LED bulbs have been an important demand-side management (DSM) savings measure that have played a big role in helping customers save energy. Over the course of the past 15 years, their popularity has steadily increased, and a greater proportion of today’s utility customers are now independently choosing to purchase LED bulbs over traditional bulbs. In fact, a recent ICF survey revealed approximately 75% of respondents prefer to purchase LED bulbs over more traditional bulbs—an indication that the market for LEDs is maturing.
But what happens when a technology dims and something newer, flashier, and more popular comes along to replace it? Are utilities prepared to educate customers about the fresh options that enter the market, adjusting their communications to meet the various needs of a diverse customer base?
For DSM savings programs to continue to build upon their great success in the coming years, utilities must look beyond traditional measures and start digging into new and emerging technologies. Strategies that focus on emerging technologies may include technologies that are already commercialized but are experiencing low levels of market penetration. Or they may include technologies that are market-ready but have not yet been commercialized. These types of technologies are likely to play an important role in programs that address flexible load management, distributed energy resources, or demand-side response as well as energy-efficiency programs. Of course, to introduce these types of technologies, utilities will need to embrace a new level of customer communication that builds trust and confidence—while recognizing the important differences that exist across the customer base and striving to give all customers an opportunity to benefit.
Encouraging the adoption of emerging technologies starts with more nuanced customer insights and increased engagement. Follow these three steps to harness the power of emerging technologies and boost DSM program performance.
1. Get to know your energy customers
The first step in strengthening customer-utility relationships is to learn more about who your customers are, what their preferences and constraints are, and how they use energy (not just how much energy they use). It’s important to recognize that there are different types of customers, all of whom are influenced by the context in which they live, work, and play. These types of customer research insights can be gained through several means. Some insights are available by means of national-level research provided by groups like the Smart Energy Consumer Collaborative (SECC ), while more targeted, utility-specific customer insights can be provided by program implementers and other organizations.
SECC research reports seek to understand customers’ diverse perspectives on a wide variety of topics, including grid modernization and energy use. Some of the insights provided by the SECC’s 2021 State of the Consumer report indicate that:
- Customers are connecting the dots between smart energy usage and slowing climate change. Customers’ growing recognition of the link between the two is both rational and emotional, resulting in greater customer interest in clean energy technologies and alternatives to fossil fuels.
- Across the board, customers are interested in smart energy-enabled products. All types of customers are curious about smart energy technologies, increasingly showing a particular interest in energy-enabled “smart” products, such as speakers, thermostats, refrigerators, light bulbs, and plugs. And the customer’s desire to own the latest “cool” technology drives related purchases.
- Lower-income customers care about smart energy and the environment. The values, interests, and motivations of lower-income customers are similar to customers with more disposable income when it comes to energy engagement. To best meet their needs, electricity providers should not regard customers as a homogenous group.
- Customers want support from their energy providers. Customers need more education on how to assess a program or technology, they seek support as they deal with the impacts of COVID-19, and they require education and engagement to realize the promise of beneficial electrification and advanced technologies.
These findings point to a need for utilities to be prepared to offer customers the technology and tools they will eventually be looking for, but the tech itself also speaks to the need to engage with and reshape relationships with customers.
2. Teach your customers about new energy-efficient technologies
Utility companies can build customer awareness about evolving and emerging technologies by frequently sharing information with their existing customer base through as many outlets as possible. Emerging technologies are relevant to a wide range of customers who find themselves considering the purchase of a smart home, electric vehicle, appliances, or other efficient technologies—or those who simply find themselves face-to-face with climate realities or seek more control over their use of energy resources. And energy providers can prioritize which emerging technologies to focus on using a variety of considerations such as the technology’s feasibility, market readiness, total potential savings, barriers to adoption, etc.
For example, utilities can show residential energy customers that a heat-pump clothes dryer is 30% to 40% more efficient compared to a standard clothes dryer. These dryers can also be installed in multifamily houses where they can benefit underserved customers in low-income populations.
3. Supply customers with enabling technologies and measures they need to manage energy usage
There are many smart technology tools available that allow people to use energy more efficiently and manage their own electric consumption. Smart thermostats, voice-controlled window coverings, and Wi-Fi-connected hot-water heaters all give customers control from anywhere by means of a smartphone app—providing a convenient way for energy customers to monitor and manage their energy usage.
For example, we recently helped Southern Maryland Electric Cooperative (SMECO), a customer-owned co-op providing electricity to more than 160,000 residential customers, introduce new smart plugs to their customers. The effort worked to engage SMECO’s customers and teach them how they can save money by eliminating “vampire loads” with a smart plug. Smart plugs work by simply cutting off the standby power when the product is not in use.
In a controlled study with SMECO, 600 customer-members received a free smart-home kit that included LED bulbs, occupancy sensors, plug load controllers, and a central hub to link all these devices to their phone or computer. This select group of participants learned general tips on adding devices, improving connections and schedules, and finding new automations that might work for members' homes through a series of outreach methods. They also received personalized recommendations based on user-device data to push more targeted recommendations (e.g., "Justin, it looks like you left your basement light on for X number of hours. Consider switching that light to a timer.") The pilot launched a smart voice assistant, SMECO Energy Assistant, through Amazon Alexa for a subgroup of participants. This assistant provided users with energy tips, program recommendations, and quick fixes to reduce energy use.
Recognize and prepare for emerging and diverse customer DSM needs today
Utilities have more opportunities than ever before to strengthen their relationships with a broader range of their customers while taking advantage of emerging technologies to boost program performance and meet a range of utility goals. While it is an exciting time now that customers from all demographics are expressing interest in making smarter energy choices, utilities sometimes still struggle to share the benefits of these new technologies effectively with all customers. Customer motivations and constraints vary, and a one-size-fits-all approach will inevitably leave some customer groups behind. Well-documented variation in program participation across customer segments is leading utilities to increasingly fold equity considerations into their DSM program planning and implementation efforts.
By tackling equity concerns overtly, utilities are better able to ensure that a more diverse set of customers benefits from emerging technologies. With a focus on equity, understanding customer needs and preferences, and aligning the evolution of DSM savings programs to meet them, utilities will set the stage for a brighter future for customers from all walks of life.