Consumers focused on "guaranteed savings"

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The sense that utilities need to communicate with and educate consumers on smart metering prior to installation has become a well-worn mantra.

But in consumers' minds, the "smart grid" remains an elusive concept. They will pay a price for products and services that reduce their electricity bills, but only if those savings are guaranteed.

Few, currently, are interested in time-of-use pricing or demand response programs. And more than one-third do not want utility control of in-home appliances, regardless of potential savings.

These conclusions derive from a national survey of about 1,600 households in the United States in the third quarter of last year conducted by Bill Ablondi, the director of home systems research at Parks Associates, a market research and consulting firm.

Two points seem critical here, according to Ablondi.

"I think money motivates people most of the time," Ablondi said. "That's a challenge for vendors. Can you 'guarantee' results?"

A few key findings from Ablondi's survey:

• 80 percent of U.S. households are interested in cutting energy costs.
• Less than 50 percent want to learn about "smart grids."
• More than 80 percent are willing to pay $80 to $100 for equipment to save on energy bills if that's "guaranteed" to save 10 percent to 30 percent on their bills.
• Only 15 percent to 20 percent are likely to sign up for time-of-use or demand response programs.
• More than 30 percent do not want utility control over in-home appliances, regardless of savings.
• More than 50 percent have programmable thermostats, thus over half of U.S. households have a potentially energy-saving device in their home.

Thus, energy-saving devices and services represent a huge potential market in the United States, Ablondi told me earlier this week. To exploit this market, however, utilities, device vendors and/or communications/media companies must launch massive consumer education campaigns to deliver an attractive value proposition.

The bigger picture - the link between supply and demand, particularly the high cost of producing and delivering electricity during critical peak loads - remains murky in most consumers' minds. Thus the reasons behind time-of-use pricing and demand response will require even greater work, Ablondi said. Knowledge that brownouts could occur if peak loads aren't shaved may be important to consumers, he said.

Another key question, Ablondi said, is whether utilities - who want control where they have responsibility - will "own their customers." Or will consumers have the freedom to install systems and subscribe to services provided by other players? In late February, Ablondi pointed out, the White House Office of Science and Technology Policy (OSTP) and the National Institute of Standards and Technology (NIST) launched a public forum [3] on related questions.

Provocatively, Ablondi said that "perhaps the most favorable scenario for the development of a robust residential energy management market is for a 'market mover,' e.g., Google, Intel or Microsoft, throw its considerable market bulk into the smart grid space and create a de facto standard."

"The probing question is 'who do you trust to help you reduce energy consumption?'" Ablondi asked, rhetorically.

Regardless of player or message, a handful of hurdles must be overcome, according to Ablondi. The cost of energy-saving devices must be clearly linked to future savings or they will be perceived as an up-front loss. Devices and services must be simple. Energy-saving device vendors must be able to support existing devices within the home; smart meters alone will not do this.

Of course, this is just one survey and corresponding analysis from one market researcher, which can be added to its predecessors for an incomplete, evolving mosaic of consumer sentiment, frozen in time by the period in which it was taken.

In my view, completely unsupported by data, if consumers understood the big picture of supply-and-demand and the cost of providing electricity to meet peak load, and they grasped that interacting with their utility enabled them to reduce peak load and save money, they might be willing to give it a try - as long as the process and technology is simple and opting out during any given demand response event remains an option.

Let us know your thoughts. Next, I'll bring you salient details from the White House OSTP and NIST forum on ensuring that consumer interaction with smart grid has a positive outcome.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com [4]
303-228-4757