According to the latest in a series of Enervee Energy Consumer Tracker polls conducted in December 2018, over 85% of Californians think it’s important to buy energy efficient products for their homes and clean vehicles that are economical to drive.
That’s perhaps to be expected. But other findings might surprise you.
Nearly 33% of those polled in California, for example, trust their energy company to provide accurate information about how much energy an appliance or product uses, making utilities the #1 trusted source, with manufacturers a close second (at 28%).
Trust in these sources was reversed in polling we conducted in Texas, where the introduction of retail competition raised consumer protection issues. Regardless, people in both states trusted their energy providers more than they trusted the government or retailers. Food for thought.
This degree of trust is an invaluable, yet grossly underutilized asset. Our poll showed that 3 out of 5 Californians don’t think their energy provider is doing enough (e.g., to help them understand the benefits of owning an electric vehicle), with another 21% sitting on the fence.
…put another way, that means less than 20% of Californians feel their utility is doing enough. Customers recognize that they need advice – and they want their energy provider to step up to the plate. Here are some reasons why.
Some of the same misconceptions and market failures that are common elsewhere are also at play in California, making it difficult for consumers to follow through on their ambition to shop energy smart.
Our poll showed that the vast majority of Californians believe the ENERGY STAR label is a guide to super-efficient products — in the case of TVs, among the top 10% most efficient models.
Unfortunately, this isn’t the case. ENERGY STAR data show that 58% of televisions shipped in 2017 nationwide were ENERGY STAR certified, and the number could even be higher in California.
Why does this matter?
It matters because the perception that the label signals the top 10% of the market in terms of efficiency is wrong by a factor of more than five. And there is a wide range in consumption and efficiency among certified TVs. Data on ENERGY STAR TVs with online offers in November 2018 show that the most efficient ENERGY STAR TVs in the popular 48" to 50" size class consume only 50 kWh/y, while the least efficient use 150 kWh/y.
Equating ENERGY STAR with super-efficiency means that we’re leaving a lot of cost-effective energy savings on the table at a time when there’s an existential imperative to reign in carbon emissions — a point not lost on Californians, who have witnessed a string of unprecedented, deadly and destructive fires in recent years.
In fact, there is no correlation between the best retail price and the efficiency of a TV. But how are consumers to know this?
Enter the Enervee Score, embedded in consumer-facing Choice Engines. Huh? Choice Engine?!? While Enervee only pioneered Choice Engines for the energy sector beginning in 2014, it’s a concept familiar in academic circles and widely applied across sectors. Most people are familiar with online marketplaces for travel and real estate – think Expedia and Kayak to sift through hotel and flight offers, or Trulia and Zillow to find your dream home. Choice Engines differ from search engines, in that they provide valuable recommendations tailored to the user, without the user having to explicitly say what they want.
The zero to 100 Enervee Score, our daily-updated, model-level energy efficiency index, works. It prompts us to make more energy-smart choices and buying decisions.
Saving 100 kWh over the lifetime of a TV might sound like peanuts, but if everyone in California bought the most efficient ENERGY STAR models this year, instead of the least efficient certified models — which generally can be done without having to spend more at checkout — we could save in the hundreds of GWh. Nationwide, the savings for the 43.5 million TVs sold in a single year would reach into the thousands of GWh.
Without the need to provide any monetary incentives. Yes…a market-based approach, without rebates!
And this is just TVs. Think water heaters, LED bulbs, washing machines, electric vehicles…
But we’re also up against the pervasive lay theory that efficient products cost more. There’s a wealth of research that documents that this lay theory is rampant, including our own randomized control trial studies, which showed that it works both ways: not only do people think they have to pay more to get efficient appliances; they also assume that if they shell out more money for a product, it will be more efficient.
While it’s true, in some cases, that the very most efficient models can’t be found at the lowest price points — super-efficient heat pump water heater and clothes dryer technologies are a good example, where monetary incentives provided to income-constrained households can make a lot of sense — this is by no means the norm, particularly when shoppers are able to time their purchases to take advantage of special pricing offered by retailers. The range in retail prices for a single model on a given day can vary by hundreds of dollars. And for those shoppers who can afford to consider the total cost of ownership, investing more up front almost always pays for itself over the lifetime of the product.
In addition, for those consumers shopping in a given price range, such as $1300 for an electric water heater, there are often both very inefficient and super-efficient options available.
Both of these 50-gallon Rheem models can be purchased at Home Depot today for $1300, yet the water heater model with an Enervee Score of 41 uses 2.7 times more electricity than the heat pump model that scores 90.
Since the consumer in this case is planning to invest $1300 regardless, nudging them towards the efficient model comes at no incremental cost, yet can save them over $3,000 in electric bills over the lifetime of the water heater (based on the average residential rate in California of $0.19/kWh).
Folks shopping in this price range might also be considering rooftop solar and EVs, so guiding them to a heat pump water heater is all about providing the right information at the right time. For this category, in the early stages of the technology adoption curve, the buying power of early adopters can be mobilized, without the need for monetary incentives. This type of segmentation and targeted marketing can improve program cost-effectiveness considerably.
These examples illustrate how new sources of data, rendered visible and actionable to consumers via online Choice Engines, can overcome market barriers, false interpretations of the ENERGY STAR label and powerful lay theories to close the gap between market and economic potential.
This is not just theory.
If Californians could see that a highly energy efficient appliance was no more expensive to buy, 96% would be likely to buy it. In the case of vehicles, 89% would find it useful (44% extremely useful), if they had access to an online tool to compare different car types (diesel, petrol, electric), in terms of purchase price and running costs.
In addition, an independent assessment of the PG&E Marketplace found that PG&E’s Choice Engine platform was influential in 62% of electric water heater purchasing decisions (extremely influential in 34%). The level of influence varied by category, but never dipped below 40% for those categories that delivered the largest electricity and gas savings (gas & electric water heaters, pool pumps, clothes washers and thermostats). That’s a lot of purchasing decisions influenced.
Economics 101 hammers home the point that lack of market transparency leads to inefficient markets. The surveys, published research and independent studies profiled above suggest that the utility sector has an unprecedented opportunity to narrow the gap between economic (cost-effective savings) and market potential (achievable savings under current market conditions) – just by making it easier for consumers to choose the efficient products and clean vehicles they’re already predisposed to buy.
Californians want to buy efficient consumer products and clean vehicles that are economical to drive. And they want their utilities to help. Pacific Gas & Electric has embraced the consumer and regulator call to action and the PG&E Marketplace recently received AESP's 2019 Outstanding Achievement Award for Residential Program Design & Implementation for the platform's success achieving savings without monetary incentives. This could open the door for California utilities to claim market-based savings, as well as utilities in other jurisdictions to invest in Choice Engines to empower consumers to shop energy smart at scale.