Among the many demographic shifts shaping the U.S. today, the rise in renting and decline in homeownership seems largely to have fallen under the radar. According to a 2016 Pew report, more Americans rent now than any time in the past 50 years.
While there are many reasons leading to an increase in renting, the Pew data shows that it isn’t a passing fad; renting has steadily trended upwards for 20 years now. Over the past decade, the total number of U.S. households has grown by nearly eight million, yet the number of households headed by owners has stagnated. Those headed by renters have increased 10 percent.
Further, due to the impact of millennials, this trend seems unlikely to slow any time soon. Millennials currently dominate the ranks of renters, yet their pervasiveness among renters reflects more than their current life stage. According to census data, millennials today are “significantly less likely to own their home than prior generations of young adults when they were the same age”.
While this demographic shift likely has a considerable impact in many industries, it has particular relevance for electric utilities, who are already experiencing transformation from a number of other factors and who have traditionally viewed renters as a difficult-to-reach subset of consumers that aren’t necessarily interested in new energy products and services in the same manner that homeowners are.
However, with an evolving and expanding set of renters, do these entrenched beliefs reflect the present-day truth? To determine the attitudes, interests and behaviors of renters as energy consumers, the Smart Energy Consumer Collaborative conducted a meta-analysis of three previous consumer studies that included over 5,000 total respondents and more than 1,600 renters.
The resulting “Spotlight on Renters” report provides insight and guidance for electric utilities and other stakeholders throughout the energy ecosystem on renters’ interests in various energy-related technologies, programs and offers, their perceptions and attitudes towards their energy providers and more.
Dispelling the myths of who renters really are
Before digging into renters as energy consumers, it’s important to dispel some common myths about who renters are today. While it’s true that young people, students, military families and other groups are common renters, renting is up among many age groups and income brackets, according to a report by real estate website Trulia that mined data from the American Community Survey for the 50 largest U.S. metro areas.
This report showed that renting increased from 33 to 40.7 percent among households aged 35-54 from 2006 to 2014, and quite significantly, that the shift from homeownership to renting was actually more pronounced among middle-class and more affluent Americans. Among those earning between $126,000 to $188,000, for example, renting increased from 27.2 to 33.5 percent.
In many urban areas today, more than half of the population rents, and contrary to stereotypes, these renters are at every stage of their lives and are represented in a wide range of income brackets. It’s important for electric utilities, particularly in those renter-dense areas, to acknowledge the diversity of renters today.
What energy programs and technologies interest renters?
By and large, when comparing renters’ current level of adoption of energy programs or technologies to homeowners’, the former nearly always comes in lower. However, that’s not to say that renters are not actually interested in utility programs or energy-related technologies.
In fact, when looking at many utility programs, including home energy reports, peak-time savings and prepaid billing, we find that renters’ level of interest is noticeably higher than homeowners’. For other programs, like home energy evaluations, energy usage tracking and savings suggestions via a mobile app, interest levels are roughly the same for renters and homeowners.
These findings and the disparity between adoption and interest suggest that there are opportunities to engage renters in many utility programs – as long as renters feel that they have the agency to adopt them. Renters are obviously less able to make major changes to their households and typically are much less likely to own major household appliances, like dishwashers, refrigerators and washing machines. Hence, when we look at renters’ interest in smart appliances, electric vehicles and smart thermostats, we see lower levels than we do from homeowners.
Contrary to this trend, however, is the finding that renters are actually more interested than homeowners in rooftop solar – yet less interested, significantly so, in community solar. This deviation from the expected reflects, perhaps, an opportunity for education and outreach to renters from industry stakeholders involved with community solar projects.
How do renters feel about their electric utilities?
Considering that renters are highly interested in many utility programs but aren’t yet participating in them, how does this translate to their attitudes about their current providers of electricity?
When asked if they would prefer to purchase electricity from their current providers, a telecommunications company, another electric utility or a solar installer, a majority of all respondents – both renters and homeowners – would prefer to stay with their current providers. However, while older homeowners and younger homeowners have similarly high preferences for remaining with their current electricity providers, there’s a considerable discrepancy between older renters and younger renters. Younger renters are by far the most likely to choose an alternate electric utility or a solar installer, like Sunrun, Solar City or Vivint Solar.
Nevertheless, when asked about their satisfaction with their current electricity providers, nearly all renters and homeowners reported being either highly satisfied or moderately satisfied. Again, younger renters are less likely to being highly satisfied, but only slightly less so. Relatively few respondents reported low satisfaction levels.
Opportunities for electric utilities and their partners
While the traditional line of thought suggests that renters are not particularly interested in enrolling in utility programs or even in the value of being more energy efficient, the “Spotlight on Renters” research shows that this isn’t the case.
Although their current enrollment rates tend to be lower, renters’ overall interest in energy programs and technologies are similar to (and sometimes higher than) those of homeowners, and they’re equally as likely as homeowners to be classified as Green Champions, a behavioral segment that is both tech savvy and environmentally conscious. These findings are great news for electric utilities, especially those in areas where renters are a majority of the population.
The “Spotlight on Renters” research also shows that programs that renters can easily participate in without compulsory home improvements are much more likely to garner interest than those that require significant financial investments or the approval of their landlords. For example, two programs that rewarded consumers for shifting their energy usage away from peak periods were more popular with renters than homeowners. Renters also appear to be highly interested in their energy usage data: they were more interested in energy usage reports and app-based savings suggestions and only marginally less interested in electricity usage tracking and alerts.
With renters comprising such a significant segment of the U.S. population today, electric utilities and their partners would do well to create special programs that engage and educate to the specific interests and needs of this group of consumers. The “Spotlight on Renters” research shows that renters are ready to engage, particularly younger renters, but only if programs are tailored to meet their specific needs.