2014 State of the Consumer Report

2014 State of the Consumer
Report
ta b l e o f co ntents
Mission........................................................................................................................................................................................ 1
Acknowledgements.................................................................................................................................................................1
SGCC Member List.................................................................................................................................................................. 2
Introduction...............................................................................................................................................................................3
Methods and Study Overviews............................................................................................................................................. 3
Customer Engagement Success Stories............................................................................................................. 3
Smart Grid Economic and Environmental Benefits....................................................................................... 4
Consumer Pulse and Market Segmentation Research Program – Wave 4................................................... 4
Segmentation Successes...................................................................................................................................... 4
Voices of Experience............................................................................................................................................ 4
What We Have Learned: The State of the Consumer...................................................................................................... 5
Theme 1: Consumer Awareness and Favorability Are Stable Over Time................................................................ 7
Consumer Awareness is Stable—But Low............................................................................................................ 7
Consumers Continue to View Smart Grid Favorably............................................................................................ 9
The Smart Grid Favorability Index...................................................................................................................... 10
Theme 2: Segmentation Drives Performance............................................................................................................... 11
Smart Grid Consumer Segments......................................................................................................................... 11
How Utilities Have Successfully Applied Segmentation.....................................................................................12
Consumers Seek Information, Advice, and Buying Opportunities From Multiple Channels........................... 12
Theme 3: Utilities Can Use Field-Tested Best Practices Frameworks to
Successfully Engage Consumers.................................................................................................................13
Customers at the Core......................................................................................................................................... 14
A Guide to Successful Engagement Efforts........................................................................................................ 14
Theme 4: Consumers Want Smart Grid “Made Real” For Them............................................................................. 15
Energy Management............................................................................................................................................. 15
Smart Grid-Enabled Technology.......................................................................................................................... 16
Product and Service Design Best Practices........................................................................................................ 17
Make it “Real”....................................................................................................................................................... 18
Theme 5: Consumers Value Clean Energy....................................................................................................................19
At What Price?...................................................................................................................................................... 19
Generation at Home............................................................................................................................................. 20
Theme 6: The Smart Grid Offers Real Benefits that Consumers Care About......................................................21
Outage Management............................................................................................................................................. 22
Renewable Generation Integration...................................................................................................................... 22
Economic Benefits................................................................................................................................................ 23
Growing Support.................................................................................................................................................. 23
What’s Next..............................................................................................................................................................................24
Innovation.............................................................................................................................................................24
Security.................................................................................................................................................................25
Renewables...........................................................................................................................................................25
Conclusion...............................................................................................................................................................................26
Appendix – SGCC Consumer Segments.......................................................................................................................... 27
© 2013–2014 SMART GRID CONSUMER COLLABORATIVE. ALL RIGHTS RESERVED.
Missio n
The Smart Grid Consumer Collaborative is a 501(c)(3) nonprofit organization
chartered to be the trusted source representing consumers, advocates, utilities,
and technology providers in order to advance the adoption of a reliable, efficient,
and secure Smart Grid and ensure long-lasting sustainable benefits to consumers.
Ac k n o w l ed g ements
This fourth release of the Smart Grid Consumer Collaborative
(SGCC) State of the Consumer expands upon previous reports
by not only reporting on the latest in Smart Grid consumer understanding, but also
sharing how utilities and others are utilizing this understanding in increasing consumer
engagement. By sharing and disseminating these insights, we continue our drive to
increase awareness of a consumer-safe, consumer-friendly Smart Grid and advance
widespread understanding and interest from consumers in the benefits of an intelligent
and sustainable electricity grid.
www.smartgridcc.org
Our members were critical to the work that we chose to do and the high quality delivery
of the research. SGCC membership demonstrates that collectively we are making great
strides in partnering to better understand Smart Grid consumers—who they are, what
they know, what they want, and how to engage them successfully.
The SGCC would like to thank the many companies and organizations that formulated
insights from the research findings, and provided feedback on layout, content, and
theme iterations. Only by continuing to collaborate on consumer issues will we be able
to fully realize the promise of Smart Grid. If you are not a member, we invite you to join
us as we continue to listen, collaborate, and educate going forward.
— SGCC Research Committee
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SGCC M ember Li s t
Accenture
ACEEE
Aclara Technologies
Advanced Energy
Alameda Municipal Power
Alliance to Save Energy
Ameren Corporation
EPCE – Energy Providers Coalition
for Education
NETL – SG Implementation Task Force
EPRI
Office of People’s Counsel – DC
Fayetteville Public Works Commission
First Energy Corporation
Florida Power & Light
Future of Privacy Forum
New Brunswick Power Corporation
Office of the Ohio Consumers’ Counsel
Oklahoma Gas & Electric
Opower
Oracle
Arizona Public Service Company
Gainesville Regional Utilities
Association for Demand Response
and Smart Grid
Galvin Electricity Initiative
GE Energy
Avista Utilities
Georgia Institute of Technology
Baltimore Gas and Electric Company
Georgia Watch
Benton PUD
Great Plains Institute
Bonneville Power Administration
GREEN DMV
Brookhaven National Laboratory
Greenlining Institute
California Center for Sustainable Energy
GridWise Alliance
California Public Utilities Commission
Huntsville Utilities
CenterPoint Energy
Hydro One
Research Triangle Region
Cleantech Cluster
Citizens’ Utility Board of Oregon
IBM
Sacramento Municipal Utility District
Climate + Energy Project
Idaho Falls Power
CNT Energy
Illinois Citizens Utility Board
Sempra Utilities / San Diego
Gas & Electric
Cobb EMC
Institute for Energy & Environment
at Vermont Law
Silver Spring Networks
Simple Energy
Intelligent Energy Solutions LLC
Smart Grid Oregon
ComEd
Itron
Southeast Energy Efficiency Alliance
Commonwealth of Massachusetts
Department of Public Utilities
Landis+Gyr
Southern California Edison
Lawrence Berkeley National Laboratory
Southern Company
Comverge
Market Strategies International
Southface Energy Institute
Consumers Energy
Memphis Light, Gas and Water
Southwest Research Institute
CPS Energy
Michigan Public Service Commission
Stoel Rives LLP
DNV KEMA
Middle Tennessee EMC
TechAmerica
Dominion Resources
Montana State University
Tendril Inc.
DTE Energy
National Institute of Standards and
Technology
Tennessee Valley Authority
National Renewable Energy Laboratory
Tri-County Electric Cooperative
Colorado Public Utilities Commission
Columbia Water and Light Department
Duke Energy
Duquesne Light Company
Earth Networks
Electric Power Board of Chattanooga
(EPB)
Environmental Defense Fund (EDF)
Natural Resources Defense Council
(NRDC)
NC Department of Commerce
– Energy Office
Pacific Gas and Electric Company
Pacific Northwest National Laboratory
PayGo
Peak Load Management Alliance (PLMA)
Pepco Holdings, Inc.
Portland General Electric
PSC
Public Utility Commission of Texas
Purdue University
Texas Office of Public Utility Counsel
TVPPA
Utility Consumers’ Action Network
Vermont Energy Investment Corporation
NC Sustainable Energy Association
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Introduction
The first step in meaningful collaboration is establishing a shared context among and between stakeholders. This has
become especially important as both the pace of change in and growth of expectations of the electric utility sector have
accelerated over the past years. The Smart Grid Consumer Collaborative (SGCC) endeavors to create this shared context
through its research and to facilitate meaningful collaboration between stakeholders.
The SGCC’s consumer research program is rigorously designed to truly understand consumers and how they relate to the
Smart Grid. We have defined the market segments that exist related to Smart Grid technology, and have delved deeply into
their interests and desires. At the same time, we have begun to examine how utilities have produced benefits meaningful to
consumers through their grid modernization efforts, and how they have successfully engaged consumers in the process.
Methods and Study Overviews
The 2014 State of the Consumer report draws its key themes from SGCC research conducted in 2013. This research
includes: Customer Engagement Success Stories, Smart Grid Economic and Environmental Benefits, and
Consumer Pulse and Market Segmentation Wave 4, along with an examination of utility segmentation efforts to
be released in early 2014. We also reviewed non-SGCC research related to consumer engagement, and include selected
findings from the US Department of Energy’s Voices of Experience as part of this report.
Customer Engagement Success Stories
Customer Engagement Success Stories examined the communication and outreach
strategies and tactics used by four leading U.S. utilities to successfully increase consumer
engagement with a variety of Smart Grid-enabled programs. This examination was the
basis for a seven-point engagement framework that is useful for all industry stakeholders in guiding their consumer engagement efforts. Additional case studies were released
throughout 2013, yielding greater insight into how this engagement framework serves
to help effectively educate and motivate consumers to engage with various Smart
Grid-enabled programs and technologies.
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Smart Grid Economic and Environmental Benefits
Because real-world experience with the Smart Grid is growing, SGCC completed a
review of available research quantifying the actual—rather than forecast—benefits
and costs to help stakeholders analyze and maximize the value of various Smart Grid
capabilities. This report summarizes available research on the benefits of grid modernization in terms that stakeholders and consumers can understand. It synthesizes the
findings in a “per customer” context whenever possible and documents the assumptions
and calculations used in this synthesis so that stakeholders can easily translate this
research into information relevant for their particular Smart Grid application.
Consumer Pulse and Market Segmentation Research Program – Wave 4
Starting in August 2011, SGCC began regularly taking the pulse of the consumer
market to gauge consumers’ journey in Smart Grid understanding, acceptance,
and engagement. This seminal study was designed to measure and track changes
in consumer awareness, favorability, and understanding of Smart Grid messages
and consumer benefits.
The findings from the SGCC Consumer Pulse and Market Segmentation
study are derived from over 4,000 in-depth, nationally-representative consumer
telephone surveys. Wave 1 was completed in August 2011 among 1,200 U.S.
consumers. Wave 2 was completed November 2011 among a sample of 1,003
U.S. consumers. Wave 3 was completed in August 2012 among 1,089 U.S. consumers. Wave 4 was completed in September 2013 among 1,001 U.S. consumers.
Segmentation Successes
From SGCC’s Consumer Pulse and Market Segmentation study, we know that consumers are not monolithic when it
comes to Smart Grid. Instead, there are five distinct segments that hold different interests, priorities, and willingness to
engage with Smart Grid-enabled programs and technologies. We looked at how a small sample of utilities have applied
segmentation to their Smart Grid programs, what the results were, and what capabilities the utilities had to develop to
do this work. The resulting white paper will be released in February 2014.
Voices of Experience
As a member of the US Department of Energy’s (DOE) Voices of Experience steering
committee, SGCC and a number of its members helped develop this report. In Smart
Grid Peer-to-Peer Workshops conducted by DOE, utilities of different sizes and operating
structures shared the approaches and methods that worked best for them and their
communities, and the valuable lessons they learned along the way. This report captures
these approaches in order to share the large base of knowledge that exists about Smart
Grid implementation in utilities throughout the United States.
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What We Have Learned:
The State of the Consumer
Since its founding, the Smart Grid Consumer Collaborative has made it a priority
to increase industry knowledge about how U.S. consumers are thinking about and
engaging with grid modernization efforts. In 2013, we have expanded our work to
help industry stakeholders understand how to apply that knowledge to grow
consumer awareness, favorability, and engagement with these new technologies.
Based on SGCC’s 2013 research, below are six key themes about the state of the Smart Grid consumer:
Th e m e 1: Consumer Awareness and Favorability Are Stable Over Time
Despite Smart Meters being installed in nearly 40% of U.S. homes and the emergence of the term “Smart Grid”
in mainstream use, consumer awareness and favorability is largely the same today as it was when SGCC began the
Consumer Pulse and Market Segmentation program in 2011. This shows that we still have a long way to go
in helping consumers understand Smart Grid and why it matters to their future. Fortunately, this also shows that
pockets of noisy opposition to grid modernization do not appear to have a negative impact on consumer sentiment.
Th e m e 2: Segmentation Drives Performance
Because consumers care about different things, utilities that approach consumers with benefits that they care
about realize better program performance than those that use a blanket message. Additionally, our research
indicates that there may be opportunities for utilities to drive revenues by offering added value to consumers.
Segmentation can be a win-win, with consumers enjoying more personalized products and messaging about things
they care about, and utilities finding new areas for growth in a changing energy landscape.
Th e m e 3: Utilities Can Use Field-Tested Best Practices Frameworks
to Engage Customers
While segmentation is critical to engaging consumers, we have found commonalities that underlie the most effective
utility customer engagement efforts. The resulting frameworks provide a core set of activities that any utility can
use to successfully engage their customers. Important among these activities are:
• Engaging customers before technology deployment;
• Facilitating employee and community engagement;
• Listening and engaging with customer concerns and questions.
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Consumers have told us that
clean energy and grid reliability
are extremely important
benefits of the Smart Grid—
and that they would be willing
to pay more to receive them.
T h em e 4: Consumers Want Smart Grid “Made Real” For Them
Although they may not be aware of the underlying Smart Grid technology, consumer interest in Smart Grid-enabled
technologies and programs is very strong, though program participation and technology adoption rates remain low.
We believe that this gap between interest and adoption can be narrowed through consumer-focused product/service
development and by communicating with consumers in the language and via the channels that they prefer.
T h em e 5: Consumers Value Clean Energy
Since the inception of SGCC’s Consumer Pulse research program, consumers have told us that clean energy and
grid reliability are extremely important benefits of the Smart Grid—and that they would be willing to pay more to
receive them. This year, we tested several price points for these benefits, and the results are surprising. Not only do
consumers demonstrate a continued willingness to pay, but their responses also show that support is not inversely
correlated with price. This indicates an opportunity for utilities and others to reexamine how they approach
providing clean energy.
T h em e 6: The Smart Grid Offers Real Benefits that Consumers Care About
We know that consumers care about a number of different benefits that the Smart Grid can offer—from the
immediate and personal to the long-term and societal. Fortunately, many of these benefits are no longer hypothetical,
but proved by real-world experience. Looking at actual Smart Grid deployments, we found that the net present
value of Smart Grid investment ranges from $247 to $713 per customer and that there are significant environmental
and reliability improvements from these investments.
We invite your feedback and look forward to continuing dialog on these insights as well as the more detailed findings that
follow. SGCC is committed to continuing to provide research and thought leadership that support increased understanding
of the implications of new grid technologies for American consumers.
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T he m e 1 :
Consumer Awareness and
Favorability Are Stable Over Time
Consumers continue to be generally unaware of the grid modernization efforts that
are happening around them.
In 2013, smart meter penetration reached
40% of all consumers.1 Additionally, the
term “Smart Grid” began to receive more
mainstream use, with GMC using it to create
a favorable impression of their new Sierra
truck and IBM promoting it as part of their
“Smarter Planet” initiative.
Despite the progress utilities have made in
Smart Grid implementation and the popularization of the term, consumers remain largely
unaware of Smart Grid, its components, and
the benefits it offers.
Watch at http://tinyurl.com/GMCSmartGrid
Consumer Awareness
is Stable—But Low
Since SGCC began its Consumer Pulse and
Market Segmentation program in 2011, we
have spoken with over 4,000 U.S. residential
consumers. Although much has changed in
the Smart Grid landscape since the first
research wave, consumer awareness does
not appear to be tracking the change.
Watch at http://tinyurl.com/SG-IBM
1
Utility Scale Smart Meter Deployments, Plans, & Proposals, Institute for Electric Efficiency, 2013
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Specifically, 53% of respondents in 2013’s Wave 4
survey have never heard the term “Smart Grid”
while an additional 22% have heard of “Smart Grid”,
but don’t know much about what it means.
Similarly, 48% have not heard the term “Smart Meter”,
while 17% have heard the term but don’t know much
about it.
These results are statistically identical to the responses
from Waves 1-3, indicating the need for continued outreach
and education to consumers about these technologies.
Additionally, although 40% of households now have a smart
meter, only 17% of Wave 4 respondents say that they have
a smart meter on their home. The accompanying graph
shows the widening gap between actual smart meter
installations and consumer awareness that the installations
have occurred.
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Consumers Continue to View Smart Grid Favorably
Although most consumers have not
heard—or don’t know much—about the
Smart Grid, those who are aware continue to hold favorable views toward it.
When respondents were asked an openended question about why they gave
the favorability rating they did for smart
meters, 19% of those who indicated
favorability indicated that they were
simply satisfied/happy with the meter.
Other responses echoed typical consumer value propositions, including remote
readings, availability of energy data to
control usage, and energy conservation.
Although many open-ended responses
aligned with typical Smart Grid value
propositions, there is a gap between
what consumers say is important when prompted with value propositions and what they say in the absence of a prompt.
Comparing the prompted responses in Wave 3 to the open-ended responses in Wave 4 shows this gap.
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Nearly 1 in 5 consumers who are aware of smart
meters say their overall feelings about smart meters
are “unfavorable.” These consumers’ responses to the
open-ended question about why they gave the rating
they did indicates a need for continued consumer
education to dispel misperceptions about the technology. As an example, 23% of unfavorable respondents
said that they held unfavorable views because smart
meters allowed their utility to monitor and/or control
their energy usage. Other responses include concerns
about accuracy, health impacts, privacy, and expense.
Correcting these misperceptions and reducing the
number of consumers who hold unfavorable views of
the technology needs to be a priority for the industry.
Interestingly, 14% of both favorable and unfavorable
respondents indicated that they gave the rating they
did because they didn’t know enough about it. It
seems that as many consumers are willing to give the
technology the benefit of the doubt as are not—and
that these consumers’ favorability could be swayed as
they learn more about it.
For consumer-friendly information that addresses
frequently heard concerns about the Smart Grid,
download SGCC’s Consumer Information Kit
for the Smart Grid at http://smartgridcc.org/
sgcc-consumer-concerns-and-educational-toolkit
The Smart Grid Favorability Index
SGCC created the Smart Grid Favorability Index to
serve as a single metric over time to track the state
of Smart Grid awareness and favorability. It provides
a summary measure of consumers’ current level of
knowledge about the Smart Grid and their favorability
towards it.2 Because the two components—awareness
and favorability—have remained essentially unchanged
over all four Waves of the Consumer Pulse survey,
the Smart Grid Favorability Index currently stands
at 24, right where it was at the inception of the Index
in 2011.
2
The Favorability Index is calculated by multiplying percent aware by percent favorable. For instance, if awareness were 50% and favorability were 60%, the
Index would be 30 (50 x 60/100).
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t he m e 2 :
Segmentation Drives Performance
Residential consumers are not a monolithic class, and utilities that approach consumers
in a more individualized way see greater program and business performance.
As discussed in the previous theme, consumers
value different benefits that the Smart Grid can
provide—from saving money to greater reliability
to environmental performance. Consequently, there
are a wide array of products and services that have
strong appeal among consumer segments, though
the reason for their appeal may differ for different
consumers. Additionally, the marketing message
is not the only place where segmentation matters,
as we discovered strong consumer preference for
certain purchase channels.
Importance of customer segmentation in reaching
profitable customers through marketing activities
Segmentation has long been seen as a valuable tool
to drive performance within other business sectors.
It is now something that is seeing increasing use in
the utility sector, both in regulated and deregulated
markets, to drive program and business performance.
Source: IBM Institute for Business Value survey, 2003
Smart Grid Consumer Segments
The Smart Grid Consumer Collaborative has developed a segmentation framework based on consumer attitudes and
behaviors towards the Smart Grid. Utilities and others seeking to engage consumers with Smart Grid-enabled products
and services can use this framework to reach them more effectively.
Segment Name
% of Population3 Attitudinal disposition
Easy Street
25%
“We can afford to pay for electricity. The cost isn’t that much, on our budget.”
Concerned Greens
24%
“Smart Grid and smart meters will help protect the environment”
Young America
20%
“We wish someone would tell us how Smart Grid can help us save money and
help the environment.”
DIY & Save
17%
“Energy efficiency and Smart Grid programs sound appealing, because they
would help us save money.”
Traditionals
14%
“Frankly, we’re not at all sure Smart Grid is needed.”
For more detail on each segment’s attitudes and select demographic characteristics, please see the Appendix of this report.
3
Nationally, based on findings from Consumer Pulse and Market Segmentation Study Wave 4
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How Utilities Have Successfully Applied Segmentation
By segmenting their customer databases, a number of utilities have seen important real-world improvements in
customer satisfaction, program uptake rates, and customer care costs. Examples4 include:
Customer Satisfaction
• To help communicate the significant reliability enhancements that were made, Pepco developed targeted reliability
messages based on their customer segmentation that contributed to improved overall customer satisfaction by almost
10 points over the previous year.
Program Uptake Rates
• When offering a demand response program, Duke Energy made the same number of offers—but to a different mix
of targets based on predictive analytics—and enjoyed a 50% to 100% improvement in response rates.
• When encouraging customers to enroll in paperless billing, Arizona Public Service tailored the message to address
privacy concerns for a “technology averse” segment and increased response rates from 1% to almost 5%.
Customer Care Costs
• When explaining an impending cost increase to customers, San Diego Gas & Electric developed specific messages and
targeted energy savings solutions for each customer segment. They were able to address the issues of each segment
with the right tone and avoided a significant amount of backlash.
• Using predictive analytics, Duke Energy was able to present customers with relevant solutions when they called their
call centers. This resulted in a better customer experience and a reduction in the cost of service.
Consumers Seek Information, Advice, and Buying Opportunities
From Multiple Channels
We asked consumers who they thought
would do the best job at acting as a
“one-stop shop” selling products,
technology, services, and expertise
to help them use energy more wisely.
Home improvement stores such as
Home Depot or Lowes topped the list,
though energy utilities were also seen
as highly credible. Although we did not
ask respondents why they expressed
the channel preferences they did, we
hypothesize that it is because most
consumers have minimal contact with
their utility and fairly regular contact
with a home improvement store.
For those seeking to enhance customer engagement by bringing new products and services to market, this indicates
that there are at least two key distribution channels to reach consumers, and that consumers encountering a product
at a home improvement store may be more likely to make a purchase. It is important to note the differences between
segments, such as DIY & Save’s significantly higher propensity to prefer home improvement stores and Young America’s
preference for telecom providers, and map those preferences against that segment’s values.
4
Examples in this section come from SGCC’s Segmentation Successes white paper, which will be released in February 2014
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Utilities Can Use Field-Tested
Best Practices Frameworks to
Successfully Engage Consumers
T he m e 3 :
Operating environments differ, but successful consumer engagement is as much
science as art.
Looking across the Smart Grid landscape, SGCC identified many different utilities that have successfully engaged
consumers in their Smart Grid programs. The lessons from these utilities were discussed in our Smart Grid Customer
Engagement Success Stories report, and although they all had different particulars, each utility used a core set of
strategies to drive its success.
These strategies include:
1.Educate customers before deployment.
2.Anticipate and answer questions before customers ask them.
3.Facilitate community engagement.
4.Communicate ways to shift usage off-peak.
5.Deploy a user-friendly web portal.
6.Offer user-friendly Smart Grid enabled technology.
7.Create authentic customer testimonials.
The Voices of Experience guide offers similar—and
complimentary—advice on the characteristics of
successful customer engagement programs:
1.Establish strong guiding principles.
2.View customers as partners.
3.Engage employees from the start and throughout the program.
4.Start customer engagement efforts prior to technology deployment.
5.Manage change within the organization proactively.
6.Meet customers in their preferred forum—traditional mail, in person, or online. The channel is just as important
as the message.
7.Recognize the importance of listening and engaging with customers who have concerns about the technology.
These lists are not exclusive, rather, they are mutually reinforcing. For example, Voices of Experience suggests engaging
employees, and SGCC’s research suggests that educating and deploying employees into the community helps facilitate
community engagement. We also see similar recommendations around proactively engaging with customers who have
questions or concerns, and the need to communicate through the channels that customers prefer.
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Customers at the Core
Throughout all of these activities, we found that utilities that are successful at engaging consumers put customers first.
For example, Gulf Power strove to make participation in their Energy Select program (a time-of-use/critical peak pricing
program) as simple as possible. Gulf Power is upfront with customers about its pricing structure and the conditions under
which a critical event will be called. They also worked closely with their vendors to ensure that supporting technologies—
programmable thermostats and load-control relays—were as consumer-friendly as possible.
The Voices of Experience guide explores how knowing your customers helps create happier, more engaged customers.
It cautions that understanding customers does not stop with consumer economics, but rather extends to understanding
consumers’ worldviews. Stakeholders who participated in crafting this guide recommended that utilities engage in
face-to-face exchanges to complement and enhance research done in pursuit of understanding customers’ worldviews.
CenterPoint Energy and San Diego Gas & Electric accomplished this face-to-face interaction in part through their
employee training and engagement programs:
• CenterPoint Energy tapped its Houston-area workforce of 2,175 employees to communicate smart meter essentials
with a smart meter training program. Approximately 1,500 of those employees were trained using a separate intelligent
grid training module. Those who passed an online course for each became “ambassadors” for the company’s
“energyInSight” campaign. The company’s ambassadors fanned out to speak to a variety of civic, religious, and business
groups demonstrating along the way how serious they are in making the Smart Grid work for all of the consumers in
their service territory.
• To ensure they were plugged into customers’ adoption of smart meters and what it could do for them, SDG&E deployed
an “Infield Liaison Team” comprised of three recent retirees to canvass about 50,000 customers in a representative
sample of neighborhoods about two weeks after the installation.
A Guide to Successful
Engagement Efforts
Somewhat surprisingly, these factors
identified through our case studies and
the Voices of Experience work were
shared among the successful consumer
engagement programs we identified
despite coming from regulated and
deregulated markets, and from utilities
large and small. They therefore serve as a
foundation upon which utilities seeking to
better engage their consumers can build
a successful program, taking into account
the uniqueness of their markets and regulatory environment.
5
t
Things Every Utility Should Know5
q
Smart Grid impacts the entire organization and must
be championed by the top executives.
Smart Grid technology changes the customer-utility
w
relationship; it is a cultural shift in the utility industry.
e Smart Grid is a community effort not just a utility effort.
customers do not all have the same needs and
r Utility
preferences. Customer choice is important.
t
Media coverage—particularly social media—can change community perceptions quickly, especially if customers have not been informed and educated upfront.
From Voices of Experiences
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T he m e 4 : Consumers
Want Smart Grid
“Made Real” For Them
Hardware is only the first step in the Smart Grid journey.
Throughout SGCC’s research, we have continually found that consumers have a high degree of interest in products
and services that are enabled or enhanced by the Smart Grid. For many of these products and services, penetration is
currently very low, offering a significant opportunity for utilities and others to fill the gap.
Energy Management
Each of the five segments SGCC has identified expresses a strong desire to use advanced metering infrastructure (AMI)
data to manage their energy use, though the particulars of how they want to do so differ. In Wave 3 of the Consumer
Pulse study, 79% of respondents indicated that they were likely to use AMI data to manage and attempt to reduce their
electricity usage and cost. In Wave 4, we asked respondents their likelihood to use various ways of accessing this data
and found energy reports and online analysis to be the most compelling offerings, likely to be used by two-thirds of
respondents.
With the exception of online energy
analysis, Concerned Greens and Young
America are significantly more likely
than other segments to engage with
these energy management offerings.
Thus, these two segments in particular
are ready to be engaged by utilities or
technology providers who can meet
their needs with compelling offerings.
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Smart Grid-Enabled Technology
For the first time in 2013, we tested consumers’ interest in purchasing a number of technologies that are enabled or
enhanced by the Smart Grid.
A significant number of respondents
—22%—already had a programmable
thermostat, but this remains the most
desirable technology to consumers
across all segments. This validates a
program that we have noted among
some utilities where they provide a
programmable thermostat to consumers
who choose a certain rate plan. This
kind of program is an easy “win” for
utilities that are looking to engage
consumers more proactively and/or
drive program enrollment.
As with providing energy data,
Concerned Greens and Young America
tend to be the most interested in these technologies, though DIY & Save edges out Young America for interest in
programmable thermostats. While we did not test why respondents indicated purchase interest, we do know that
Young America is the most likely segment to rent and may be constrained in their adoption of programmable
thermostats as a result.
A significant number
of respondents—
22%—already had a
programmable thermostat,
but this remains the most
desirable technology
to consumers across
all segments.
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Product and Service Design Best Practices
SGCC worked closely with the US Department of Energy and over 50 utilities and vendors to create the Voices of
Experience guide to customer engagement with the Smart Grid. Voices of Experience participants stated that it
was critical that customers see an immediate benefit when Smart Grid technology is installed. These stakeholders
recommended that utilities do the following when developing their product/service roadmap:
Conduct Research
• Conduct a survey of customers or study emerging consumer research to determine the specific products, services,
and features to implement.
• Have personal conversations (on the phone, online, or in person) with customers to determine what they care about,
want, and need.
Develop A Plan
• Develop a product road map that includes having a product that provides consumers with energy insights, choices
and
convenience options available when the meter is installed so consumers can understand and see the benefits on the first
day. For some, the roadmap may only include a couple of products (perhaps time of use rate or home energy monitor);
for others, it will be much more robust.
• Give customers choices. Develop a range of products and services that demonstrate value to the consumer. Customers
have different preferences and needs so they will value different products and services.
• Give customers the choice not to choose; customers want the choice to do nothing.
• Make programs, products, and services voluntary, easy, and pleasant.
• Consider the benefits of making a program opt-in versus opt-out.
• Develop a web portal with easy access to information about the utility’s programs, products, and services such as
personalized energy management information, alternative rate and payment plans, and tools for energy management.
Ted Reguly from San Diego Gas & Electric shared how they used these principles in their approach to Smart Grid
innovation, and the success they saw in engaging their customers:
“From day one, SDG&E focused on rolling out a number of valuable services to benefit our customers.
These included things like outage communications, energy charts, incentives and alerts for peak time
reductions, and weekly email alerts. We took a new approach and launched a customer-centric
approach … The feedback has been great, due to the fact that we effectively targeted to ensure we
were providing the right information to the right customers in a channel that they preferred.”
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Make it “Real”
Consumers demonstrate a strong interest in value-added products and services made possible by the Smart Grid. As
discussed in Theme 2, it’s important to develop messages and use channels that are customized for each consumer
segment when marketing these products and services to consumers. As noted in Voices of Experience, marketing
should be staged to correspond with the operational deployment of new products and services. Voices of Experience
stakeholders provided the following recommendations on messaging:
• Focus on the benefits to customers and what is in it for them, but do not oversell the benefits.
• Do not focus on the “Smart Grid” or “smart meter” when educating consumers. Customers do not always care about
the underlying technology; focus on the products, services, and benefits it enables.
• Avoid technical terms such as “kWh” to describe usage. Equivalencies such as “this is enough electricity to power
10 homes for a year” or “that’s about $1,200 worth of electricity” are more helpful.
• Include a simple call to action that is relevant to the specific segment. For example, “Consider signing up for a time of
use rate” or “Your usage is 30% higher than the same month last year. Check to see you’re not leaving your computers
on at night.”
With proper planning and consumer insight, utilities and others can deliver products and services that drive higher
consumer engagement and satisfaction.
It is critical that
customers see an
immediate benefit
when Smart Grid
technology
is installed
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T he m e 5 :
Consumers Value Clean Energy
While saving money is important, consumers have consistently said that they would
pay more for products and services they value.
In Consumer Pulse Wave 3, two segments—Concerned Greens and Easy Street—said that the Smart Grid benefit that
they thought was most important and were willing to pay for was making it easier to connect renewable energy sources
to the grid. The other three segments indicated that preventing outages and reducing the length of those that do occur
was their top “important and willing to pay for” benefit.
At What Price?
In Consumer Pulse Wave 4, we followed up on this finding by asking
consumers about their likelihood to
support programs increasing clean
energy generation (including solar,
wind, geothermal and biomass),
exclusively solar generation, and grid
reliability at four different price points.
Notably, for each of the programs
tested, support at a $15 per month
electricity bill increase was greater than
support at $10 per month. We believe
that this is a result of some consumers
placing a high value on these benefits
and being willing to pay to enjoy them.
Also remarkable from these results is that the support for clean energy (and even solar PV by itself) surpasses that for
grid reliability. Although we do not know definitively why this is, we think that the primary factor driving these results is
that many consumers view reliability as “table stakes”—that is, utilities ought to be investing in reliability without
additional charges flowing through to consumers.
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Generation at Home
As shown in the graph on page 16, interest in Smart Grid-enabled technology in the previous theme, 56% of consumers
have an interest in installing rooftop solar PV to generate electricity for their homes. An even greater number—nearly
two-thirds—of Concerned Greens and Young America indicate interest in solar PV. Although we did not test price points
for rooftop solar PV, and actual purchase behavior almost certainly varies depending on price, financing structure, and
ease of installation, it is clear the consumers have a strong interest in solar PV—and that there is similar interest in a
“DIY” solution as there is to a utility-driven solution.
It is clear from these results that some consumers care a lot about clean energy, and are conceptually willing to pay
for it. Utilities and other stakeholders should take a second look at whether consumers in their service territory might
be willing to fund new Smart Grid-enabled capabilities that deliver the consumer benefits of clean energy.
56% of consumers have an interest in installing rooftop
solar PV to generate electricity for their homes
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T he m e 6 :
The Smart Grid Offers Real Benefits that Consumers Care About
Real-world experience shows that the benefits of the Smart Grid are not just
hypothetical—they’re material, and support benefits consumers say they care about.
In Wave 3 of SGCC’s Consumer Pulse study, we asked consumers which Smart Grid benefits were important to them,
and which benefits they’d be willing to pay for:
With the increasing number of utilities that have fully implemented their Smart Grid programs, we are no longer
constrained to forecasts of these benefits—we now have actual data that can quantify the level of benefits available to
consumers from grid modernization. In our Smart Grid Economic and Environmental Benefits study, we looked at
nine distinct Smart Grid capabilities: 6
• Integrated Volt/VAr control
• Remote meter reading
• Time-varying rates
• Prepayment and remote dis-/reconnect
• Revenue assurance
• Customer energy management
• Service outage management
• Fault location and isolation
• Renewable generation integration
For all capabilities, we examined research that quantified their direct and indirect economic benefits, reliability benefits,
and environmental benefits from reduced greenhouse gas emissions. Outage management and renewable generation
integration, in particular, align with the Smart Grid benefits that consumers have indicated are important to them.
Additionally, we found that all of the capabilities provide economic benefits to consumers.
Please see the Smart Grid Economic and Environmental Benefits study at http://smartgridcc.org/sgccs-smart-grid-environmental-and-economic-benefits-report
for detailed descriptions of these capabilities.
6
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Outage Management
Three out of five segments (DIY & Save, Young America, and Traditionals) report that preventing outages and reducing
the length of outages that do occur is the most important benefit that Smart Grid can offer. In total, we found that the
Smart Grid can improve reliability by approximately 25%, which equates to a reduction in Customer Average Interruption
Duration Index (CAIDI) of 27.2 minutes per year. The capabilities that generate these benefits are:
• Fault Location and Isolation. By permitting remote diagnostics
of the distribution grid and a degree of autonomous “self healing”
capability, fault location and isolation constitutes the bulk of the
benefit with a 20.5% improvement in reliability (22.3 minute/year
improvement in CAIDI).
• Service Outage Management. The “last gasp” capability of
many smart meters provides utilities with better intelligence on
the location and causes of outages and also helps ensure that all
customers are restored prior to service crews leaving an area.
These capabilities help reduce outage duration by 4.5% (4.9
minute/year improvement in CAIDI).
Although not directly related to outage management, we found
that Integrated Volt/VAr Control can help improve power quality,
ensuring that appliances and equipment run at their most optimal
efficiency and reducing disruptions to sensitive computer equipment.
Renewable Generation Integration
Two out of five segments (Concerned Greens and Easy Street)
report that the Smart Grid’s ability to more easily accommodate
renewable energy integration is the most important benefit
that they’d be willing to pay for. By enabling grid operators
to more effectively deal with renewables’ intermittency and
technical challenges associated with two-way power flows on
the grid, the Smart Grid accommodates greater amounts of
renewables on the grid.
For example, utilities in California and Hawaii have used
Smart Grid technology to allow up to 100% of the minimum
load on a distribution line to come from customer-sited
renewables. For a typical utility, this is approximately double
the 15% of maximum load that IEEE Standard 1547.2 sets.7
Although every utility’s—and every distribution line’s—load profile differs, minimum load on a residential feeder is often 30–50% of maximum, so permitting
100% of minimum is at least double the 15% of maximum allowed under IEEE 1547.2.
7
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Though renewable integration is likely the most effective way to decarbonize generation, we also found that Smart Grid
can drive a significant amount of energy efficiency and conservation benefits. The capabilities that provide, in aggregate,
55-5928 lbs. CO2e reduction per customer per year include:
• Integrated Volt/VAr control
• Time-varying rates
• Prepayment and remote dis-/reconnect
• Customer energy management
There is consequently an opportunity for industry to educate and engage consumers on how the Smart Grid can
contribute to solving climate change apart from its ability to better integrate renewables.
Economic Benefits
Every Smart Grid capability we examined
showed potential to generate either direct
or indirect economic benefits for consumers.
Direct benefits, or those that conceivably
flow through to consumers’ electricity bill,
total $39.69 to $101.57 per customer per
year. The bulk of these savings come from
integrated Volt/VAr control, remote meter
reading, and prepayment.
Indirect benefits, or those that accrue to
society at large, range from $49.35 to $53.08
per customer per year. These benefits are
largely driven by greater grid reliability,
reducing disruption to business and households.
In total, we found a strong economic case for
grid modernization, with a net present value
that ranges from $247 to $713 per customer
as shown in the accompanying chart9, and
a benefit-to-cost ratio of $1.50 to $2.60 for
every dollar invested.
Growing Support
Our goal in undertaking this research was to quantify the benefits of Smart Grid investments so that Smart Grid
stakeholders better understand the benefits of grid modernization. Quantified benefits will help stakeholders see how
these investments support their own goals and consequently will increase support for additional investment in a safe,
secure, and environmentally-friendly Smart Grid. 8
Where ranges are presented, the low number is the “Reference Case” — or typical utility experience—and the high number is the “Ideal Case” which
represents the documented “art of the possible”
White boxes indicate the range between Reference Case and Ideal Case net present values
9
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Wh at ’ s Next
Across the country, an increasing number
of consumers live in areas with fully deployed
AMI and/or significant upgrades in distribution
automation. However, our research indicates
that the industry has only scratched the surface
of consumer awareness and engagement. For
many, it is now time to shift into a “post-AMI”
mindset and start tackling the next set of Smart
Grid challenges, including:
• Enabling and cultivating innovation across
the industry;
• Ensuring the security of the Smart Grid;
• Broadening renewable generation.
Innovation
Just as the smart phone provided a platform for significant innovation in consumer applications and services, so too does
the Smart Grid provide a platform for innovation in generation and energy management. Utilities, established vendors,
and startups are all pursuing this to varying degrees, and ultimate success will depend on adopting a “consumer first”
mindset and overcoming sometimes significant market barriers.
Nest Labs, manufacturer of the Nest Thermostat, has become an overnight success by developing its thermostat first
and foremost as a compelling consumer device. Only after three years on the market have they begun to integrate what
many would consider traditional programs (e.g., peak-time pricing) into their service offering. Similarly, new product and
service offerings—regardless of where they come from—must focus on solving consumers’ problems with a strong value
proposition.
In 2014, SGCC will be conducting research that will offer insight into consumer problems and resonant value propositions.
Among other projects, SGCC will be updating its Smart Grid consumer segmentation framework as part of the Consumer
Pulse and Market Segmentation Survey Wave V, and will be exploring the motivations and emotions of utility customers
who engage with various programs and technologies.
While a “consumer first” approach is necessary to foster innovation in the industry, it is not in itself sufficient. Barriers
abound to bringing products and services to market. The regulatory compact varies from state to state, sometimes
significantly. Regulators need to develop as deep an understanding about consumer attitudes, behaviors, and needs as
utilities and vendors have. We are no longer in a “one size fits all” economy, and although there is not a regulatory silver
bullet, the interaction between regulators and utilities needs to acknowledge and accommodate serving individual
consumers with products and services tailored to their wants and needs.
Similarly, new business models need to be developed to allow utilities and others to capture the value they create
through innovation. The specifics of these business models will vary across the country, but the SGCC believes that
innovators need to be able to generate revenue at a level that supports further innovation and investment.
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© 2013–2014 SMART GRID CONSUMER COLLABORATIVE. ALL RIGHTS RESERVED.
Security
The utility industry takes customer data privacy and the physical security of the grid very seriously. However, it will only
take one widely publicized instance of a cyber-attack that shuts off power or compromises consumer information to sour
consumers on grid modernization. Consumers are increasingly aware of the vulnerability of information provided to third
parties as news of attacks against online service providers such as LinkedIn proliferate. Indeed, nearly one in ten consumers
holding an unfavorable view of smart meters cites privacy concerns as reason for their view.
The GridEx II national cyber-security exercise in late 201310 is a great example of how utilities can plan and prepare for
security threats. SGCC is pleased that utilities and the federal government organize and participate in these exercises to
ensure that grid infrastructure is as safe as possible from potential threats. The more utilities are open and transparent
with their customers about the steps they are taking to ensure the security of customer data and the reliability of the
grid, the more likely it is that consumers will trust that the utility is managing their data and infrastructure appropriately.
Renewables
In many parts of the country, renewables are
competitive with conventional generation as
both centralized and distributed generation.
This trend is likely to continue and accelerate
as renewable technology manufacturers climb
the productivity curve and utilities are forced
to increase electricity rates to support the
investments they’re being asked to make by
customers and policymakers.
In many parts of the country, renewables are
competitive with conventional generation as
both centralized and distributed generation.
In 2014, we anticipate that stakeholders will
begin to create clarity around the answers to
a number of critical questions such as:
• Who will own the customer relationship?
• How will intermittency challenges be costeffectively addressed?
• How are grid reliability and grid-provided
“backup power” cost-effectively maintained?
In many cases, Smart Grid technology will
enable solutions heretofore impossible. The
solutions, however, are not merely technical.
They will require collaboration between stakeholders to optimize sometimes-competing
interests and put consumer experience first.
10
See http://www.nerc.com/pa/CI/CIPOutreach/Pages/GridEX.aspx for more information on GridEx
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© 2013–2014 SMART GRID CONSUMER COLLABORATIVE. ALL RIGHTS RESERVED.
Conclusion
SGCC’s consumer research program is
rigorously designed to truly understand
consumers and how they relate to the Smart
Grid. From these efforts, we have distilled six
themes related to how consumers think about
and experience grid modernization. The
bottom line from all of these themes is that
engaging consumers is critical to Smart Grid
success.
We have also begun to examine how utilities
have produced meaningful benefits to consumers through their grid
modernization efforts, and how they have successfully engaged consumers in the process. We know that consumers
have a near-universal desire and expectation for utilities to offer energy savings advice, and we know that the energy
landscape is changing tremendously. 2014 promises to be a year filled with more home energy management products
and services, increased momentum for rooftop solar PV installations, and greater consumer demand for grid resiliency
and improved outage communications with each storm event.
By rigorous analyses of reliable data from actual Smart Grid implementations, SGCC research has demonstrated that
there’s a strong value proposition for consumers supporting investments in Smart Grid. We’ve also shown how a positive
consumer value proposition aligns with the responsibilities and goals of differing stakeholders, from regulators and
policymakers to consumer advocates and environmental advocates.
The massive and sustained investments needed to modernize the thousands of individual grids in the U.S. will require a
keen understanding by myriad stakeholders of the costs and benefits involved. Utilities with a sound business plan for
implementing Smart Grid technologies need an informed, supportive base of customers, as well as support and innovative
thinking among other stakeholders, to adapt to changing circumstances and evolving utility business models.
We have only scratched the surface of consumer awareness, education, and empowerment. It is now time for the electric
power industry to more fully understand who their customers are and what they want, and it is time for regulators and
policy-makers to create new ways for utilities to take risks and help meet consumer demand for energy knowledge and
energy savings while maintaining their business integrity.
We hope 2014 is a year that will see more progress in the transformation of the electric power industry into the new
world we know is coming: where consumer energy data is widely available to consumers so they are more empowered;
where consumers enjoy an array of apps that provide more fun and engagement; and where consumers can sign up for
new pricing plans that help them save money while reducing pressure on the grid.
SGCC is committed to doing its part in driving this progress through its consumer research and education programs, and
by facilitating collaboration among industry stakeholders. We ask you to join us in this exciting effort.
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Appendix—SGCC Consumer Segments
S E G M E NT: Key C haracteristics :
• 25% of population
• Highest levels of education
Easy Street
• High income—23% above $100K
• Moderate/liberal politics
• Higher concentrations in Northeast and West regions
• Middle-aged (65% are between 25–54 years of age)
• More women than men
• Largely White, 14% Hispanic
• 24% of population
Concerned
Greens
•High levels of education
•Highest income of any segment—28% above $100K
• Middle aged, moderate-liberal politics
•Fairly diverse: 15% Hispanic, 13% African American
•Concentrated in the South and Midwest regions
• 20% of population
• Youngest and most ethnically diverse segment
Young
America
• Lowest levels of education and income
• Least likely to have kids under 18 at home
• Likely to live in apartments/condos/mobile homes
• Concentrated in the South and Midwest regions
• 17% of population
DIY & Save
•Middle-income
•Families; 20% have three or more children at home
•Diverse range of ages from 25–65+
•Largely White, 12% Hispanic
•Average levels of education
•Conservative politics
• 14% of population
• Predominantly older (25% are age 65+)
Traditionals
•The most politically conservative and religious segment
•Higher concentrations in the West and South regions
•Relatively low levels of education
•Average income
• More men than women
• Mostly White
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Appendix—SGCC Consumer Segments
D isti nctive Attitudes a n d Behaviors:
C on sumer En gagemen t Opportunities:
• Low levels of interest in smart grid programs or using smart
meter information for energy management
• Moderately concerned about the environment at a global level,
but not interested in making individual-level environmental efforts
• Believe global warming is real and the government should do
more to promote energy efficiency and alternative fuel sources
• Low likelihood to try to minimize impact on the environment
through daily actions
• Believe the most important reason to save energy is for the
environmental benefits, followed by “for children and
grandchildren,” then saving money
• Easy Street customers are unlikely to exhibit a high level of engagement with energy management. Simplicity and ease-of-use are keys to acceptance.
• Most concerned and active regarding environmental issues
• Segment is receptive to environmental concerns and tries to protect the environment through their own actions.
• High smart grid knowledge, favorability, and support
• Messaging should emphasize environmental benefits and
stewardship for future generations.
• It will be a challenge to motivate them to change; they are
satisfied with their current energy consumption habits and expenditures.
• This segment is the most naturally inclined toward participating in energy efficiency and smart grid programs.
• Most likely to participate in smart grid programs
• Eager to buy new products and technologies
• Want to save energy for the future of our children and
grandchildren and for the environmental benefits; not
as concerned about saving money
• They like new technology, and have the resources to make
investments in better energy management.
• Highest level of concern regarding environmental issues
• The primary focus in communication with this segment should be education.
• Think energy efficiency is important, but lack knowledge of
how it works and feel they may have already done all they
can to save energy
• They are concerned about environmental issues and face financial constraints—let them know how Smart Grid
products and programs can help address both.
• Say they have low likelihood to participate in smart grid
programs, but they are interested in using information from
a smart meter for energy management
• They say the most important reasons to save energy are saving
money and for the future of our children and grandchildren
•High levels of interest in smart grid programs, especially
TOU pricing, primarily for the financial benefits
•Believe the most important reason to save energy is to
save money
•High percentage of homeowners, and 84% agree they
like to “do it themselves” to save money
•Low level of environmental interest and involvement
• May be considered a longer term developmental opportunity, as they mature and become more likely to be homeowners.
• Product and program design and messaging should emphasize saving money and de-emphasize environmental benefits.
• There are opportunities to market products and programs
that leverage their DIY interest and experience.
• Consider outreach through religious affiliations and communities.
•Not motivated to minimize impact on the environment
through daily actions
• Most likely segment to say “Religion guides the way I live”
•Least favorable segment toward smart grid programs
•Lowest interest in monitoring energy usage
•Least engaged in environmental issues
• Prefer comfort and saving time and effort over saving energy
•Feel their financial situation compared to a year ago is worse
• Segment is probably not a high priority initial target for smart grid programs.
• Program/product design and promotion for this segment
should emphasize immediate money savings and de-emphasize environmental considerations.
• Messaging may also communicate that energy efficiency can contribute to having a comfortable home.
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Working for a consumer-friendly,
consumer-safe smart grid
SGCC is a consumer focused non-profit organization aiming to
promote the understanding and benefits of modernized electrical
systems among all stakeholders in the United States. Membership
is open to all consumer and environmental advocates, technology
vendors, research scientists, and electric utilities for sharing in
research, best practices, and collaborative efforts of the group.
Join @ www.smartgridcc.org.
© 2014 Smart Grid Consumer Collaborative. All rights reserved.