9 Jan 2012

Smart grid apps poised to score energy savings on top of more-successful-than-expected efficiency programs

Written by Jim Pierobon

Early lessons from utilities deploying proactive smart grid programs with their customers point to potentially significant energy savings if consumers are engaged with targeted communications they find relevant to their values and lifestyles.

When matched with stronger-than-expected gains being achieved through more traditional efficiency programs found in a report out this month by the Consortium for Energy Efficiency, the upside for saving that much more electricity could be huge. That’s how this author, at least, connects the dots on what could be one of the most exciting — and successful — energy initiatives of 2012 and beyond.

The Consortium worked with the Institute for Electric Efficiency (IEE) and the American Gas Association in collecting industry-wide data on ratepayer-funded energy impacts, expenditures, and budgets for energy efficiency programs in the U.S. and Canada, including programs from 172 utilities.

Among the major highlights: The IEE believes that ratepayer-funded electric efficiency budgets are “highly likely to exceed” the Lawrence Berkeley National Laboratory’s “high-case” scenario projecting $12 billion in savings by 2020.

Now, feather in the value that smart grid applications can achieve and it’s plausible to conclude: these energy industries are marching toward major dollar savings and reductions in harmful greenhouse gas emissions. On their own, electric efficiency programs save more than 112 terrawatts in 2010. That’s enough to power about 9.7 million typical U.S. homes for one year and avoid the generation of 78 million metrics tons of carbon dioxide.

A few utilities in a 2011 study for the Smart Grid Consumer Collaborative — AEP Ohio and Southern California Edison — put a lot of ‘stock’ in attitudinal and psychographic segmentation. That’s because it’s improved their smart grid enrollment and engagement, thereby setting the stage for the added efficiency gains and dollar savings.

According to the Collaborative, AEP Ohio developed six psychographic-based segments. It looked at each segment across four energy usage levels to identify high-likelihood, high-value customers. This model worked well in their pilot and they plan to incorporate it in the future to target customers that are both likely to enroll and also have high energy reduction potential.

Other findings of the study suggest that attitudinal segmentation can also improve smart grid messaging and efficiency gains by delivering targeted messages beyond that of just “saving money.” Specifically, Southern California Edison looks to develop future program offerings with tailored messages for specific customer segments (e.g.  a “Green Plan”).

Another utility, Salt River Project based in Arizona, has fully incorporated attitudinal segmentation into their time-of-use messaging (TOU) and outreach efforts. They create up to six new bill inserts each month to target multiple customer segments with different messages and benefits, emphasizing anything from saving money to preserving the environment. Using this differentiated marketing strategy; it may be no coincidence that Salt River Project has the second-largest TOU program in the nation.

The encouraging conclusion drawn from the research is that differentiated and targeted approaches to marketing and engagement are the key to strengthening demand for smart grid programs and the efficiency gains they can lead to. While demographics are an important starting point for segmentation, they don’t add anywhere near the in-depth dimensions of customers’ wants, needs, values and attitudes to enable message optimization in the same way that an attitudinal segmentation framework can.

Look for more research to come from the Collaborative and fresh revelations bound to surface later this month at its 2012 Symposium (poster, above). Future research will explore how smart grid reactions and program preferences differ in important ways among different types of consumers using a behavioral segmentation framework.

1 Comment to Smart grid apps poised to score energy savings on top of more-successful-than-expected efficiency programs

  1. January 10, 2012 at 2:17 pm | Permalink

    Thanks for bringing SGCC’s Excellence in Consumer Engagement Study and upcoming symposium into the discussion, Jim! SGCC has published the full agenda and speaker list for the consumer symposium, which will be on Monday, January 23rd at DistribuTECH. In an afternoon of thought-provoking panels, attendees will hear from top smart grid experts from Oracle, Accenture, IBM, CenterPoint, AEP, and more! We’ll also be releasing our 2012 State of the Consumer Report and Consumer Pulse Study Wave II findings at the event. Please visit smartgridcc.org to learn more.

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