By Kimberly Kupiecki, Edelman’s clean tech senior vice president and group leader
Over the last five years, electricity providers, technology companies, regulators and the federal government have poured billions of dollars and millions of man hours into the major upgrade of our antiquated electric grid.
Technologies such as smart meters are now seeing the light of day and for many of us our first introduction to the smart grid is a new piece of hardware attached to our house in the form of a digitized meter. It shouldn’t be surprising then that consumers are pushing back against the concept of the smart grid.
As technology companies developed their wares and utilities mapped out smart meter deployments, the customer has largely been left out of the conversation. In an information vacuum people tend to draw their own conclusions about the smart grid – sometimes erroneously.
GTM Research analyst David Leeds said it best at this year’s The Networked Grid: “Making the customer smart is as important as making the grid smart.”
So why have end users been largely absent from the smart grid conversation? There are three reasons – the utility mindset, lack of industry clarity in discussing smart grid benefits and plans and the one-size-fits-all approach.
Invisibility isn’t good
At a recent industry gathering, Jim Turner, group executive of Duke Energy and president and COO of its U.S. franchised electric and gas business said that customers “don’t want to think about their utility.” He went on to explain that from the utility’s perspective, the definition of success is when the customer doesn’t think about the utility because when they do it usually means the power is out.
In a smart grid world where the user must be pulled inside the demand equation, utilities need to turn this approach inside out and engage with the customer more often and through many channels.
Two friends of mine, both technology-savvy and eco-conscious, recently received smart meters. Neither of them – even after reading the flyer left behind – knew what the meter could do to enhance their energy use.
Most of us don’t even know what the smart grid represents. Based on a recent GE survey, 79 percent of consumers are not even familiar with the term “smart grid” (disclosure, GE is an Edelman client).
For utilities to reap the benefit of technology investments, they need to shift to a more customer-centric approach. Utilities have an excellent opportunity to bridge this gap in awareness and understanding with a greater level of public engagement.
The good news is that the smart grid provides the opportunity for a deeper, more robust and trusting relationship so the question now is how can utilities evolve their mindset (and marketing departments) to take advantage?
On July 13th, GE announced its ecomagination Challenge: Powering the Grid.” The initiative represents a $200 million commitment by GE and venture capital partners calling for breakthrough ideas that accelerate adoption of smart grid technologies.
At that event, GE CEO Jeff Immelt made a strong point on language. He said that the term “smart grid” is too “elite” and “precious.” That words matter and we need to come up with terms that are more broadly accessible such as the “digitization of energy.”
Immelt brings up a key point. If you ask ten people what the smart grid is, you will likely get ten different answers. Some equate the smart grid with smart meters and largely miss the critical infrastructure inside the perimeter that keeps the lights on.
Furthermore, a recent study by Harris Interactive found that 68 percent of Americans have never heard of the smart grid, and 63 percent have never heard of the smart meter.
Bloggers like Daniel Bon and organizations such as the Smart Grid Consumer Collaborative, which exists solely for the purpose of improving communication with consumers on smart grid issues, are trying to fill the knowledge gaps.
Ultimately, actions speak louder than words and consumer education around the smart grid is critical. To date, current efforts to educate customers on smart grid operations have been minimal and in many cases unsuccessful.
Without proper education and transparency around smart grid projects, consumer backlash could ensue and potentially result in community movements against smart meter installations and smart grid deployments, as previously witnessed in California and Texas.
One size doesn’t fit all
The whole purpose of a public utility is to provide a service albeit under government regulation. The service in this case (electricity) is a commodity, meaning no differentiation amongst the products provided by utilities. The electricity coming out of my wall is exactly the same as the electricity coming out of your wall.
Now for the first time, your public utility is offering a level of choice in how you consume and pay for energy. As Chris Anderson points out in The Long Tail, we are now living in a world where even commodities like flour are offered in at least 20 different varieties.
Different consumers will opt for different choices. Some will want to “geek out” on all the new technology gadgets and watch their energy use like they follow their Twitter channel. Others will be more focused on the eco-benefits like optimizing energy output of their solar rooftop system.
On the other end of the spectrum, many will want to “set and forget.” This range of preferences means demographics matter. The one-size-fits-all communication approach will be largely ineffective.
According to Jesse Berst of Smart Grid News, two of the four “hidden hurdles” to advanced metering infrastructure are associated with a lack of consumer engagement. He says, “As an industry, we have not yet mastered the science of consumer messaging and engagement.”
While many look to the telecom industry for lessons learned to apply to the smart grid, we might instead look at the digital transformation of the music industry. We can think of the smart grid in the context of a solution to dumb demand, a problem that today consumers don’t realize they have.
Before iPods and digital music libraries there wasn’t really a problem with CDs per se, but once Apple launched the iPod and iTunes Music Store in 2003, the experience of listening to music was completely transformed and there was no turning back.
A parallel might be drawn for the smart grid. While we can certainly expect bumps along the road, once consumers realize the value proposition, which extends beyond cost savings to value creation such as electric vehicle charging, home energy management and new applications no one has even thought of yet, there will be no turning back.
More practically, a more engaged “smarter” consumer base will smooth acceptance and program adoption allowing utilities to reap the benefits of their technology investments.
So how do we get there?
Utilities must increase focus on marketing and customer service. They are no longer passive participants in the background of consumer lives. They need to be “boosting energy literacy” as a New York Times contributor put it.
This means developing PSAs, the collateral, online video, participating in community events, using Twitter, and engaging local media proactively. Much like meters have transitions from one-way communications devices to interactive hubs, the utility must transition from one-way communications (in the form of monthly statements) into an interactive consumer engagement online and in the community.
Marketing has not been a traditional focus for utilities, but that needs to change. To start, utilities should start making better use of the marketing capabilities of the smart grid vendors that support them. They should also consider devoting more in-house resources – from seasoned utility veterans to young Facebooking graduates – to focus solely on consumer education and marketing efforts.
Utilities and electricity need to be humanized, and utilities and regulatory commissions must communicate in ways that show a “pact” with the electricity customer on issues of privacy, accuracy, information sharing and diversifying energy sources (a charter, as some have called it). As utilities, regulators and vendors increase their commitment to public engagement, energy-literate citizens can truly stand behind the smart grid roll-out beginning to take place in their communities.
Author: Kimberly founded and leads Edelman’s clean tech sector, a key agenda promoting clean energy, energy efficiency solutions and other innovative sustainable technologies. Edelman represents venture-backed startups, high growth companies and large global public and private companies with technologies in wind generation, solar power, smart grid, clean fuels and chemicals, electric vehicles and LED lighting.
Prior to joining Edelman, Kimberly was a process engineer at solar and semiconductor manufacturing company Applied Materials where she holds two patents. Kimberly holds a bachelor’s degree in chemical engineering from the University of California at Berkeley and a Master of Business Administration from the Haas School of Business.