Examining the State of Today's Smart Grid Consumers
Earlier this year, SGCC published the "2017 State of the Consumer Report" to better understand consumer trends and preferences on smart grid-enabled products and services. This report utilized SGCC's 2016 research projects, industry trends in consumer engagement and six utility case studies to create a meta-analysis of how consumers have benefitted from more utility outreach and advancements in grid modernization.
Here's a rundown of six things we learned about today's smart grid consumers:
It’s about consumer needs
The first finding is that consumer interest transcends technology. In “The Empowered Consumer”, we studied consumer awareness of and interest in nine different smart energy offerings. We partitioned the sample into states that could be considered advanced in respect to their smart grid implementation and those that could be considered the control (or not-as-advanced) states. We found that awareness and interest in the offerings were not significantly different among consumers in advanced or control states.
However, when we reframed the data according to our segmentation framework, we learned that interest in technologies follows well-established consumer attitudes and values about energy. The conclusion is that consumer values drive interest, and policy and incentives boost adoption.
Effectively framing the benefits
The second takeaway is that marketing effectiveness (or how an offer is framed) is key to adoption. Consumers overwhelming want control and choice. In “Consumer Driven Technologies”, we asked consumers what kind of solar energy they would prefer, and over 80 percent indicated “residential solar”, because they see this as offering the most control over their system.
In “The Empowered Consumer”, a majority of consumers chose a time-of-use rate over a standard rate plan when offered variable options with different premium and discount levels, because they see this as offering them control while saving money. In the same study, we also learned that when awareness is high yet interest is low, carefully configured, personalized marketing programs targeting specific segments are most effective. However, when awareness is also low, a broad-based, multi-channel education campaign is called for around the financial, reliability and environmental benefits.
Balancing four elements of program design
The third key finding is that program design matters. Program design can be thought about as the interplay between four elements: the level of control that the consumer retains, what incentive they could realize by participating, the transaction burden (the amount of time and effort they need to invest to participate) and the amount of personal information they need to share. Both the incentives and burdens can be upfront and ongoing. Calibrating these four elements to the right proportion will determine marketing effectiveness.
In “The Empowered Consumer”, we presented consumers with a smart thermostat utility program and adjusted five elements – installation method, demand response (DR) enablement, incentive amount, incentive payment method and qualifying thermostat capabilities – to see which would result in the highest level of interest. The ideal configuration is a program with DIY installation, programmable weather adjustment capabilities, no DR capability and a $250 rebate. Nearly 70 percent of consumers expressed interest in this program. The art here is assessing the balance of give and take to maximize consumer interest and benefit.
Cost barriers are crucial
The fourth theme is that cost barriers are a major deal for consumers. This was demonstrated clearly in our “Consumer Driven Technologies” research; the top three barriers to solar adoption and the second-most cited barrier to EV adoption were all related to financial issues.
Looking at consumers that have already adopted solar, about 80 percent own their solar PV system, while a minority lease a solar PV system or have signed a solar power purchase agreement with a developer. However, if we look at those who have not yet adopted solar but are interested in doing so, there's a higher level of interest in non-ownership models.
This could be related to larger cultural trends as seen in the Sharing Economy. Companies like Lyft and Airbnb are causing consumers, especially Millennials, to re-think the necessity of ownership. Another major factor is the policy environment. While consumer interest is not significantly affected by policy environment, adoption is to some extent influenced by policy. If you're living in a state with support or incentives for solar and EVs, adoption will likely be higher in your state.
Consumer engagement is constant
The fifth finding is to remember the post-purchase engagement. Today's utilities have a number of touchpoints with consumers, some that are consumer initiated and others initiated by the energy provider, that are all opportunities to improve consumer engagement and satisfaction. Today's consumers are comparing the customer service of utilities to other industries, including banks, online retailers, health care providers and others, as we saw in our “Customer Experience & Expectations” research. Looking at problem remediation, consumers rated banks as the best providers of customer service by a significant margin; however, 44 percent of consumers placed utilities in their top three best customer service providers, second only to banks and 11 percentage points over online retailers.
While utilities are doing reasonably well in customer service, they could look to banks to see can what can be done next to further improve the customer experience. For example, banks have invested heavily in online and mobile banking and are, generally speaking, considerably farther ahead in offering easy-to-use mobile experiences to their customers. It’s these customer experiences with banks, online retailers and others that consumers have on their mind interacting with their own utility and weighing the customer service received.
Facing a consumer-oriented future
The final finding is that several recurring elements in SGCC research point to a changing business model for utilities. First, research suggests that energy consumers are willing to pay for products and services if they truly understand and value the programs. Consumers are interested in what electricity costs them and what it costs them to participate in programs that will save them energy and money; however, these consumer benefits need to be clearly communicated. In “The Empowered Consumer”, we found that over half of consumers are willing to pay for programs like energy concierge services, personalized savings suggestions via an app and automated heating and cooling services – a figure that may be surprising to some.
Second, there are several exciting things happening now in the energy ecosystem. Consumers show a clear propensity to look to their utility for trusted information, and utilities can take advantage of this by delivering information clearly in a personalized way. Partnerships are also going to be more important going forward since utilities may not have all of the expertise required to meet the needs of today’s consumers. Lastly, utilities should consider the policy environment and advocate for policies that get consumers over the hump toward adoption. Collectively, these trends point to a future where utilities can effectively meet the personalized needs of their evolving consumers.