If energy-efficiency is the cheapest resource, it is also the most elusive. In the face of new regulations and growing public concern about the environment, utilities need to be willing to explore a variety of approaches to reducing energy use. Several studies released in 2013 offered much food for thought on designing effective energy-efficiency programs.
Breaking down energy behavior
The utility industry has seen a steady growth over the last five years in behavior-based energy-efficiency programs—strategies that use an understanding of how individuals consume energy to decrease energy demand. The American Council for an Energy Efficient Economy (ACEEE) recently completed the first comparative analysis of programs that focus on changing customer behavior to save energy. The Field Guide to Utility-Run Behavior Programs examines 281 of these programs offered by 104 energy providers and third parties between 2008 and 2013.
Researchers sorted all the programs into 40 different categories grounded in the behavioral and cognitive sciences that can be roughly grouped into three large families:
- Cognition programs focus on delivering information to consumers. General and targeted communication efforts, social media, classroom education and training fall into this group.
- Calculus programs rely on consumers making economically rational decisions. This group uses feedback, games, incentives, home energy audits and installation to shape consumer choices.
- Social interaction programs rely on interaction among people for their effectiveness. They involve social marketing, person-to person efforts, eco-teams, peer champions, online forums and gifts.
ACEEE recommends that program designers “stack” several strategies—at least one from each family—to engage multiple drivers of consumer decision making. For example, a designer might want to combine a home energy report with an audit program using a community-based social marketing approach. Holistic programs that simultaneously appeal to consumers through information, economic incentives, and social interaction are likely to have the greatest impact.
Millennials expect social interaction
Social engagement played a starring role in the project that won a student competition hosted by energy management consulting firm DEFG.
The Future of Energy 2020 tasked a group of New York University students to envision the future customer experience in the utility sector from the perspective of the Millennial Generation. The project took place in a finance class offered within the NYU Gallatin School. Students who attend this college within NYU pursue inter-disciplinary approaches to their education and have a reputation for thinking “outside the box.”
Working with DEFG, Professor Peter Rajsingh asked students to tell a story centering on future interactions between customers and utilities in the year 2020. Students broke into small teams to conduct market research and trends analysis, and then presented their vision through a narrative and visual demonstrations of the future. The teams chose interactions ranging from new bill-paying options, to future energy management and advances in clean technologies, to a new paradigm for low-income consumers to earn energy credits.
Selected from four finalists, the winning story depicted a young couple navigating different needs and expectations as they bought a new home. The home featured several new technologies and applications that both managed energy and were environmentally friendly. The utility served as a pro-active partner to the couple, assisting them with their decision-making, even providing an “energy concierge.”
Professor Rajsingh found it interesting that the students all rooted their visions of future customer experience in social contexts, which humanized the relationship between customers and utilities. “Transparency and social responsibility were key themes that were woven into all the Vision 2020 presentations,” he noted.
The results of the competition pointed to a future where young adults expect their utilities to engage with customers and support a mix of consumer technologies, devices and interactions on the customer’s terms. “The student’s Vision 2020 married major trends in customer service and communications with advancements in energy management and technologies into one seamless experience,” stated DEFG CEO Jamie Wimberly. “In other words, for the millennial generation, the future customer experience represents the digitization of the utility customer experience. Ultimately, that is a very different relationship between the customer and the utility from today.”
Efficiency for industry
Energy efficiency programs for industrial and other large customers call for a different approach than residential programs. Businesses may need to train or hire staff to deal with specialized equipment or operations. A report from Southwest Energy Efficiency Project (SWEEP) indicates that utilities can achieve significant, measurable savings by providing large customers with funding to build in-house energy management expertise.
SWEEP studied three strategic energy management (SEM) programs, as these programs are called, and reported its findings in Utility Strategic Energy Management Programs. SEM programs implemented by Bonneville Power Administration, Energy Trust of Oregon and Puget Sound Energy achieved energy savings of 15 to 25 percent of the agencies’ total savings for all commercial and industrial efficiency programs. The programs also showed that savings from operations and maintenance (O&M) improvements can be measured in a rigorous way, and that SEM can be very cost effective.
SWEEP recommends that utilities with an interest in SEM programs start by launching an energy manager co-funding program. This strategy helps many large customers to see energy management in a more comprehensive way and begin to develop the staff resources needed to implement energy-efficiency improvements.
The next step might be to create a pilot program to train a group of customers in the SEM principles and develop a way to measure savings. Offering a utility program to help industrial customers find, implement and measure savings from O&M improvements will put businesses on the SEM path.