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Tapping into Online Retail: A 2021 Utility Priority

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Anne Arquit Niederberger's picture
SVP Market Development, Enervee

Inspiring high-impact climate change, clean energy and sustainability solutions globally. Sought-after speaker, effective communicator and leader of influential communities of practice. Skilled...

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  • Jan 27, 2021

This item is part of the State of the Industry 2021 SPECIAL ISSUE, click here for more

The coronavirus pandemic has changed many aspects of our daily lives, and some behavioral changes are likely to endure. One of these is the accelerated shift to online shopping. A recent McKinsey & Company survey indicates the share of customers purchasing appliances mostly or all online is expected to increase by 54% post-COVID, reaching 29%. They also found that 20% of consumers are doing more research on brand and product choices before buying and are open to new ways of shopping.

Enervee sees this trend impacting utilities in 2021, representing an opportunity to deepen and expand the utility-consumer relationship for mutual benefit.

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Residential Energy Demand Depends on 1 Billion Buying Decisions

When we think about residential energy consumption, we tend to overlook the dramatic shift in important energy end-uses over the last decade. According to the 2019 California Residential Appliance Saturation Survey, refrigerators now account for 25% of electricity demand; miscellaneous plug loads and air conditioning roughly doubled their contributions to 21% and 13%, respectively. Despite sharp declines over the past decade brought about by innovation and standards, lighting still accounts for 10% of consumption and TVs, computers and office equipment, for another 8%. These top five electricity end-uses drive 77% of California’s electricity consumption, and four of them (as well as room air conditioners) are plug-in devices typically purchased by individuals at retail. Despite variations from region to region, data from the National Residential Energy Consumption Survey shows a consistent picture that plug loads collectively dominate residential electricity consumption.

Roughly 1 billion energy-using consumer products are purchased by households annually. With recent advances in marketplace technology, functionality and data integration, utilities are now able to influence these transactions at scale.

Facilitating Energy Efficient Retail Transactions Is Good for Customers, Utilities and the Planet

By facilitating safe, online purchases from the comfort of one’s home, utility marketplaces have been one of the few energy efficiency program offerings that have proven resilient during stay-at-home orders, typically outperforming 2019 numbers. Utility marketplaces also strengthen the utility’s brand perception/credibility, help meet regulatory mandates by providing new sources for cost-effective energy savings, establish new revenue streams, and create more digitally engaged customers.

Being able to tap into the capabilities of partners, including retailers, to deliver best-in-class customer experiences is also important. According to Salesforce, 79% of consumers say their experience is as important as its products & services, and COVID-19 has elevated expectations of companies’ digital capabilities across the board. The bar for energy providers is set by the digital offerings experienced by customers in the retail, banking and entertainment spaces, not by other companies in the utility sector.

The Future Promises Greater Scale and The Ability to Execute Multiple Strategies

Recent marketplace innovations and data integration mean that utilities are now able to influence purchase transactions at scale – and not only to achieve energy savings, but also to tackle other utility priorities. Utility marketplaces of the future will allow utilities to do two things:

> Scale impact. While online stores have typically featured and seen the greatest savings from small devices like smart thermostats and LED bulbs, utilities can influence purchases across all energy-using device categories (Enervee's platform currently features 40+), including major appliances and water heaters. A truly personalized utility marketplace experience, relying on partnerships, rich data and artificial intelligence, also became a reality in 2020 and is making an impact on marketing and program effectiveness. And innovative new ways of making purchases affordable will come to market this year, facilitating efficient purchases by income-constrained households, who will see the greatest benefits from lower energy bills.

> Execute multiple utility strategies in parallel. Influencing purchase transactions can serve multiple objectives, including energy efficiency, demand response, grid reliability, and better serving low- and moderate-income customers. 2020 was the year, for example, that online marketplace innovation and partnerships with manufacturers and DR aggregators made it possible to pre-enroll smart thermostats in demand-response (DR) programs during online purchase transactions. In Arizona, Enervee worked with Google Nest and Energy Hub to launch DR pre-enrollment, and the customer response in the first several months of the program has been overwhelming: 98% of those who bought thermostats also pre-enrolled their devices in the APS Cool Rewards program. 

These innovations may help prevent the need to repeat California's 2020 rolling blackouts. Under a fast-tracked emergency reliability proceeding drawing on a sobering retrospective analysis of what went wrong, the California Public Utilities Commission is pushing utilities to ramp up supply and demand-side solutions by the end of August 2021. In opening testimony, the California Energy Efficiency & Demand Management Council called for roughly $10 million to enroll 100,000 smart thermostats in DR programs within a five-month period. Doing this would deliver 58 MW of relief at a fraction of new generation or storage costs. 

Energy efficiency and demand response integration is just a start.

My prediction? Customers and leading utilities will achieve great things together in 2021, thanks to marketplace innovations, making the value and imperative of tapping into 1 billion online retail transactions increasingly evident to utilities.

Matt Chester's picture
Matt Chester on Jan 27, 2021

An interesting trend to watch, for sure-- how much personalization and hand-holding do you expect the bulk of customers to need? Smart thermostats, for example, can seem like a bit much for some consumers, and digging through the best one from an energy perspective adds a new layer. How can and should utilities best help in this way? 

Anne Arquit Niederberger's picture
Thank Anne for the Post!
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