November 1, 2021 / By Oracle

Putting Utility Customers at the Center of Decarbonization Efforts

The focus on reducing carbon emissions has never been clearer. This is especially true in Canada where the country’s Net-Zero Accountability Act, introduced in November 2020, formalized our target to eliminate carbon emissions by 2050.

Many think that achieving decarbonization targets is dependent on replacing traditional generation sources with renewables like wind, solar and hydrogen. Of course, that is partly true. But these supply-side investments will take decades and billions of dollars to play out. To avoid a climate crisis, we also need to be doing things today that will reduce emissions.

The Pathways to a Net-Zero Carbon Economy

When looking at the pathways to net-zero utility emissions, there are essentially four: clean energy supply, energy efficiency, demand flexibility, and beneficial electrification. Three of those are on the demand side. Compared to clean energy supply, these pathways are big, fast, and affordable. And getting the most out of them means getting utility customers to act on an incredible scale. It begs the question though, to what extent can customer action play a role in our decarbonization efforts?

While Oracle Utilities Opower has long believed in the role customers play, it’s important to understand the aggregate impact of their individual actions on decarbonization efforts. The Brattle Group recently conducted a study to quantify that impact. Granted, this data was compiled in the U.S., but there is no reason to think utility customer action won’t have the same impact in Canada.

And what they found is that by 2040, actions by utility customers can reduce nearly two times more GHG emissions than clean energy supply. That’s remarkable. The customer actions determined to be most impactful to reducing GHG emissions are participating in gas and electricity efficiency programs, purchasing an electric vehicle, installing rooftop solar, and electrifying appliances.

Getting Customers to Act

But driving utility customer action is hard. It requires a combination of artificial intelligence and behavioral science. AI is needed to connect with customers on a personal level. For instance, customers with an EV or solar needs to see how that equipment impacts their bill. Vulnerable families need help finding and enrolling in the right energy affordability programs. These are complex tasks.

But there’s another problem here…once you know the customer’s unique situation you still need to get their attention. This is where behavioral science comes in. Constantly testing new principles to influence actions, among all utility customers, is proven to generate high program participation rates.

Let’s examine what that looks like in practice.

Optimized Engagement Strategies

AEP, one of the largest utilities in North America, treats the customer experience as a strategic asset of their business. They recently wanted to increase customer self-service to get more people engaged online and to solidify their role as trusted energy advisor. So, they worked with us to bring artificial intelligence and behavioral science together into the customer experience, which has led to impressive results.

Last year alone, they delivered 20.9 million personalized touch points across web, email, direct mail, and SMS. Most of these interactions are digital, which is great for increasing customer self-service and reducing operating expenses. And we know customers want this because over 60% of them are engaging with emails.

Achieving Energy Affordability for All

Decarbonization can’t just be for the wealthy. With the race to promote expensive EVs, appliance replacements, storage and solar, lower income individuals are expected to feel an outsized burden of higher electricity rates. To truly achieve energy affordability, we must improve the way we identify, reach, and enroll limited income customers in the programs that will most benefit them.

Yet, many utilities don’t understand the full extent of their limited-income populations. For example, Eversource had qualified 230,000 of their 2.4 million residential customers as limited income. By incorporating data and analysis from Opower, Eversource found that, in fact, more than 410,000 of their customers were energy burdened.

Once identified, it’s been historically hard to engage this hard-to-reach population. It requires a multi-faceted approach predicated on personalized messaging through preferred channels.

For Puget Sound Energy, who wanted to target manufactured homeowners, one channel was the Home Energy Report,with customized modules promoting a dedicated page with insights on their usage, information on weatherization programs and a link to a home energy assessment. Customers responded well to this approach. Average monthly savings are 1-1.5%, with 91% of customers reading the reports and 58% finding the tips useful.

Quite simply, we can’t decarbonize without the customer. They are a tremendous, untapped asset. But utility customers have choices to make, the choice to purchase that EV, install solar, insulate their home, or participate in a demand response program. When it comes to reducing emissions in the energy sector, markets, and regulations play an important role, but ultimately you have influence customer action at scale, and nobody is in better position to do that than the utility.