New energy consumer demands and how to fulfil them

Nicholas Nhede looks at the new energy consumer, what utility customers are demanding, factors driving their demands and some of the measures being implemented by energy providers to meet these demands and enhance customer satisfaction and services.

Decarbonisation, decentralization and digitisation have disrupted the utility business sector over the past decade, and consumer demands have largely been centralised around the 3Ds.

For instance, utility alignment of business practices with decarbonisation helps consumers to reduce carbon footprints and to leverage less-expensive energy generated using renewables such as solar and wind energy to protect the environment.

This article was originally published in Smart Energy International Issue 2-2020. Read the full digimag here or subscribe to receive a print copy here.

According to a survey conducted by EY, American energy consumers expect significant transformation in the way the energy they are provided with is generated as well as in the way they will use it.

The Fuels of the future: what is powering the US energy transition? survey revealed that while concerns around the environment and climate change are key factors to this transition, the 1,500 energy consumers and more than 100 corporate executives surveyed said affordability and reliability are still the highest priority for energy decisions.

83% of the surveyed consumers say they are interested in adopting independent power generation to allow their homes to generate electricity primarily due to a desire to save money.

86% of consumers are satisfied with their electric utility and 90% with their natural gas utility. However, 68% of respondents in markets without choice said they would prefer to choose providers, primarily to save money but also to have access to renewable options.

The Distributed Energy Resources (DERs): Meeting Consumer Demands study that was conducted by the Smart Energy Consumer Collaborative (SECC) highlights that a majority of consumers (69%) want their electricity suppliers as DER providers. Twenty-two percent want to select a private contractor.

Amongst the ones wanting utilities to be DER providers, 73% say saving money is their top concern whilst protecting the environment ranks high amongst 44%. However, 49% expect incentives upfront to participate.

The 1,500 American and 543 Canadian consumers surveyed by SECC state they need information about DERs from their electricity providers and assistance in overcoming financial barriers to adoption.

A separate survey conducted by SECC, comprising 7,500 responses, has revealed that consumers are more ready than ever to engage in smart energy, home energy management and renewable energy programmes if industry stakeholders adequately address their most pressing needs and wants.

57% of consumers prefer a time-varying rate and 31% are likely to buy a smart thermostat in the next 12 months.

The study has led to the development of five key themes on the needs and wants of today’s energy consumers and how industry stakeholders can better serve them:

1. Consumers are more ready than ever to engage on energy matters.

2. Segmentation remains essential in a digital world.

3. Energy engagement is fundamentally a journey for both society and individuals.

4. Consumer demands are shaping the future.

5. Education remains a clear, strategic opportunity to increase energy engagement.

Luis Vale Cunha, Director for European Affairs at EDP Distribuicao, told Smart Energy International during a video interview that “consumers don’t care about energy, they care about value” and for utilities to deliver value to their customers they need to intelligently use data and flexibility.

Rolf Bienert, technical director at OpenADR Alliance, agrees, saying that utilities need to engage with customers without trying to control them, in order to improve customer services while optimising the management of the grid.

Mitch Fane, US energy market leader at EY, said: “Across the US, energy consumers are caught between two desires: protecting the environment while keeping energy costs in check.

“These competing dynamics have also perplexed energy companies as they try to deliver the profitability that shareholders demand and meet evolving customer needs.

“While utility customers are generally satisfied with their services, there’s a call to action for companies to innovate their business models, strategies and customer interactions in a way that enables them to turn satisfaction into loyalty.

“In order to meet customers’ current and future expectations and increasing options, companies need flexibility and agility, paired with a deep understanding of energy users and the disruption facing the dynamic energy sector.”

Despite facing challenges in trying to adopt new business models and next-generation technologies as well as to meet changing policies and consumer demands, overall customer satisfaction with electric utilities climbed significantly in 2019 compared to previous years.

According to JD Power’s 2019 edition of the Electric Utility Business Customer Satisfaction study, overall customer satisfaction has increased by 18 points to 779 points.

In 2017, overall customer satisfaction among electric utility business customers improved for the fifth consecutive year to a record high of 765 (on a 1,000 point scale)

The increase in customer satisfaction in 2019 has primarily been attributed to improvements in communication and price.

Proactive communication about power outages and estimated restoration times have played a key role in this increase.

Customer satisfaction has also been increased by utilities communicating their grid infrastructure maintenance programmes. Customers that are unaware of utility programmes perceive their utility does no maintenance, according to the study.

For instance, amid continued global media attention on the recent Northern California wildfires, awareness regarding infrastructure maintenance is lowest among customers in the Western region of the United States.

Online offerings have also improved customer services

Adrian Chung, Director, Utilities Intelligence at JD Power, said: “Electric utilities around the country have been ramping up their communications efforts, often addressing everything from mobile alerts about outages to updates on citizenship initiatives.

“Many top-performing utilities are getting that formula right, by visibly maintaining their infrastructure and leveraging technology to ensure businesses receive timely information needed to deal with outages and support decision-making.

However, several utilities are still missing the mark by not focusing on these areas that drive customer satisfaction.”

Mateu Munar, a senior director, Go-to Market Lead for SAP Cloud for Utilities at SAP, said the energy transition in 2020 will be characterised by end-customers that are becoming competitors, consumers that are evolving into prosumers and increasing demand for improved customer experience.

Leveraging innovation and investing heavily in digital transformation will enable utilities to meet the demands of this new energy consumer. By so doing, energy firms will unlock new revenue streams for themselves. SEI