When It Comes to Saving Energy, Consumers Are Ready to See the Light

Most Americans are in the dark when it comes to their energy use.

Utility Products
By Suzanne Shelton

Most Americans are in the dark when it comes to their energy use. Our latest survey found many Americans underestimate the amount of energy they use while overestimating the energy efficiency of their homes.

It’s a bad combination–one that leads to a lot of wasted energy. And it’s one of several findings from our study that present real challenges to utilities.

Our survey, called Utility Pulse, polled 514 consumers across the country (for a plus or minus 4 percent margin of error). We found that:

  • 53 percent of Americans say they’re not using more energy than they were five years ago, and another 7 percent saying they weren’t sure. In reality, electricity consumption in the U.S. has been rising. According to the U.S. Department of Energy, electricity consumption has increased 10 percent over the last 10 years;
  • 72 percent of Americans think their homes are somewhat energy efficient or very energy efficient. Yet . . .
  • 71 percent of respondents said they live in homes that are more than 20 years old;
  • Only 26 percent of respondents said they’ve added insulation; and
  • Only 35 percent have replaced their windows.

Clearly, consumers are not really aware of how much energy they are using or that their older homes are not very efficient. We all forget that we are plugging in more electronics these days–Ipods, computers, cell phones and flat screen televisions. All of this adds up, and many of us don’t realize it.

The problem is that consumers who overestimate their energy efficiency and underestimate their usage are bound to waste electricity. They are less likely to purchase energy-efficient appliances, add insulation or install new windows. When it’s time to pay for those items, it’s too easy for them to put the product back on the metaphorical shelf, shrug their shoulders and say, “My home’s already pretty efficient–I don’t need to spend this extra money right now.”

So what can utilities do? Our survey findings offer some insight.

Consumers are clearly concerned about their jobs and their savings. They are willing to buy energy-efficient products and services, however–if they see immediate savings.

Our survey found that 71 percent of consumers cited saving money as a reason to buy energy-efficient products. Far fewer chose “to protect the environment” (55 percent) and “to protect the quality of life for future generations” (49 percent). That is a notable change from the surveys we conducted in 2006 and 2007–before the recession–when consumers cited “to protect the environment” most often.

Thanks to the uncertainty wrought by this economy, Americans have a deep desire to be in charge of their lives. They’re worried about their homes, their retirement savings and their kids’ college funds. So they’re seeking more control and stability. Thus, seeing their utility bills go down $20 a month is a huge motivator these days. That’s why utilities should stress the emotional drivers behind energy conservation: Saving energy means saving money, and saving money means being more in control of your world. It means peace of mind.

It’s not surprising, then, that our survey found consumers are likely to take a number of energy-efficient measures after learning they would save immediately. Just over 40 percent, for example, said they were likely to buy a programmable thermostat upon learning that they could save 10 percent a year on energy costs by replacing a standard thermostat and actually programming it. The numbers are similar for those likely to install insulation or a higher-efficiency water heater.

It’s important to note, however, that consumers want results when they buy energy-efficient products. The good news: Our survey found 53 percent of those who said they had purchased ENERGY STAR brand appliances, completed energy-efficient home renovations or participate in special utility programs had seen the reduction in their utility bill that they had expected.

The bad news: Almost a third–32 percent–said they had not seen the reduction they expected. This is most likely due to their utility raising rates, or because they are using more energy, thanks to all the additional electronics that they have plugged in. Not surprisingly, they’re pretty unhappy when they discover they didn’t get the expected return on investment.

That’s why it’s critical that utilities and energy-efficient product manufacturers make sure consumers understand more about their energy use. Utilities need programs to persuade consumers to take energy-efficient measures–turn off the lights, shut off the computer at night and lower the thermostat in the winter–and not expect miracles from new products. A high-efficiency furnace doesn’t mean we can turn our home into a greenhouse in January.

Our survey also looked at whether consumers would participate in utilities’ efforts to use the latest technologies to conserve energy, and found that about one-third of consumers are willing to participate. Among our findings:

Time-of-use billing: Respondents were asked: “A time-of-use pricing plan charges a lower rate for electricity during the early morning and evening when electric demand is lower, a higher rate for usage during the day, and the highest rate during occasional critical peak demand times (usually on the hottest summer afternoons). Your utility would notify customers through its Web site and via the media when a critical peak occurrence is under way, so customers could see the prices and reduce their usage. On a one-to-five scale, what is your likelihood to participate in time-of-use billing?” The results:

  • 3.5 percent said they already participate;
  • 36 percent said they would be likely or very likely to participate;
  • 44 percent would participate if given a display monitor or special thermostat that displayed the current demand period and/or price and critical peak events.

Load management/curtailment: Respondents with a central air conditioning system were asked: “The second pricing plan for you to consider is a load-management or curtailment pricing option. Your utility would install an advanced thermostat or an AC switch in your home. During a critical peak event, your utility would send a signal to cycle down your HVAC for short periods during peak power demand. Participating customers would pay a lower rate for cooperating to manage electricity demand. On a one-to-five scale, what is your likelihood to participate in load management pricing?” The results:

  • 3 percent said they already participate in this program; and
  • 37.5 percent said they would be likely/very likely to participate.

Online energy management systems: Respondents were asked: “Some utilities with advanced metering systems are also beginning to offer an online energy management system. This system would be accessible via the Internet from any location. You could access your home’s billing and energy consumption information in real time. You could set your AC settings remotely, even setting up automatic programs for higher thermostat settings during the day when no one is home and lower settings for the evenings and weekends. On a one-to-five scale, with five being very interested, how interested would you be in having such an online energy management system?” The results:

  • 2.5 percent said they already have such a system; and
  • 37.7 percent said they would be “somewhat” to “very” interested in having such a system.

What does this mean for utilities? Consumers don’t really want to interact with their energy differently than they do now, so you have to make it simple. Give them electronic displays that are easy to see and use. If possible, send messages either via the display, email or text message with clear instructions: “Turn your thermostat down 5 degrees now and save 10% on your utility bill for the next three hours.”

All of this comes down to educating consumers. Utilities need to communicate that energy efficiency is preferable to building new generation plants. This will help consumers understand why utilities promote energy efficiency, and it will generate more trust for the utility.

Utilities also need to tell consumers exactly what they need to conserve energy, and how much money they will save. Consumers respond much better to the concrete “you’ll save $10 a month on your utility bill if you do this” than simply “Do this and you’ll save.” And if you’re launching an ad campaign focused on conservation, convey the emotional driver beneath the “save money” message, such as, “get more peace of mind” or “gain some control” in this economy.

The good news from this recession–perhaps the only good news–is that consumers are primed to hear how they can save energy. Now, more than ever, is the time to get consumers the information they need and incentives (rebates, etc.) to take action. Our studies show they’re ready to listen.

About the Author:
Suzanne Shelton is president and CEO of Shelton Group in Knoxville, TN, an advertising agency that is entirely focused on motivating mainstream consumers to make sustainable choices. The firm tracks consumers’ attitudes, beliefs and behaviors through four annual, proprietary studies: Utility Pulse, Eco Pulse, Green Living Pulse and Energy Pulse®.

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