This past week, Gomathi Sadhasivan, Senior Consultant at DNV GL, Bridget Meckley from SGCC, and Dr. Paul Schwarz, Managing Director at Research Into Action, came together to present the highlights of our recently released The Empowered Consumer report on an SGCC Research Briefing Webinar. Released on May 10th, TEC provides a first-of-its-kind look at the new generation of smart energy consumers in the United States while exploring their awareness for an interest in next-generation products and services.
Kicking off the webinar, our Research Coordinator Bridget Meckley provided an explanation as to why SGCC set out to conduct TEC research. Bridget explained that we were interested examining specific question about grid modernization such as “what cool things has the Smart Grid enabled?” “have Smart Grid-enabled programs empowered consumers?” and “what options or technologies would encourage more engagement?” Bridget explained that we surveyed 1,500 consumers across 16 states including “advanced states” with an advanced metering infrastructure (AMI) and “control states” without AMI in order to determine whether or not geographic location or local smart grid initiatives impacted consumer awareness or interest. Moving on, Bridget also explained that the TEC analysis was conducted through the lens of SGCC’s Smart Grid Consumer Segmentation that was refreshed in 2015. Through this lens, SGCC evaluated survey respondents and grouped them into 5 distinct consumer segments that bring together individuals based on similar social characteristics. As was further explained throughout the webinar, SGCC determine that consumer awareness, interest, and preferences were more closely aligned with their consumers segment rather than their geographic location.
Finally, Bridget provided a brief overview of the 9 smart grid enabled products and services that were evaluated through TEC analysis: energy tracking alerts, time-varying rate plans, onsite power storage, smart appliances, prepaid billing, rooftop solar & net metering, peak time savings plan, device remote control, and the smart home.
Our second speaker–SGCC’s Research Committee Chair & Senior Consultant at DNV GL–Gomathi Sadhasivan provided webinar attendees with an overview of consumers’ interest vs. awareness for the 9 tested smart grid products and services. Gomathi explained that consumers expressed the highest interest in adopting smart appliances and a peak time savings rate plan while the highest levels of awareness were expressed for rooftop solar and the ability for smart energy products to be controlled remotely. Gomathi drew special attention to emerging technologies such as prepaid billing, noting that it has a relatively high level of awareness and interest despite the fact that it is only available in select markets.
Gomathi also presented attendees with an analysis of consumer awareness and interest levels in these technologies and services based on both their consumer segment and their geographic location. Gomathi reiterated that TEC analysis revealed that consumer interest / awareness are better aligned with their consumer segment rather than with their location. As an example, Gomathi explained that 60% of consumers in “advanced states” and 54% of consumers in “control states” are generally aware of new technologies and services, but when digging deeper, in reality only 35% of consumers who are identified as “Status Quo” exhibit similar levels of awareness. These findings shed light on the fact that marketing and promotional materials may be better served in appealing to specific segments of a population rather than all consumers.
Looking at the same data from a different angle, Gomathi provided an overview of the room for growth in adoption as it relates to these 9 products and services. Gomathi explained that adoption rates vary by concept and consumer segment, but almost universally, “Savings Seekers” and “Green Champions” are those most likely to adopt new products and services while consumers segmented as “Status Quo,” “Technology Cautious” and “Movers & Shakers” are the least likely to adopt. While we didn’t expect Movers & Shakers to respond to these new technologies in such low numbers, we think the reason may be because they have yet to see the benefits of these innovative products and services.
Gomathi also provided an overview of what consumers expressed as the most important benefits of adopting smart grid enabled products and services. 72% of consumers said they are interested in adopting new products and services for the savings they provide, while 62% responded that they are attracted by the increased control over their usage. While other consumers expressed their interest in environmental benefits, the high level of responses around concrete concepts and actions indicate that consumers are looking for quantifiable and tangible benefits from these technologies.
The Empowered Consumer also tested consumer concerns for barriers around adopting new technologies and services. Gomathi explained that 87% of consumers said that they are hesitant to adopt next-generation products and services due to the initial purchasing cost, 78% said that they think their utility may take control over their home against their wishes, 69% said that they are concerned that they won’t save money, and 63% said that they are concerned they may have to change the way in which they use their home. Gomathi suggested one answer to these expressed concerns would be to “generate more testimonials and case study that use real-world hyper-local examples of savings and control.”
Gomathi finished by providing attendees with an overview of the expressed interest in emerging technologies such as smart appliances, onsite power storage, and smart homes. These three technologies represent new offerings to the smart energy market, and are already experiencing high levels of consumer awareness and interest. Gomathi explained that due to consumer interest, stakeholders may be able to engage consumers with educational awareness campaigns and first-adopter incentives. These technologies may further serve as opportunities to engage consumers in smart energy plans and increase consumer knowledge about grid modernization and the principals of efficiency and conservation.
Our last speaker, Dr. Paul Schwartz, Managing Director with Research Into Action explained how choice-based conjoint analyses were conducted through TEC research. The first conjoint analysis presented consumers with many possible combinations of a smart thermostat program and offered them a variety of choices to ultimately find the ideal smart thermostat program from a consumer perspective. The second conjoint analysis allowed survey respondents to customize their ideal time-varying rate plan, providing us with insight into the elements that consumers value the most.
Paul explained that consumers were presented with five common elements that represent a smart thermostat program: Installation method, Demand Response Enablement, Thermostat Capabilities, Incentive Amount, and Incentive Payment Method. The best configuration that consumers preferred was a smart thermostat program with a DIY installation method, auto-adjusting features, no demand response enablement, and a $250 incentive, which appealed to 68% of consumers. Paul explained that when reducing the incentive amount by 50% to $125, the configuration still appealed to the same number, 68% of consumers. When further reducing the incentive to $50, only a marginal decline in appeal resulted – fully 64% of respondents still thought this would be an ideal configuration. The takeaway is that incentive amount is not an important factor in consumer interest, so long as an incentive is offered.
Paul also explained that when they used a higher configuration ($125 incentive) amount but enabled demand response, more than half of respondents still believed that this would be an attractive program configuration. Paul explained that when designing a smart thermostat program, consumers showed the greatest sensitivity to the installation method, not the incentive amount, which was a surprising result of the TEC analysis. Further, Paul explained that programs such as these represent a low-cost, gateway opportunity to engage consumers in other smart energy programs.
Bringing our attention to the second conjoint analysis, Paul explained the four elements that comprised the time-varying rate plan analysis: Contract Duration, kWh Usage Access, kWh Pricing, and Bill Limits. Survey respondents were initially presented with the option to choose one of three randomly selected time-varying rate plans or a standard rate plan. With certain elements including a short contract and a bill limits, 55% of consumers chose a time-varying rate plan, with the majority (24%) choosing a night-time rate discount plan. In an effort to determine if consumers were simply unhappy with the standard rate plan or were actually interested in a time-varying rate plan, survey respondents were given the opportunity to choose from all three time-varying rate plans as well as the standard rate. When given all of the available options, including elements of a short contract and bill limits, 60% of consumers chose a time-varying rate plan (with the majority still choosing the night-time rate discount).
Although we are not sure of the causal reasons, Paul explained that consumers liked the night-time rate discount plan as it was simple to understand and provided a clear path to savings, reducing the burden on the consumers to adjust their behavior.
Webinar attendees were provided with a final wrap-up of TEC findings:
• Consumer segments are more important for understanding consumer interests and awareness than specific geographic regions.
• Consumers want to be assured their investments will return value by expressing interest in ways to save money and concerns about up front investments. Stakeholders may want to show authentic, real-world examples and testimonials of the benefits of these services and technologies to drive enrollment and interest.
• More consumers are interested in time varying rate plans than flat rate plans when certain program elements are in place. Consumer interest rises if given a choice of multiple time-varying rate plans.
• Emerging technologies, particularly smart appliances, offer opportunities to engage a wide spectrum of consumers.
A full Question & Answer session was conducted, which can be observed by watching the webinar’s recording using the pass-code “SGCC2016.” To learn more about The Empowered Consumer, I invite you to visit www.SmartGridcc.org/Empowerd-Consumer and download the report’s free Executive Summary.