What do consumers want? Since the mid-20th century, businesses have been studying the cultural, social, individual, and ethical influences on consumer buying behavior, trying to figure out the right confluence of consumer motivation and strategic decision-making. So, when thinking of energy as a consumer good, most insiders contend that improvements in energy-generation technologies offer the greatest potential for carbon emission reductions. But are utilities anywhere close to being ready to provide consumers the cleantech energy that they desire? It is amazing how slowly the shift to new digital tools is progressing in the utility sector when compared to other consumer-oriented businesses.
In the electricity sector, energy conservation through technological and behavioral change is estimated to have a savings potential of 123 million metric tons of carbon per year, which represents 20% of household direct emissions in the US. We’ve come to a point in time in which many consumers, especially millennials, understand how interaction with the energy sector through continuous applications of sensors, wireless transmission, network communication, and cloud computing technologies can affect energy efficiency. The reasons for this transition to cleantech energy include consumer recognition of a need to reduce harm on others as well as the private benefits from reduced marginal consumption, such as fewer health impacts.
Millennials, now the largest generation of US consumers, comprise an increasingly important cohort of energy consumers. So, when the Smart Energy Consumer Collaborative (SECC) released its 2018 State of the Consumer report, it came as no surprise that consumers, particularly millennials, want access to renewable energy and are often willing to pay a premium for it. To fulfill the potential of smart energy management, cleantech energy engagement tools should keep pace with current consumer expectations.
Energy efficiency is an important approach to mitigating climate change, minimizing energy system costs, and improving system reliability. The 2018 State of the Consumer report underscores the need for utilities to treat the relationship with each customer as a journey that first starts with the basics and evolves over time as the customer’s energy-related understanding and needs change.
“The energy sector is undergoing widespread change with far-reaching implications for providers and consumers alike,” said Patty Durand, President & CEO, SECC. “Long considered a commodity-based business, utilities are now being called on to build and nurture relationships with their customers. Strategies for effective consumer engage.”
Another 2018 SECC report, Consumer Platform of the Future, examined emerging energy technologies developed from four consumer focus groups that generated 16 in-depth interviews, totaling about 1,300 respondents. When asked about their interest in four potential products and services — an e-commerce marketplace, an energy manager, an online rewards program, and a menu of add-on products and service — nearly half (48%) said they would use an online platform that combines current and historical household energy usage data, preference settings, and utility (or third-party) programs and offers. These consumers were clear about how important this information could be to help them better understand and manage their energy use.
Recognizing the Importance of Usage: Shifts through Cleantech Energy Apps
In addition to determining that many consumers are ready for an upgraded online platform to interact with their utility, another theme in the SECC report is that programs emphasizing shifts in energy usage, such as peak time rebates or peak-shifting programs, are appropriate for and appeal to a wide range of consumers. In fact, about 60% of consumers are either “probably” or “definitely interested” in participating in one. According to respondents, the two most popular applications are energy rewards programs (52% probably or definitely would use) and energy manager tools (46%).
Global climate change and environmental decline are largely caused by human behavior and can thus be altered when people more consistently engage in sustainable energy behavior. The study authors call on energy market stakeholders to move beyond energy alone and imagine how new innovations from other industry sectors can be applied to their businesses. A wide range of changes in household energy behavior is needed to realize a sustainable energy transition.
Multiple Channels, Holistic Experience is Key to Cleantech Energy Transition
The authors at SECC aren’t alone in their determination that millennials are ready for cleantech energy of all kinds. Michael Kelly, in a recent Navigant Research report, notes how engagement has become a much more complex process for utilities. Kelly exhorts them to take a more proactive approach, deploying across multiple channels in a holistic manner so customers experience a consistent set of information and tools, no matter how they engage.
Navigant Research suggests that global customer engagement spending is expected to grow from approximately $3.6 billion in 2017 to over $5.2 billion in 2026. Changing tools for engagement such as online, mobile, and social networks create a myriad of choices for utilities that seek to meet current customer expectations. Websites with sophisticated self-service capabilities, mobile applications, and online chat support are just a few of the engagement channels now considered standard.
Given the urgency of combating anthropogenic climate change and the fundamental changes needed to realize a sustainable energy transition, a sustainable energy transition involves changes in a wide range of energy behaviors. These include the adoption of sustainable energy sources and technologies, energy efficiency measures in buildings, energy-efficient appliances, and changing user behavior to reduce total energy demand and to match energy demand to available supply of (renewable) energy carriers.
We are in an era in which it is time for utilities to value creation, innovation, and financial transformation to a renewable energy economy. The potential for renewable energy resources is enormous because they have the potential to exceed the world׳s energy demand; therefore, these types of resources will have a significant share in the future global energy portfolio. To enable the diffusion of cleaner energy technology, it is not enough to just have supportive policies in place. Utilities need to quickly assess declining infrastructure utilization, asset impairment, rising electricity costs, and negative social outcomes as consumers attempt to reduce their reliance on existing electricity supply systems. To proactively manage these risks, utilities need to better understand and address consumer motivations in the impending energy market transition, which includes clean energy generation, transmission and distribution, the storage of electrical and chemical energy, energy efficiency, and better energy management systems.
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