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Three Notable Racial Disparities Among Lower-Income Consumers

Posted to Smart Energy Consumer Collaborative (SECC) in the Customer Care Group
Nathan Shannon's picture
President & CEO, Smart Energy Consumer Collaborative

Nathan Shannon is the President and CEO of the Smart Energy Consumer Collaborative, whose mission is to advance consumer-friendly, consumer-safe smart energy through research, education and...

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For the final publication in a series on lower-income energy consumers, the Smart Energy Consumer Collaborative (SECC) recently delved into survey responses from 1,000 consumers from across the United States to investigate differences between lower-income Black, People of Color (POC) and White consumers when it comes to smart energy, climate change, the provider-customer relationship and more.

Due to historic racial inequalities in American life, we wanted to see if these inequalities were also present in the electric utility sector. With the ongoing energy transition, making sure these groups are able to participate equitably is of the utmost importance. Furthermore, due to inequalities specific to Black communities, we examined whether discrepancies exist between these consumers and POC households as a whole.

The research revealed specific characteristics and concerns that make Black and POC consumers both more amenable to smart energy technology adoption and harder to engage with existing programs and services. Here are three of the most notable disparities that were uncovered with this research:

1) Black and POC households are more interested in smart energy technologies.

In the online survey, respondents were asked about their interest in eight smart energy technologies (including smart thermostats, community solar, energy management technologies and smart appliances), particularly if their electricity providers were to provide some financial assistance to help them access them.

For all eight of the technologies tested, lower-income Black and POC consumers were considerably more interested than lower-income White consumers. For example, Black and POC consumers were far more likely to say that they are “very interested” in both community and rooftop solar than White households.

There were also notable discrepancies among smart home technologies, such as smart lighting, smart appliances and smart thermostats. Thirty-nine percent of Black consumers and 36 percent of People of Color were “very interested” in smart thermostats, compared with 21 percent of White consumers.

2) Black and POC households are more concerned about climate change and the environment.

While interest among lower-income Black and POC households in solar energy technologies is much higher than White consumers, we also see this interest in the environment and clean energy sources reflected in several other areas of this research.

About 90 percent of Black consumers and 86 percent of POC consumers state that it is important that their electricity comes from clean sources, compared to 74 percent of White consumers. Similarly, about three-quarters of Black and POC consumers state that environmental concerns are a major factor in who they vote for, compared with less than half of White consumers.

In addition, research into consumers’ reasons for contacting their electricity providers over the previous two years reveals that Black and POC households are more likely to have already taken steps to learn more about clean energy. About 10 percent of these consumers have already contacted their providers about their clean energy options – compared to 3 percent of White consumers.

3) Black and POC households look to their networks for information on saving energy.

Finally, our research into where consumers typically receive information on saving energy revealed an important finding for engaging lower-income Black and POC households. While all households get the majority of their energy savings information from their electricity providers, Black and POC are more likely than White households to look to connections in their personal networks for this type of information.

Black and POC consumers are far more likely to cite family/friends (15 percent and 14 percent vs. six percent), social media (19 percent and 19 percent vs. six percent) and trusted contractors (13 percent and 14 percent vs. eight percent) as sources of information. Given these predilections, industry stakeholders can use testimonials, social media posts, community events and other methods to boost awareness and participation in programs and services.

This research found that POC households, especially Black households, are generally more amenable to smart energy technology adoption yet are often harder to engage with existing offerings. These households trend lower income, are more likely to rent and have children, but are also more likely to be literate in existing financial assistance programs and smart energy technologies. Furthermore, POC households are much more environmentally conscious and more willing to share data with providers. However, they have low cost tolerances, and any upfront or maintenance costs often dissuade them from participating.

Black and POC households have specific characteristics, needs and wants, and electricity providers must engage with them to find out how their programs can provide mutual benefit. This study identifies these characteristics and provides potential roadmaps for industry stakeholders to follow. We encourage the creation of new programs that increase adoption of smart energy technologies in underserved communities, especially the Black and POC communities, to help them reduce their energy bills, improve their air quality and do their part to help the environment.

Smart Energy Consumer Collaborative (SECC)
SECC is a nonprofit organization that works to learn the wants and needs of energy consumers, encourage the sharing of best practices in consumer engagement among industry stakeholders, and educate the public about the benefits of smart energy
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