Engaging Platforms Will Help Determine Utility Future
By Patty Durand, Smart Energy Consumer Collaborative
Consumers’ expectations for their relationships with their electricity providers have evolved rapidly in recent years, driven by their daily interactions with technology companies, such as Apple, Netflix and Lyft, and the increasingly digital business models of other organizations, like banking and telecommunications companies. This is particularly true for millennials, who are now the largest generation of U.S. consumers.
At the same time, within the energy industry, investments in grid modernization are creating new areas of opportunity for digital and data-driven products and services. In fact, by the end of 2016, half of U.S. electricity customers had smart meters, a two-fold increase from 2010, according to the Energy Information Administration (EIA).
For the most part, electricity providers have not missed the importance of these macrolevel developments. In recent years, electricity providers have made advancements in website functionality, app development and a host of new products and rate plans that take advantage of new technologies.
Given these changes in the energy ecosystem, it’s important that consumers’ voices are not lost in this sea of opportunity. What exactly do consumers want in next-generation digital offerings from their electricity providers? Would they utilize a one-stop platform to manage their home energy usage? And if so, what capabilities would be most helpful in meeting their evolving needs and wants?
To provide insight into this, the Smart Energy Consumer Collaborative (SECC) undertook an extensive research endeavor aimed at getting to the heart of consumers’ needs and wants in the new digital world. Published in January 2018, the “Consumer Platform of the Future” report is a groundbreaking investigation into what the utility industry could look like in the next five years for both consumers and utilities themselves.
To begin, SECC interviewed 16 industry professionals to develop a list of functions that a consumer-facing, digital “platform of the future” might offer and to define information objectives. These industry professionals ranged from C-level executives at some of the nation’s largest investor-owned utilities (IOUs) to executives at technology companies that partner with utilities to deliver innovative services.
figure 1 : Features on “Platform of the Future”
SECC then held four focus group meetings with consumers to edit the definitions of concepts that could be included and to determine how best to describe the options to consumers. Finally, these two qualitative inputs were used to develop a quantitative survey of 1,292 consumers drawn from a double opt-in, online panel. The sample collected conformed to the U.S. population for region, income, gender, age, ethnicity and homeownership.
What exactly is the “Consumer Platform of the Future”?
Using the insights gleaned from the interviews with industry experts, we developed a cohesive definition of this theoretical Platform of the Future. While we also extrapolated based on some current digital products and services being offering in today’s market, for this study, the Platform is a theoretical offering, something that could potentially be available in the next three to five years.
That said, SECC’s consumer-facing survey described the Platform to panelists in this way:
The Platform is an online energy resource that you can access from your computer, smartphone or tablet. This portal would combine your household’s energy usage data (current and historical), your preference settings, real-time energy usage data, energy provider and third-party programs. It then offers and uses this information to help you understand and manage your energy use. Figure 1 (page 13) illustrates the described Platform.
What do consumers think of the Platform?
So, are consumers really interested in using such a platform to manage their home energy usage and access additional services from their electricity providers? It appears that, for the most part, consumers do find value in such an offering.
Figure 2 illustrates consumers’ responses to the survey. Roughly half (49 percent) of respondents said they “definitely” or “probably” would use the Platform. By roughly the same proportion, respondents saw the Platform as something new and different that would improve their experience with their energy provider. In addition, only a minute proportion of respondents (4 percent) said they “definitely would not” use the Platform.
Looking at interest through SECC’s attitudinal segmentation, we see that the Platform does, in fact, have at least some appeal among all segments: 40 percent or more of consumers in four of the five segments demonstrate significant interest and are likely to use the Platform. (For more on SECC’s segmentation, download the “Consumer Pulse — Wave 6″ research.)
Among Savings Seekers, a group that’s primarily interested in the financial benefits of any new utility product or service, almost half are interested and would likely use the Platform if they believed they could save money by doing so. Unsurprisingly, consumers in the Status Quo segment are true to type, with fewer than one-fourth expressing any interest in the Platform, but quite notably, even 40 percent of consumers that belong to the Technology Cautious segment state that they are “likely” to use the Platform.
Overall, the research shows that there is broad appeal among all types of consumers. Even renters, a characteristically difficult to engage group, express considerable interest in the Platform. These findings reinforce the potential for energy providers to address diverse needs through products and services based on the Platform.
figure 2 : Consumers’ Likelihood to use the Platform
What Functions Would Consumers Like to see on the Platform?
Like a smartphone without apps, the Platform without specific products and services is difficult for consumers to comprehend. In fact, after reading a more detailed description of products or services that could be included on the Platform, the number of respondents who say they would use the Platform rises from roughly half to nearly two-thirds (64 percent). This reinforces the idea that consumers need concrete examples on how they might use and benefit from new technology.
For the consumer survey, respondents were asked about their interest in four potential products and services they could access through the Platform:
1. An online energy rewards program that encourages consumers to pay attention to home energy use and rewards them with bill credits and/or products and services when they take specific actions.
2. An online energy manager tool/app designed to help consumers manage their home’s day-to-day energy use. The tool can act based on their preferences to identify, recommend and manage relevant offers.
3. An e-commerce marketplace where consumers can get information about and purchase major energy-related products, tools, technologies and related services for their home. The marketplace has calculators, product reviews and other resources.
4. A products and services menu where consumers can purchase additional options at added costs. These additional options included guaranteed short wait times when contacting the energy provider, access to expert assistance, the ability to specify their energy source (e.g. renewables), back-up battery storage and more.
Out of the nearly 1,300 survey respondents, about two-thirds (64 percent) stated that they would use at least one of the four products or services mentioned. Further, roughly a quarter stated that they would likely use all four.
Not all of the tested products and services were equally popular, however. Over half of respondents (52 percent) said they would likely participate in the rewards program. The rewards program was tested with four specific ways to earn the rewards, and out of these, the offer to be a solar “host” was the most popular. This option allows the utility to install solar on a customers’ rooftops in exchange for discounts on their electric bills. This option was notably also the most explicitly tied to a monetary reward.
At 46 percent of all respondents, the energy manager was not far behind the rewards program in popularity. Out of the six configurations of this program, consumers responded most favorably to the billing options feature, which would allow consumers to access time-of-use rates or the nights/weekends free options. Over 60 percent of consumers reported being interested in this feature.
The First Step in the Platform journey
While SECC’s Platform is a theoretical product that industry executives believe could be offered in the next several years, several electricity providers already are on the journey to offering a Platform-like product.
For example, many electricity providers, including Georgia Power, ComEd and Con Edison, already offer their customers online marketplaces stocked with a range of energy-efficient and smart home products. Others, like Central Hudson Gas & Electric, offer marketplaces that make it easier for residential customers to connect with third-party distributed energy resource (DER) providers.
Other electricity providers, like Fort Collins Utilities and Kansas City Power & Light, have begun to focus on energy “concierge” offerings that make it easier for residential and business customers to connect with energy advisory services.
In addition, SECC sees an increase in bundled offerings from electricity providers to customers that wanted to access several energy-saving products and services. For example, Green Mountain Power’s eHome Program offers homeowners a holistic suite of offerings, including rooftop solar, Tesla Powerwall storage, smart water heaters, Nest thermostats, car charging and weatherization.
figure 3 : Number of Platform Enabled Products and Services Consumers Would Use
It’s no surprise that the energy ecosystem is changing rapidly. What was once a commodity-based industry is transitioning into a consumer-focused, transactional industry where consumers expect more than just the delivery of energy. A major component of this transition is the emergence of new digital tools. With the rise of millennials, the demand for digital offerings will only increase.
As the “Consumer Platform” research demonstrates, almost two-thirds of consumers indicated they would use at least one product or service offered them on the Platform, and of those, nearly a quarter indicated they would use four or more products and services. Quite notably, however, we learned that the concept of the Platform appeals to consumers in all segments and all demographics.
Consumers clearly respond to the idea of a one-stop digital platform, and as electricity providers plan for the future and create new ways to engage with their customers, a consumer-facing digital platform should be a major component of their future offerings.
Patty Durand is president and CEO of Smart Energy Consumer Collaborative (SECC), a nonprofit whose mission is to serve as a trusted source of information for stakeholders seeking a broad understanding of consumers’ views and attitudes about energy technology and grid modernization. SECC also educates consumers and provides materials to support stakeholders in their outreach and educational efforts engaging consumers about smart energy topics.