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Planners and consumers align

Planners and consumers align

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As areas once dominated by government services and infrastructure become increasingly decentralized, governments are having to rethink their longer-term plans. Expect to see greater focus on aligning the ‘micro’ decisions of technology-enabled consumers with the ‘macro’ decisions being made by infrastructure planners and decision-makers.

planners and consumers align

The decentralization of infrastructure is not a new trend, but it is rapidly picking up pace. Consider, for example, the widespread adoption of ride-sharing; the spread of decentralized consumer power generation sources; the shift towards more ‘circular-economy’ waste practices. New models that put the consumer in the driver’s seat continue to emerge.

While many governments are keen to encourage this type of innovation — in part to meet evolving consumer demands and in part to reduce their own investment requirements — the shift away from the more traditional ‘command and control’ macro approach is creating some difficult long-term planning challenges.

In particular, some governments and infrastructure planners are struggling to understand how these new economy models will influence the value and usefulness of their existing ‘old school’ assets and services. Will the falling price of home solar kits eventually result in stranded generation assets? If so, how quickly will demand drop? Who will be the residual supplier? How will they be compensated and what role will government play in ensuring/providing a level of ‘baseline’ services? Some are asking themselves if they should be investing any taxpayer dollars into a centralized energy grid at all.

Governments will need to become much better at understanding and responding to consumer preferences, needs and expectations.

Look back: What did we predict?

In 2019, we predicted that “infrastructure authorities and planners [will] move towards more holistic and evidence-based decision-making processes… to deliver on society’s needs and expectations.”

Evidence-based decision-making and continuous public consultation/listening/engagement will be key to understanding future trends and demand.

Yet government will still need to take the lead: few citizens truly understand the full breadth of considerations that go into long-term planning. Basing decisions purely on what the data says citizens want today is not a recipe for long-term growth and sustainability. Infrastructure plans must be made within the broader context.

Over the coming year, expect to see governments investing more time and effort into understanding how these trends are influencing behavior and how that, in turn, is shaping demand. The more advanced markets (in this regard) are already creating long-term strategies that balance new models against existing traditional asset investment and planning expectations.

Ultimately, this should lead to much greater alignment between the micro decisions being made by consumers and the macro ones being made by governments. Whether that will be enough (or will happen quickly enough) to satisfy the public’s demand for greater influence is anybody’s guess.

© 2020 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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