Incentivizing Customers to Operate their Homes Aligned with Grid Operators - Insights from Simple Energy

by Parks Associates | Jan. 23, 2019

Prior to Parks Associates’ 10th-annual Smart Energy Summit, in Austin, Advisory Board member and conference speaker, Judd Moritz, SVP of Solutions, Simple Energy shared insights on how consumers operate their home aligned with the needs of the grid operator and how utilities integrate smart home and distributed energy resources into the grid.

Judd will be participating on the Incentivizing the Smart Home: Utility Marketplace session on Wednesday, February 20, at 8:45 AM. Panelists joining him on this session include:

Brian McKee, Director of Online Store, AM Conservation Group, Inc.
Joel Miller, Principle Supervisor, DTE Energy
Anne Arquit Niederberger, VP Market Development, Enervee
Todd Rath, Marketing Service Director, Alabama Power

How can utilities integrate smart home and distributed energy resources into the grid?
We feel that utility customers want to be more engaged with their utility and that the utility has permission to do much more with their customers than simply provide energy commodity. The utility brand has significant untapped potential and that many customers want (or expect) the utility to help them make energy related decisions. The utility has access to a unique data set (meter data, billing data, program participation data, demographic data, housing stock data, etc.) that when effectively analyzed allows the utility to make highly personalized, timely and relevant recommendations of actions that customers can take to achieve their desired outcomes. These outcomes can provide customers with bill savings, increased comfort, greater convenience, added security, environmental stewardship, or some other driving factor. The challenge for many utilities is that interacting with the utility is unnecessarily difficult and that many customers don’t know “what” they should do. Through an integrated technology driven approach, utilities can:
Engage - leverage behavioral tactics (BEE, nudges, tips, points and rewards) to help make their customers energy aware. Behavioral science should be applied to all customers and used as a motivation tactic to drive awareness and help customers identify that there are opportunities to act.
Empower - once customers have been made aware of actions they can take to achieve a desired outcome (bill savings, increased comfort, security, environmental stewardship, etc) the utility should help the customer make a decision for an enabling technology, program enrollment, dynamic rate, or bundle of all three that is right for them at that given time. When given too many options, a customer's default position is not to act, so the utility needs to leverage the unique data that it has and the brand permission as the “trusted energy advisor” to help the customer make the decision that is right for them.
Enable - once the customer knows what to do, the utility should help facilitate the acquisition of the enabling technology, the enrollment in the utility program and/or dynamic rate. This can be done through a utility marketplace or through an instant rebate/enrollment in the customers preferred retail channel.
Energize - After the customer has completed the program/rate enrollment and now has the enabling technology in hand, the utility should seamlessly dispatch the enabling technology to help customers manage energy costs and achieve grid level benefits while keeping the customer continuously engaged to help reinforce the decision that the customer made and to start the cycle again to drive towards the next action.

What incentives are needed for consumers to operate their home in a way that is aligned with the needs of the grid operator?
First and foremost, customers must have ready access to enabling technologies that make participation in utility offered programs simple and streamlined. Energy is generally a low interest category for most mass market customers, so making participation in programs that align with grid operator needs as simple as possible is a prerequisite.

Once customers have enabling technologies that are “smart” enough to make participation simple, the grid operator needs to share value with the customers, either directly or through energy service providers, to incentivize participation. This value can come in a number of forms and will likely evolve over time.

In the long term, incentives should give way to time (and maybe locational) varying price signals, with externalities accounted for, but in the meantime (and in light of political reality) incentives should start from a base of total (internal and external costs/value) and then add an additional value for a limited period of time to allow for understanding consumer behavior and seed the market for future value.

More information on the Smart Energy Summit

Next: How Can Energy Providers Move the Market Forward? Insights from DTE Energy
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