety Concern H8'

PSC4 H5'
PR 2 PR 4 PR 5 PR 6 H 3'

H4' USER EXPECTED H6'

SATISFACTION
ATB + BIU
SIN2
Social Influence/
SIN3
SIN4 Subjective Norms
SIN5 H1'
H9' UES 1 UES 2 UES 3 ATB 2 ATB 3 ATB 4 BIU 3 BIU 5

H 2'
Program Contents/ H10'
PCF 3
Features Available PEU + PEEOU
PCF 4

H11'

TCC2 PEU 4 PEEOU 4 PEEOU 5 PEEOU 6

TCC 3
Technological Complexity
TCC4
TCC5

Fig. 2: Modified hypothetical model

Some fit indices in the original model were unsatisfactory. To improve goodness-of-fit, the model was modified by
removing unsuitable indicators with factor loadings below 0.7 and standardized residual covariances larger than 2 since
factor loadings below 0.7 indicate a weak correlation between an original variable and its associated factors. Model fit
can also be improved by evaluating correlations among error terms. Errors with large modification indices indicate that
two errors should be correlated. Table 4 shows that most modification indices met the requirements. Only GFI is lower
than the recommended value. Therefore, the analyses confirmed that the research model adequately represents the entire
set of causal relationships. The analysis suggests that the operationalization of overall factors was satisfactory. Further
reliability and validity tests also obtained favourable results for all indices and constructs.
Test of Hypotheses
Since the overall model was satisfactory, htypothesis testing based on path analysis using AMOS 7.0 was performed to
test the significance of each independent variable. In summary, 9 of the 11 path coefficients were significant at 0.001,
0.01, and 0.05 significance levels as seen in Table 5. Perceived expected usefulness and perceived expected ease of use
significantly (p<0.001) affected the expected user satisfaction, which supported H1'. Perceived expected usefulness and
perceived expected ease of use did not significantly affect attitude and behavioral intention to use. Therefore, H2' was
rejected. Perceived risk significantly affected user expected satisfaction (p<0.01), which supported H3'. Perceived risk
significantly (p<0.001) affected perceived expected usefulness and perceived expected ease of use, which supported H4'.

Tab.5: Hypotheses test results

Hypothesis Relationship Result
Hypothesis 1' (H1') PEU + PEEOU → UES Significant***
Hypothesis 2' (H2') PEU + PEEOU → ATB+BIU Not significant
Hypothesis 3' (H3') PR → UES Significant**
Hypothesis 4' (H4') PR → PEU + PEEOU Significant***
Hypothesis 5' (H5') PR → ATB + BIU Not significant
Hypothesis 6' (H10') UES → ATB + BIU Significant***
Hypothesis 7' (H7') ETC → PR Significant***
Hypothesis 8' (H8') PSC → PR Significant***
Hypothesis 9' (H9') SIN → PEU + PEEOU Significant**
Hypothesis 10' (H10') PCF → PEU + PEEOU Significant***
Hypothesis 11' (H11') TCC → PEU + PEEOU Significant*
Notes: * significant at (p<0.05) level; ** significant at (p<0.01) level; *** significant at (p<0.001) level

Perceived risk did not significantly affect attitude towards behavior and behavioral intention to use. Therefore, H5'
was rejected. User expected satisfaction significantly (p<0.001) affected attitude towards behavior and behavioral
intention to use, which supported H6'. Energy tariff/cost (p<0.001) and privacy/safety (p<0.001) significantly affected
perceived risk, which supported H7' and H8'. Social influence/subjective norms significantly (p<0.01) affected perceived
expected usefulness and perceived expected ease of use, which supported H9'. Program content/features significantly
(p<0.001) affected perceived expected usefulness and perceived expected ease of use, which supported H10'.

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Technological complexity significantly (p<0.05) affected perceived expected usefulness and perceived expected ease of
use, which supported H11'.

CONCLUSIONS AND FUTURE RESEARCH

This study identified critical factors that should be considered when assessing consumer acceptance of smart meters in
residential buildings in Indonesia. The structural equation modeling (SEM) method was used to identify relationships
between factors that affect consumer acceptance of smart meters. Based on the original model, this study proposed 20
hypotheses regarding the technology acceptance model. After the modification process, 11 hypotheses remained. The
SEM analysis of empirical data supported 9 out of 11 hypotheses.
The results of this study can be summarized as follows. First, user satisfaction is an important predictor of consumer
adoption of smart meters in residential buildings. Second, consumer acceptance of smart meters is most likely to be
affected by their beliefs about usefulness, ease of use, and also perceived risk. This finding supports the general belief
that usefulness and ease of use increase adoption of new technology, which, in this case, is smart meters. The data also
confirmed that consumer expectations about usefulness, ease of use, and perceived risk would affect consumer attitudes
and behaviors to adopt smart meters indirectly toward their expected satisfaction. Finally, this study found that the
critical factors in the adoption of smart meters in residential buildings are perceived usefulness and perceived ease of use
(i.e., social influence/subjective norms, program contents/features, and technology complexity), and determinants of
perceived risk (e.g., energy tariff/cost and privacy/safety).
Future works will further consider the implications and applications of the results of this study. A consumer adoption
propensity index will be included to measure the tendency of consumers to adopt/accept deployment of smart meters in
their residences. To improve understanding of corporate operational efficiency by the utility companies in the service-
oriented industry, future studies by the authors will also apply SEM and importance-expectation analysis to compare
overall data and socioeconomic attribute-level satisfaction.

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