Fallacy #1 - Customers don't care about energy consumption
Updated: Nov 8, 2020
There is a common assertion I hear – which in various forms states that the reason we aren’t making more progress in the clean energy transition is that customer just don’t care about energy. This is usually based on market research that has asked customers whether they want this or that feature – or tariff – and makes sweeping conclusions about what customers actually believe. As one European utility executive put it, “Customers don’t care about energy, they care about value”.
Many utilities cite statistics showing the apathy of their consumers to explain their lack of engagement with them. There are – to be fair – facts that support this theory. One is the lack of 'switching' by customers from incumbent energy providers in now deregulated energy markets. In the US, this represents roughly 81 million households who live in competitive choice markets (and the majority of customers remain with their legacy provider – a group sometimes referred to as the ‘sleeping giant’). This argument tended to the absurd in the UK a few years ago when the government launched a 'competition' commission – a formal inquiry to show that UK utilities were conspiring to thwart customer choice. In the end, there was no collusion – the fact was British citizens weren’t switching because the process was a pain, and the UK utility’s offerings were boring and uninspiring.
The counterfactuals to this myth are more compelling. First, according to Accenture's annual Global Customer Pulse Survey last year, 62% of customers said they want to support brands that take a stand in solving important social issues (and sustainability is their #1 social issue, among others like economic equality and justice). Another Accenture study a few years ago found that that 59 per cent of consumers would invest to become self-sufficient if they could do so – so they would no longer rely on buying energy from the grid. In the US, many customers are aware that electricity production and transportation explain almost two thirds of our carbon output. Regarding electric vehicles, according to another Accenture study, 82% of customers globally that were considering EVs wanted charging to be “smart” – meaning, they cared how the car used power.
Second, people have watched as everything around them has gotten smarter – their cars, their lights, their locks, even their pet collar – and they expect the same to be true in the rest of their homes. Customers have become very digitally engaged in processes even more mundane than energy use – like insurance claims, oral care, and even watering the lawn – when given more compelling ways to do so. As an example, I installed Rachio irrigation controllers to replace my legacy sprinkler system. They allow me to manage my lawn using pictures and satellite maps – and it reduced my water consumption by 24% (yes, they measured that for me!).
Third, energy practices are changing around us – and customers are noticing. Many states are considering broad adoption of time of use or tiered rates (like my Michigan) – or have mandatory TOU tariffs for EV owners. Likewise, Tesla and Sonnen and other companies marketing battery and backup systems have heightened people’s understanding of energy risks (as have wildfires on the news across the country). And, don't forget that consumers work for companies – and this year the number of G2000 companies that have made commitments to using only clean energy is up 24% this year, as they feel pressure from their shareholders, supply chain partners – and, ironically, from customers. Energy waste and energy efficiency are becoming hot topics.
So, doesn't it seem odd – even silly – to assert that customers don't care about their most valuable asset (their home) and how it's using our most consequential commodity (energy)? I offer two illustrations of what’s actually true. Take Google. In 2019, during the solar eclipse that blanketed the US, Google offered owners of Nest thermostats the chance to modulate their consumption to make up for lost solar production in areas where the eclipse was shadowing the earth. Without much marketing, nearly 750,000 customers signed up – to let one of the most mistrusted tech companies in the home market control their thermostat for a day! Likewise, Powerley’s energy insights app – so called for ‘disaggregating’ and depicting energy usage – is showing that energy customers do engage. They report levels of app usage (e.g. # times involved per week) that rival some social media sites.
The best analogy of what’s possible is Carnival Cruise line. A few years ago, Carnival equipped one of their flagship cruise ships with 75 miles of cable, 7,500 sensors, and 4,000 interactive monitors. The ship's apps presented customers – among other things – with real-time information about the status and wait times for every restaurant on the ship. And something surprising happened – people adjusted the times they ate in response to congestion – solving one of the most confounding issues in the cruise industry (how to serve ~5,000 people all who want to eat at the same time). The analogy should be obvious –
people changed their behavior related to something much lower on the Maslow hierarchy (food!) in response to a compelling service experience, digital engagement, and transparency. And it will happen to energy consumption ...
In fact, customers do care about energy. But the recipe for engagement is complex and the hurdles are high – simplicity, relevance, convenience, transparency, and trust. What we all can agree is that customers won’t engage with services that are boring or uninspiring or generic.