After completing a study of the home energy management market I spoke last week with a strategy guy at large consumer electronics manufacturer. The company is looking at the home energy management market and evaluating various product and market entry strategies.
Many of the vendors of in-home energy displays are focused on working with utilities. Utilities have the customer relationships. In many cases utilities now have money to spend on in-home displays (a million of them in the U.S. according to the recent federal Smart Grid awards). And many have powerful motives to promote the adoption of energy information displays, ranging from fostering energy conservation, greasing the wheels for demand response programs, and dressing up smart grid investments with something the rate payer can see and touch.
Is there a path to market that bypasses the utilities and speaks directly to consumers? This is one of the questions my new strategist friend is looking at. It’s an interesting one, and one that Google raised when it announced that, along with trying to sign up utilities to share customer consumption data through its PowerMeter application, it is partnering with device makers like Energy, Inc. to capture and report on home energy use without the involvement of the utilities at all.
Perhaps consumers don’t trust utilities to help them manager their energy consumption. It is noteworthy that, according to a Pike Research report earlier this year (subscription required), some 30% of U.S. consumers were uninterested in demand response programs because of the “‘big brother’ aspect” and another 12% “don’t trust the electric company.”
Still, I think utilities are the key to the development of the market for energy information displays over the next 3 to 5 years (even though longer term I believe a consumer market for the devices will develop). And I suspect, based on the data I have, that the segment of consumers that would be motivated by distrust of their utility to buy an energy information device to be relatively small.
According to the Pike study, for instance, of those interested in energy information displays, over 80 percent said they would consider using their electric utility as a provider of energy management services that included one. An IBM study last year of consumer attitudes about energy consumption suggested that nearly 70 percent of consumers would be interested in a “participatory network” in which they share responsibility for energy management with utilities.
Utilities have an opportunity and an imperative over the next few years. They must convey to their customers the benefits of getting more engaged in their own energy managaement. And they must develop a more dynamic relationship with their customers. But utilities have their work cut out for them. Both the IBM study and a Gartner study released over the summer suggested that utilities have room for improvement in how they market new energy programs such as those relating to energy efficiency or green power: awareness and uptake of existing programs remain low in many cases.
So my sense is that this consumer electronics company may well be able to out-market the utilities, but would have little success building a market based on of distrust of them. A promising path forward might include a co-marketing arrangement, which could give the utilities a needed boost in their communication skills.
What are your thoughts?