The utility landscape in the US is changing rapidly, in a way that’s expanding consumer choice and giving individuals a much greater say in energy management. With their native tech abilities, curiosity, cultural understandings, and sheer number — Millennials are now the largest age cohort — Millennials are expected to be in the drivers’ seat.
Two recent studies in North America provide rich insights on these trends, most recently the Smart Grid Consumer Collaborative’s Spotlight on Millennials. According to SGCC, Millennials are savvy & well educated, highly technology dependent and want to be treated as individuals with personalized offers. They are willing to pay for things they value, like excellent service, achieving their “green objectives”, or access to real-time energy information.
The good news for electricity providers in the USA is that — even though Millennials feel other sectors do a better job at customer service — they are generally satisfied with their utility, and they trust and are influenced by utilities. The disconcerting news is that Millennials aren’t wed to them.
One takeaway for me is that the bar for a best-in-class user experience is increasing, and is being driven by sectors other than utilities. SGCC reported that the perception of Millennials is that banks and online retailers provide better customer service than utilities do. They’re immersed in online experiences spanning all aspects of their lives, so are more discerning when it comes to utility offerings than older customers.
While utilities are scrambling to catch up on their user experience, they do have an ace in the hole: their trusted brand. Even if people may not be infatuated with their energy provider, they generally trust utility recommendations on energy efficiency and energy technologies.
SGCC found that about 50% of Millennials are likely to invest in energy-saving technologies and programs if their utility endorses them.
And, as Accenture pointed out, consumers expect their utility to partner with other vendors on products and services outside of the traditional energy sector, lending encouragement to utilities to Partner or Perish.
However, even that brand advantage could evaporate, as customers increasingly have choice, such as self-generation (rooftop solar), exposure to Community Choice Aggregators (CCA) and unregulated energy service providers. Between rooftop solar, CCAs and Direct Access providers, as much as 25% of investor-owned utility (IOU) retail electric load in California could be effectively unbundled and served by a non-IOU source or provider before the end of 2017, exceeding 85% of retail load by the mid-2020s [1].
According to SGCC, Millennials express interest in anything that may help them save money or contribute positively to the environment. Between 55% and 85% of Millennials express interest in clean energy/smart technologies — smart appliances, rooftop solar, device controls, electric vehicles — savings suggestions via app or web and programs, such as appliance evaluation with incentives, load shifting and Time of Use tariff programs.
Yet their adoption rates are consistently lower than non-Millennials. Why is that? It may be due to the fact that many are still in their teens and early 20s, sharing living space with parents and housemates and not yet investing in major purchases. We also see this phenomenon in the profile of visitors to the utility-branded marketplaces that Enervee operates for utility clients across the USA.
While 18–24 year olds show the least interest in participating in new product rebate programs (under 4% of all claim requests), rebate requests ramp up with the 25–34 year olds (over 21% of requests), second only to the rebate-getting 35 to 44 year olds at 27% [2].
Intuitively, this makes sense, as rebates are almost exclusively offered on major domestic appliances, investments that make most sense when you own your own home.
But utilities don’t have to wait for young Millennials to mature to engage them. This cohort is buying dozens of electronics and other energy and water-using products annually that aren’t currently covered by utility programs, purchases that can be eased and nudged with utility guidance towards great products that also save energy.
As the Engaging Millennials report put out by Ontario’s Independent Electricity System Operator (IESO) noted, there’s a need to tackle long- (market transformation) and short-term (demand-side management) goals in parallel. Utility-branded marketplaces powered by Enervee support traditional downstream rebate approaches to achieve short-term energy savings goals, while removing market barriers, engaging and empowering Marketplace visitors to manage their energy (sustained culture of conservation).
The surveys suggest that Millennials will be particularly receptive to utility recommendations that help them make a positive contribution to the environment, with or without incentives.
In addition to the point above, the IESO report (prepared by the Canadian Energy Efficiency Alliance and released February 2017), culled out a whole series of insights & recommendations derived from their extensive surveys. There’s a striking degree of congruence between the CEEA’s take on engaging Millennials and the functionality that Enervee’s turnkey customer engagement platform puts at the fingertips of our utility clients:
It’s a thrilling time to be working with our utility clients to deliver what Millennials say they want. The IESO report uncovered the perception that the main obstacles preventing a majority of Millennials from doing more to save energy were lack of time and forgetfulness. Even though they’re aware and motivated, they don’t always follow through, which is certainly a phenomenon not restricted to Millennials!
This underscores the importance of understanding the way people shop and using data, behavioral research insights and technology to nudge every one of us to make the most energy efficient purchasing decision that fits our requirements; this will lock in energy savings over the lifetime of the product, regardless of how busy or distracted we might be in our daily lives.
Results from Con Edison’s Connected Homes REV (Reinventing the Energy Vision) demonstration project for Q2 2017 show that Marketplace Storefront (an ecommerce feature that allows utility clients to purchase small energy conservation and LED bulbs direct from their utility) is delivering slightly more greenhouse gas emissions than the behavioral home energy report program that operates in parallel. The two approaches work splendidly together, with usage data supporting recommendations for how to save and Marketplace offering the actionable information that customers need to research and purchase efficient products and related services, like EV charger installation.
Satisfying Millennials will demand a mindset of putting the customer first, embracing trends and continual innovation — a culture that has served the likes of Amazon well from the outset, but which represents a culture shock to most regulated utilities.
To paraphrase the insightful comments that ComEd’s Val Jensen made at Grid Edge World Forum 2017, we’ve spent 100 years trying to force people not to pay attention to energy by making it too complicated (case in point: energy bills). But if utilities add value, customers will come.
Digitization, Millennial preferences & expectations and partnerships between utilities & innovators will lead to attractive services that will delight customers and create new business opportunities. Just imagine sending your energy bill savings to your kids away at school with the click of a button or sharing your excess solar with friends and relatives. That future is now.
Notes
[1] California Public Utilities Commission and California Energy Commission Staff White Paper www.cpuc.ca.gov/retailchoiceenbanc
[2] Data for the first 7 months of 2017 across 9 utility marketplaces and enervee.com in the USA