Energy Central Power Perspectives™: PG&E Marketplace and Enervee, A Conversation with AESP’s ‘Outstanding Achievement in Residential Program Design and Implementation’ Winner
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- Apr 1, 2019 2:15 pm GMTMar 30, 2019 2:40 pm GMT
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Earlier this year, the Association of Energy Services Professionals (AESP) handed out awards to recognize outstanding energy efficiency achievements across the industry. Among those winners recognized was the PG&E Marketplace from Enervee and Pacific Gas and Electric Company.
The PG&E Marketplace is a customer-facing tool that offers an innovative market-based retail approach to make efficient products visible and actionable to customers. After attracting 770,000 visitors and influencing hundreds of thousands of intelligent and informed retail purchases by customers empowered to achieve energy efficiency, the PG&E Marketplace can be held as a standard of how residential programs from utilities can make a real difference for their customers.
Hoping to share some of their valuable lessons learned in this space, Anne Arquit Niederberger of Enervee was kind enough to answer some questions on the program as a part of the Energy Central Power Perspectives™ series:
Matt Chester: Thanks so much for taking the time to share with us, Anne. Can you start by giving an overview for what need was seen in the market that the PG&E Marketplace was intended to fill and how it would solve problems for customers better than other options already out there?
Anne Arquit Niederberger: Over 85% of Californians think it’s important to buy energy-efficient products for their homes and clean vehicles that are economical to drive. The same holds true for Texans, in case you’re thinking this is just a Left Coast thing. The consumer dilemma is that energy efficiency is invisible in the marketplace, preventing people from choosing the efficient products they aspire to. What our online “choice engine” platforms like the PG&E Marketplace provide is a 0 to 100 energy efficiency index on every product model, aka the Enervee Score, that is intuitively understood and nudges shoppers towards more efficient purchases. With personalized estimates of energy bill impacts and total cost of ownership, the platform also helps consumers correct their intuition that efficient products necessarily cost more or that all ENERGY STAR-labeled products are super-efficient, because it’s simple to compare the efficiency and best retail prices for all products that meet their needs.
Beyond efficient products, our platforms also help consumers go solar and buy clean vehicles. These are big ticket, unfamiliar buying decisions, where consumers are looking for guidance from objective and competent sources they can trust.
From a policy perspective, energy savings and greenhouse gas emissions reductions need to be scaled rapidly, calling for market transformation strategies that eliminate underlying market barriers, instead of just applying Band-Aids in the form of monetary incentives used to draw attention to efficient product choices, which can even do consumers a disservice. Economics 101 tells us that the starting point for any incentives should be a transparent, well-functioning market. Leveraging new data, technology and behavioral insights, our choice engine platforms have demonstrated that it’s possible to close the gap between economic and market potential, without requiring incentives.
MC: A bragging point of the PG&E Marketplace is that it’s led to energy bill savings of up to $300 per visitor due to 995 kilowatthours (kWh) & 52 therms of energy savings on average. Can you talk more about this-- what types of decisions are customers making that lead to these immense savings? How do these savings add up in aggregate?
AAN: This is all about making better one-time buying decisions. Let’s say your water heater goes on the blink. You can buy a $1,200 electric water heater at Home Depot that uses 2,500 kWh per year, or you can choose a heat pump model that costs the same but uses 63% less energy. Making the wrong choice is costly: over 10 years, your energy bills would be over $3,000 higher for the conventional model – more than double the purchase price of the water heater! Thanks to the Enervee Score, PG&E Marketplace visitors instantly see that the more efficient model scores 96 and has a much lower total cost of ownership, making the right choice simple and compelling.
With the average U.S. household buying between 15 and 20 energy-consuming products each year, the savings can add up. The numbers you quoted reflect current residential energy tariffs and the 163,032 efficient product purchases influenced by the PG&E Marketplace during the emerging technology trial period across 18 product categories, some of which have large savings per unit, such as gas and electric water heaters and pool pumps. Other products have smaller unit savings that deliver big results in total across the utility’s service territory, such as clothes washers, projectors, and TVs. Three-quarters of the total electric savings and 90% of the gas savings were achieved without any incentives, the rest are associated with PG&E programs that provide monetary incentives.
Net first-year energy savings achieved by the PG&E Marketplace during the 33-month trial period were estimated to be between 113,430 and 311,332 therms and 2,041 and 6,724 MWh, with a load reduction of 417 to 1,139 kW. Over 80% of the electricity/capacity savings and 90% of the gas savings were attributed to market transformation and behavioral nudging effects, without monetary incentives, while the remainder came from efficient purchases associated with PG&E incentive programs. This results in a favorable total program cost per average first-year kWh saved of $0.15, without any costs allocated to the capacity or gas savings.
MC: How do customers find out about PG&E Marketplace? What has been the roll-out strategy and what's been the most successful method for getting customers to realize the potential savings they can find if they engage with the marketplace?
AAN: Good question! Unless customers visit the site, there are no savings. Enervee’s co-founders are digital marketing executives, so that’s an important skillset that we bring to the table. Best practice is for our marketing team to collaborate with utility marketers from the pre-launch phase. We begin by helping our partners get the word out through existing owned channels. For example, linking communications to customers about energy use to the online choice engine platform, which positions it and our utility partner as the authority on saving energy.
Secondly, as a data company, we have millions of data points on products that power the marketplace, and we are able to turn that into long tail keywords for paid search marketing. This allows us to target in-market shoppers looking for particular model numbers or features and get them to consider a more efficient model on the choice engine platform.
And finally, Enervee uses a variety of techniques and sources to create and target relevant audiences, such as geotargeting, using customer data, or utilizing third-party data. These various sources can be algorithmically overlaid and evaluated in real time to identify customers and segment them by desired attributes. For example, we can build a list of people who have recently purchased a thermostat on the utility platform with an instant discount and signed up for price drop alerts on several categories of appliances. From that, we may surmise that these people are moving or remodeling their home and can target them with relevant offers. We can also use this to build lookalike audiences on platforms like Google ads and Facebook.
We then dynamically tailor and personalize the Marketplace experience to each unique audience segment to provide the most relevant products, information and incentives, such as custom-tailored recommendations, rebates or incentives, product bundles, and more. Enervee can even reach, acquire, and retarget these audiences across all media channels along the customer’s digital journey, from PC to mobile to tablet, for example. It’s a pretty sophisticated endeavor, but one that works.
MC: The PG&E Marketplace is noted as being a replicable approach-- have you engaged with other organizations to discuss how they can use the same approaches to ideally create the same sort of results?
AAN: Our choice engine platform has been rolled out across the United States and in Europe to partners serving about 50 million residential electricity accounts already. Since the platforms are turnkey, cloud-based, and don’t require deep integration, we typically get them up and running within four to six weeks from contract signing. Most of this time is spent customizing and testing the sites – which are white labeled, meaning they take on the branding of our client – and developing a joint marketing strategy. It’s as easy as: launch, market, and track savings.
Any entity that seeks to engage a target market in energy efficiency or climate action – be it an energy provider, government or non-profit entity – would benefit from the platform, and it’s a low bar in terms of partner effort to launch. ACEEE, for example – the leading non-profit voice advancing energy efficiency policies – relies on the Enervee Score to recommend the most efficient products to their own audience.
MC: The benefits to customers for using PG&E Marketplace appear obvious, but how has the success of this program benefited the utility?
AAN: PG&E and other utilities in California are on the hook to ramp up customer energy savings cost-effectively, at the same time that load growth is largely tied to the fast-growing “plug load” categories like electronics, for which traditional rebate programs are not well suited, due to the small savings per unit and price parity between efficient and inefficient models.
PG&E’s goal from the outset, therefore, was to generate claimable, market-based savings by helping customers make better buying decisions, rather than relying on incentives of any kind. Across all utilities in California, rebates are only offered on a handful of products in the residential sector-- for PG&E, smart thermostats and heat pump water heaters. For all other categories, market transformation approaches that tackle underlying behavioral and market barriers are needed to scale savings cost effectively.
Utility benefits of the choice engine are plentiful and varied, including in the areas of customer relationships, data and insights, and electrification and load growth.
MC: How do you see the PG&E Marketplace evolving in the future to keep up with changing needs of customers, such as smart products, demand-response strategies, or even residential generation?
AAN: The PG&E platform already features smart home products and applications, so let me just mention several opportunities already rolled out with other utilities:
- Expansion to solar and EVs to provide a more seamless customer experience
- Retail product programs with targeted instant discounts
- Simplified customer journey for smart thermostat purchase and enrollment in demand response programs
- Integration of contractor services
- Enervee digital marketing
MC: What did it mean to PG&E Marketplace to win AESP’s Outstanding Achievement in Residential Program Design and Implementation? How is the recognition helping out the program to continue in its success?
The award was the culmination of a rigorous selection process. AESP solicits nominations from the industry, which are then vetted by an independent selection committee. The nomination is essentially an in-depth case study, covering everything from the problem being addressed and insights into customer/market need through to execution and results.
As AESP's CEO John Hargrove said, these AESP Energy Awards honor companies and programs that have demonstrated leadership in the energy industry. So AESP's recognition means a lot to the teams at Enervee and PG&E who took on the risk of turning behavioral insights into pilot deployments that have since proven their effectiveness. We're hoping that the award-- and your story, Matt! -- will draw attention to the unprecedented opportunity the industry has to make markets work better for consumers and scale energy savings cost effectively.