Marketing Home Energy Management Without Utilities

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?

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3 Comments

Filed under efficiency, grid, in-home displays, smart meters

3 responses to “Marketing Home Energy Management Without Utilities

  1. Ted Dann

    Perhaps utilities could charge a premium for not having an energy monitoring system installed? Not much, maybe $5 per month. If the utilities are willing to pay for customers to have these displays installed, they can offset the cost with the premiums received from other customers that refuse the installation.

    It’s the principle of the matter: either you get a display or you pay more for your energy. The worst case scenario is that a customer gets the display and ignoring it.

    This would most definitely speed up the adoption of these displays and ultimately lead to greater energy consumption awareness.

    This might be monopolistic behavior…but if you are the biggest dog on the block, throw your weight around to make some changes for the better.

  2. Enjoyed the post. I’ve already come across a number of home energy monitoring and management solutions that bypass the utility. Whether you’re working with or without the utilities, this is a crowded space. Hopefully they’ll all get an opportunity to deploy enough units to gather some data that adequately differentiates their solutions from one another.

    These systems will start to provide real benefit to consumers once they start facing higher prices. However, I don’t think utilities can push through meaningful price-hikes or TOU rate structures without supplying their customers with the tools (smart meters and complementary displays) that enable them to maintain or lower their monthly bills. To that end, utilities really are in the driver’s seat on this movement. Solutions that by-pass the utility may be limited to the Prius community and households whose electric bills far exceed the local average.

    Ted’s comment and suggestion above is quite a good one. I only wonder if this would be difficult given the heavy regulation and oversight…

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