They Got a Smart Meter: What Do Residential Customers Really Want?
by Bob Shively, Enerdynamics President and Lead Facilitator
"The status quo is no longer an option...Providers must move decisively to build a foundation for the future." ~ Greg Guthridge, Managing Director, Accenture Energy Consumer Services
Historically, natural gas and electric consumers haven’t demanded much. Give them reliable service at a reasonable price, send an accurate bill once a month, and all is good. But like much else in the world, the desires of energy consumers are rapidly changing. After all, these are the same people who order everything on Amazon (sometimes just by talking to a speaker) and who are cutting the cord to get all their media via the internet. New energy services and technology providers are striving to engage consumers with innovative value propositions, and gas and electric consumers are moving from a commodity-based to a services-based world. In this month’s Insider we look at how residential consumers are changing; in future editions we will consider commercial and industrial consumers.
The smart meter opens the door to change
Many utilities have initiated a significant change in their relationship with consumers by installing smart meters. These open the door for new services such as usage portals, time-of-day rates, and more sophisticated demand response products. In its research on energy consumers, Accenture discovered that consumers with smart meters expect more sophisticated offerings from their energy companies. When asked "Along with your smart meter, which of the following energy-related products or services would you expect from your energy provider?" consumers responded as follows:
Source: The New Energy Consumer Handbook, Accenture
According to Accenture’s research: "Once smart meters are in place, consumers expect providers to leverage technology to offer a new energy experience—one that is more personalized and proactive, particularly when it comes to saving money.”
New technology within the home is the next step
Consumers are rapidly adding new smart home technologies. According to a 2018 study by Parks Associates titled State of the Market: Smart Home and Connected Entertainment, over 20% of broadband-equipped homes have at least one smart home device and almost a third of these homes have four or more smart devices. (A smart device is defined as a single-point device with intelligence embedded in the device or combined with intelligence provided by software in the cloud.) Interestingly, the top platforms used to control smart devices were, in order of popularity, Amazon Alexa, Google Assistant, Samsung SmartThings, and Works with Nest. Currently many of these devices aren’t directly associated with energy, but Parks Associates found a strong correlation to interest in energy. Among broadband homes, a high percentage rated energy efficiency as important:
Source: Parks and Associates, State of the Market: Smart Home and Connected Entertainment
The study concluded that:
- there is strong demand for products and services that make homes more energy efficient
- consumers value access to real-time energy information
- adoption of smart thermostats is the highest of any home automation product
- consumers have an opportunity to drive additional savings through systems that control multiple products
It’s about more than money
While consumers want to save money, Accenture believes consumers are increasingly motivated by more than monetary values. Consumers now value convenience and services that reflect their personal values. Consumers want 24/7 access to information and want to interact with their providers in new ways such as online or via social media. Consumers also want new choices and tailored services, whether that be generating their own power through rooftop solar, using easily implemented demand side management technologies, or combining energy services with other services such as telecom, entertainment, or security. Consumers also have a willingness, and, in some cases a strong desire, to buy from someone other than their utility: Accenture found 73% percent of respondents indicated they would consider purchasing electricity or energy-efficient products from at least one provider other than their utility:
Source: The New Energy Consumer Handbook, Accenture
These results are demonstrated during Enerdynamics classroom seminars in which we commonly poll participants on who they think their neighbors would most like to buy their energy services from in the future. Choosing from a list that includes Amazon, Google, their utility, and an unregulated energy services provider, the winners are almost always either Amazon or Google.
So how can traditional utilities as well as evolving energy service providers navigate the changing world of the energy consumer? Accenture suggests they need to develop four core competencies:
- Delivering operational excellence
- Optimizing consumer interaction using data-driven insights
- Creating lasting consumer engagement
- Extending the value proposition
Note the first bullet — none of the exciting “new stuff” matters if the energy company can’t first deliver on operational excellence. As a seminar participant who lives in a rural area told the class: "When I order something next-day on Amazon, it shows up on my door the next day; no one else can do that."
Lastly, companies must be able to manage ongoing internal change and successfully react to ongoing external change. The need for rapid change and for new consumer-focused services results in changing requirements for the energy workforce. Evolving to meet changing consumer demands requires the ability to attract and develop a new and/or evolved talent pool. This means recruiting employees who previously may not have seen an energy company as an exciting place to work. Also, these employees must have the training required to develop new skills needed to flourish in partnership with changing consumers.
Here at Enerdynamics, we find that the utility workforce of tomorrow is yearning for more knowledge about the energy industry, its customers, and the strategies companies are exploring for future success. Enerdynamics’ classroom seminar Future of the Utility provides an opportunity for your employees to explore these issues in an interactive workshop. For more information visit our website, e-mail us at firstname.lastname@example.org, or call us (866) 765-5432.