The past 24 months have shown that electric utilities across the US are committed to meeting environmental sustainability and clean-energy objectives by 2050 or sooner. However, while the industry has done a particularly good job of keeping shareholders, investors and other institutional stakeholders informed of their progress, residential and business customers are often less aware of—and less engaged with—actions taken to meet environmental goals.
This is one of the key findings in the J.D. Power 2020 Sustainability Index—Climate, which measures customer awareness and engagement with clean energy initiatives in the electric utility sector.
The study includes a 5-point scale—zero represents a response that “there is no climate change” and 5 represents a response that climate change is “very serious”—to determine the average Sustainability Index on Climate Change Seriousness for electric utility customers.
While the average customer index score is 2.6—meaning that a majority of customers surveyed believe that climate change is an important issue for utility companies to address—residential customers lagged behind business customers in engagement.
Opportunities missed to communicate progress already achieved
The lack of general awareness is shaping up to be a problem for utilities as they make new investments in plant modernisation. This is because customer buy-in will play a key role in securing the resources needed to achieve their clean energy goals.
When it comes to consumers, the biggest missed opportunity is the lack of awareness of the progress that has already been made by the industry. Many utilities are ahead of schedule in converting their energy sources to more sustainable formats and are rapidly reducing their dependence on fossil fuel sources. However, for consumers to become advocates, they first need to be informed.
Most customers, for instance, are unaware that:
- In 2020, for the first time, energy generation from utilities will no longer be the biggest source of fossil-fuel emissions. The biggest contributor now is general transportation.
- The average household contributes 10% less carbon emissions from their use of residential utility services than 10 years ago.
Informing customers of this important progress encourages individuals to make smarter choices on the products they purchase and use. It also opens the door for utilities to strategically expand their business into new sectors. For example, many utilities are already actively exploring how they can encourage greater adoption of electric vehicles.
This will not only stimulate demand for clean electric utility services, but also link the industry to the green outcomes of broader electric vehicle adoption. It extends the relationship that utilities have with consumers, while highlighting how utilities are not only playing a key role in people’s homes and business, but also in their personal vehicles and commercial fleets.
Customer buy-in critical to funding clean energy infrastructure
The more people are aware of what utilities are doing, the more success utilities will have in securing support from public utility commissions (PUCs) and other regulatory authorities for their sustainability programmes.
Informed customers are empowered to make smarter choices such as taking part in available sustainability programmes, using smarter technologies that consume clean energy and even investing in companies that excel in meeting sustainability objectives. Taken together, these choices will contribute greatly to building out a smarter and greener energy infrastructure.
About the author
Dr. Andrew Heath is the managing director of utilities intelligence at J.D. Power. He has more than 30 years’ experience working within the utility and infrastructure sectors in the United States and UK.