How the evolving utility-customer relationship is changing home energy management
As new technologies like cloud computing and the Internet of Things continue to grow in adoption among consumers, the rise of the “smart home” has presented both an opportunity and challenge for utilities. On one hand it has raised the awareness of energy efficiency and residential energy management among a wider audience of consumers who are becoming increasingly energy conscious, but has also presented utilities with some non-traditional competitors.
In the last year consumer technology companies such as Samsung, Apple and Google have all put their stake in the ground stating their commitment to bringing the future of smart home technology into the present. While it’s very possible that utilities will find a natural alliance, they do run the risk of losing mind share and customer loyalty if they aren’t able to comparably deliver a better customer experience or incentives. As a result, utilities are starting to think differently about their direct relationships with consumers and market their services to appeal to them.
With the home energy management (HEM) market expected to reach $1.9 billion by 2019, the opportunity is ripe for utilities to integrate energy efficiency and demand response programs into their portfolios. According to a recent survey by Parago, only 14 percent of U.S. consumers currently engage in demand response programs today, but 87 percent would do so with the right incentives. Additionally, a report by The American Council for an Energy-Efficient Economy looked at 36 studies over 15 years and estimated that furnishing real-time information to a homeowner about how much energy they are consuming can lower usage by 9.2 percent.
The challenge utilities face is changing the nature of their relationship with residential customers to drive successful adoption of energy efficiency programs on a larger scale. Utilities are focusing on individual customers more and more to accurately understand how they consume energy in order to provide customized programs and incentives that fit their needs and enable them to monitor and manage their electricity consumption wisely.
Traditionally, utilities have had very little visibility into what is going on at the home as their data often stopped at the meter. With the introduction of new technologies such as smart meters utilities now have the ability to get more information on when and how homeowners are using energy, which allows them to create customized energy-saving offers. As a result, utilities are beginning to change their overall approach to better communicate and engage with customers and better understand their energy use and consumption. Large-scale customers understand the language of demand and kilowatt hours but residential customers by and large don’t. What customers understand are intangibles – safety, comfort, control, convenience – utilities must address these customer needs.
The channels are also changing. Customer communication preferences are shifting, making it essential for utilities to meet the growing demand for multi-channel and mobile communications. Mobile in itself has become the universal defacto access point across all income levels, geographies and demographic groups – it’s the unifier. A recent industry study conducted by Accenture, found nearly one-third of consumers, especially the younger generation, expect increased functionality on Web and mobile channels from their energy providers.
Innovative utilities are building their own mobile applications to better serve consumers by providing them with real-time information about outages, the ability to manage their accounts anytime, anywhere and even report issues during natural disasters and severe weather. Mobile applications and tools not only help utilities to decrease energy consumption and help improve efficiency, but is a great channel for engaging with consumers and building loyalty.
Utilities have already begun seeking energy efficiency solutions like Schneider Electric’s Wiser Home Energy Management System, to provide consumers with real-time information about their overall energy use which can be easily accessed online or through a mobile application. Utilities are able to share detailed energy usage daily as well as provide pricing information and notify customers of price increases during periods of high demand, and offer customers personalized energy saving ideas based on their goals and tracked energy usage. This is important as consumers are demanding more control over their energy usage and solutions like Wiser empower consumers with the data and insights to control their energy consumption.
Utilities need to remember that the product they sell isn’t necessarily the same thing customers buy. Electricity is an essential service, but not because of the electrons themselves, but because of the conveniences driven by them. Additionally, consumers need actionable information. A single number at the end of the month is neither insightful nor actionable. Providing customers insights into how they use electricity and how they can actively manage that use according to their priorities, whether it be comfort or cost. Utilities are in the best position to help their customers manage their energy use, and that is exactly what consumers want.