Navigant Research Blog

Making the Utility-Customer Relationship a Two-Way Street

— May 24, 2018

I recently received a home energy report (HER) on my Honeywell thermostat app. It showed my monthly heating and cooling usage, compared it to last year, provided some thoughts on what factors affected my usage, and offered tips to save money in the future.

The Quest to Increase Customer Engagement

I was intrigued that Honeywell would offer this service outside of a utility-sponsored program, as most HERs are provided. The Honeywell app also includes a marketplace to buy some HVAC-related products and find local home contractors who can provide HVAC services. Both offerings appear to be gaining traction with utilities and retail energy suppliers across the globe in their quest to increase customer engagement.

Honeywell HER

(Source: Honeywell)

The widespread adoption of smartphones, mobile apps, and social networking tools has changed the way that consumers interact with their service providers. Utility customers are becoming more proactive and are expecting more insight into energy usage. The days of a once-a-month bill have morphed into potentially ongoing conversations and numerous points of contact that utilities need to embrace and exploit. Changing tools for engagement such as online, mobile, social networks, and marketplaces create a myriad of choices for utilities that seek to meet current customer expectations.

An Intersection of Technologies and Strategies

Between the distinct functions within a utility of general customer service and demand-side management (DSM) program management lies an intersection of technologies and strategies. These tools can merge the two areas to enhance customers’ experience with the utility and save energy in the process. The changes in consumer expectations brought about by companies like Amazon, Netflix, and others have led utilities to seek DSM software solutions that can lower the cost-to-serve and improve customer satisfaction and engagement.

Utilities are also under pressure to build fewer power plants, accommodate cleaner sources of fuel, and keep rates low. This has caused regulators to place higher priority on better customer service, increasingly incentivize utilities to pursue DSM, and improve their customer relationships. This same effect has occurred in regions experiencing deregulation, such as Texas, Europe, and Australia, which creates a more competitive marketplace. It also results in retail suppliers pursuing DSM offerings to differentiate themselves and evolve to become service providers in the eyes of their customers, rather than commodity providers.

Navigant Research’s new report Utility Customer Engagement through DSM highlights these trends and provides case studies of utilities and retail suppliers offering such products and profiles of vendors that provide such solutions. This market is getting ready for strong growth based on advances in methodologies and technology, utility willingness to try new means of customer outreach, and a myriad of other drivers for DSM in general and these products specifically.

Now back to my Honeywell HER to see how I can use less energy than my neighbors!


AESP Conference Makes DSM Gumbo in the Big Easy

— March 22, 2018

I hadn’t attended the Association of Energy Service Professional’s (AESP’s) annual conference in 10 years. I hadn’t been to New Orleans in 20 years. When the two came together in February, I decided it was time to kill two birds with one stone. Neither disappointed. I’ll focus on the conference here, but the beignets, bands, and Bourbon Street were as epic as I remembered.

Buzz-Worthy Presentations

The conference was twice as big as the last time I was there, and the topics have become much broader, reflecting the maturation of the industry. The opening session, Business Models – The Evolving Role of Demand-Side Management (DSM) in Utilities, was a shot across the comfort zone bow that most DSM professionals have settled into. Val Jensen, Senior Vice President of Customer Operations at ComEd, stated that while the energy efficiency group is now a driver of revenue for the company, he would like to see the end of energy efficiency programs as we know them today. He views it as an inefficient cottage industry that is not as unique as we think and is really more of a commodity. Energy efficiency program design is more a reflection of program evaluation than serving customers in a useful way. He believes that the utility should become a platform, where energy efficiency is a high value application that can be offered. The notion that utilities should make money from energy efficiency has been viewed as dirty, but being incented financially to do something is a powerful motivator.

After that wake-up call, I enjoyed seeing some of the presentations that were on the leading edges of DSM. There was a notable smattering of natural gas presentations—a field historically dominated by the electric side of the house. Integrating natural gas and electric DSM programs plays a growing role as utilities try to find more cost-effective ways to meet their goals. Converting fuel oil heating customers to natural gas, and natural gas HVAC applications to electric (like heat pumps) holds promise in saving energy and emissions.

Another buzz term I focused on was customer engagement, in part because I am working on a report covering that topic. A panel with three utility marketplace offerings, energyOrbit, Enervee, and Simple Energy, showed how customers could be enticed to make more efficient purchases by providing information and comparisons on product ratings and costs. It was even posited that traditional energy efficiency rebates could be rendered obsolete through superior data sharing, but that point was hotly contested by the panel.

Not Just a Bystander

I also participated in my own panel, Non-Wires Alternatives: The New Model to Integrate and Target DSM and DER, but that wasn’t nearly as intriguing as the talk on using drones for energy efficiency site visits!

All in all, it was great to get back to the AESP crowd and see some familiar faces as well as new, innovative companies and young, enthusiastic industry players carrying the mantle for the next generation of DSM.


DERMS Is the Word at DistribuTECH

— January 30, 2018

After attending DistribuTECH in years 2014 through 2016, I took 2017 off because it seemed like there was less emphasis on demand-side management (DSM) and behind-the-meter distributed energy resources (DER) like demand response, energy efficiency, and energy storage. The biggest standalone public companies in the space at the time, Opower and EnerNOC, had seriously pulled back or ended their presence at the show. Acquisitions added additional doubt of direction in the industry; in 2016, Opower was bought by Oracle—putting into question its future focus on the space—and in 2017, EnerNOC was acquired by Enel.

DSM and DER Back in Focus

With that backdrop, I did decide to make the return trip to San Antonio in 2018 to see if anything had changed. I can’t speak to whether last year’s conference was any kind of transition, but I was floored with the level of attention given to DSM and DER topics by both DistribuTECH stalwart companies and startups alike.

From the big boys, like GE, Siemens, and Schneider, a common theme emerged of connecting advanced distribution management systems with DER management systems (DERMS). I alluded to this trend in Navigant Research’s 2016 report, Demand Response Management Systems, and my experience at DistribuTECH solidified the notion. Those vendors had intricate displays showing how the systems integrate, but there is still little real-world experience with such cases. The Smart Electric Power Alliance (SEPA) held a concurrent session aimed at standardizing DERMS requirements and terminology since it means something different to every vendor and utility.

On the startup side, a plethora of newbies were hawking their technologies for energy efficiency, and in particular, customer engagement. The majority of these applications are based purely on software, analyzing meters and other forms of data, as opposed to any new hardware that the utility or its customers would need to install. Companies like Grid4C, Powerley, Mach Energy, and Bidgely—along with more-established players like Oracle, Itron, Landis+Gyr, Honeywell, Lockheed Martin, and AutoGrid—touted their algorithms, segmentation tools, and disaggregation capabilities designed to help utilities and end-use customers save energy, detect anomalies, and engage in more meaningful ways. The Smart Energy Consumer Collaborative held its annual Consumer Symposium onsite to highlight these technologies and strategies.

DistribuTECH or ConsumerTECH?

Of course, the majority of the show floor was dominated by the usual suspects with transmission and distribution equipment and operational systems, but I was more interested in what was bubbling up around the edges. If things keep progressing in these directions, the show might have to change its name to CustomerTECH!


Increasing SMB Customer Engagement through Integrated Demand-Side Management Programs

— October 5, 2017

For decades, utilities have had success reaching large commercial and industrial (C&I) as well as residential customers with demand-side management programs like energy efficiency and demand response. Large C&I customers typically have utility account managers catering to their service needs, while mass marketing techniques like bill stuffers, direct mail, door-to-door canvassing, advertising, social media, and retail channel partnerships effectively reach residential consumers.

However, the small to midsize business (SMB) customer segment is typically underrepresented when it comes to demand-side management (DSM) program participation, so it is considered hard to reach. Obstacles include the facts that there are too many SMBs for utilities to have a dedicated account managers, SMBs typically do not have staff resources focused on energy issues, and mass marketing does not easily penetrate the segment. In addition, no clear definition of SMBs exists. Some utilities and vendors use square footage, others use annual kilowatt-hours, and still others use kilowatt peak demand.

Examining the Issues

A 2016 study in California found that SMB customers accounted for 78% of customers, but only 33% of energy efficiency program incentives and 32% of energy savings from programs. The program participation rate for SMB customers is about one-third of the average for all business types. In Massachusetts, 1.4% of eligible customers participated in the small business direct install program, and the smallest customers did not receive attention comparable to customers closer to the 300 kW program cutoff. In PSEG Long Island’s energy efficiency program, the participation rate among SMBs was 3 times lower than among non-small business customers (5% vs. 15%).

Reaching SMBs

However, this segment makes up a large percentage of a utility’s customer base and has specific characteristics that make these customers great candidates for these programs. They are cost-conscious and will be more likely to participate if energy projects can be put in terms that resonate with them. They also care about community relations, so they will see value if they can show that they are doing something to help the local economy or environment. Recently, utilities have started aggressively pursuing SMBs with new integrated DSM (IDSM), demand response (DR), and energy efficiency product offerings to better leverage this untapped load resource and engage them to help improve J.D. Power customer satisfaction scores.

Join the Conversation

Navigant Research will host a free webinar on the topic of increasing SMB customer engagement through IDSM programs on October 10 at 2 p.m. EDT. I will be joined by Robert Duval, director of operations at Itron, and Jeremy Morrison, program manager at Duke Energy, and we will share best practices related to designing and deploying DR and energy efficiency programs for SMBs.

Key topics covered will include tips for DR and energy efficiency program design, recruitment strategies to maximize customer participation, approaches to maximize energy efficiency savings, and insights from a utility that has successfully deployed an integrated DR and energy efficiency program for SMBs.


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