Energy efficiency – consider the customers

Energy efficiency programmes are more effective from cost and uptake perspectives if targeted to customer needs.
Published: Fri 18 Nov 2016

Customer centricity is increasingly taking centre stage in utility operations, going beyond basic engagement with approaches and models that are designed with customers’ needs in mind and that meet their requirements and wishes. [Engerati-In Focus: Retail Predictions for 2017 - Customer Centricity]

This concept is most frequently being adopted with traditional practices such as billing and with new products and services. [Engerati-In Focus: Customer Centricity - Billing & Customer Care] However, an area that it has yet to be widely adopted is energy efficiency.

Energy efficiency for households

A new study from the American Council for an Energy-Efficient Economy (ACEEE) has found that many utility energy efficiency programmes are designed around measures rather than people. These "untargeted" programmes focus on meeting energy savings and cost-effectiveness goals, and are ostensibly impartial about the characteristics of the households that receive the offering. However, they also often appear to limit participant diversity.

The study reviewed the 66 residential programme evaluations in California for the 2010-2012 programme cycle, and found participants in some of the biggest programmes were substantially less diverse than the population. For example, Energy Upgrade California (EUC) and Home Energy Efficiency Rebate (HEER) programme participants were more likely to be white, upper income, college educated or English speakers.

Three reasons are identified why programme participants may not look like the general population, according to the study author, Marti Frank.

One is the buy-in cost, or the amount a household is required to spend in order to participate. In the US, the average buy-in cost ranges from $6,000 for a home energy retrofit to $500-$3,000 for an energy efficient appliance to -$50 for refrigerator recycling (i.e. the programme pays the participant). The data show that a high buy-in cost correlates with a less diverse participant population. Participants in programmes with the highest buy-in costs, EUC and HEER, were less diverse than California’s general population. Participants in the programme with the lowest buy-in cost, refrigerator recycling, looked almost exactly like the population.

Second is the language, format, and channel through which programme information is communicated. Nearly 40% of Californians say their primary language is something other than English. But the biggest-budget efficiency programmes communicated nearly all programme information in English.

Third is the implementation method. Programme designers face many options when it comes to implementation, and their choices can influence participant diversity. An example in the ACEEE study is an experimentally designed pilot programme for refrigerator recycling. When implemented by big box retailers, participants had higher incomes, larger homes and recycled newer, larger, side-by-side refrigerators, compared to participants in a utility-run programme.

“There are many research opportunities to explore the relationship between implementation approach and participant diversity,” says Frank calling for evaluators to “consistently collect, report, and analyze demographic data.”


Housing retrofits in UK

Another example of where this becomes important is on the opposite side of the Atlantic. In the UK, the decarbonization of heating in homes is essential in moving to a low carbon economy and improving the thermal efficiency of the existing housing stock will form an important component to achieving that. [Decarbonising homes – the UK challenge] However, housing refits are expensive and need to be targeted appropriately. Indeed the cost of deep retrofits could potentially be similar to the cost of rebuilding the entire UK housing stock, i.e. in excess of £2 trillion.

A new study from the Energy Technologies Institute indicates that only a third of consumers are motivated to spend effort and money on saving energy and bigger drivers are comfort and security. Thus, a focus on the interests of home owners and occupiers is critical to progress.

The ETI suggests the uptake of efficiency measures could be increased by making them an integral part of improving the amenity and value of dwellings rather than as a series of independent measures. Progress with retrofits will depend on recognising that efficiency savings are a very weak driver and that some combination of improved comfort and amenity along with improved supply-chain performance and mechanisms that mandate or reward carbon savings will be required, both in the social and able-to-pay sectors.

“Targeting an appropriate mix of measures on the most promising combinations of housing and occupants is more likely to be a successful 'sell' than a blanket approach,” says ETI chief engineer Andrew Haslett. He suggests that with a “coherent whole systems approach” to meeting UK climate change targets, expenditure of £10 billion of private and public funds over the next ten years could provide a platform that would enable investment of roughly £100 billion out to 2050.

“Developing the platform would ensure that this money would be well spent as part of an overall housing and energy strategy.”

Further reading

ACEEE: Who’s Participating and Who’s Not?  The Unintended Consequences of Untargeted Programs

Energy Technologies Institute: Housing retrofits – a new start

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