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%).
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.