In a world of targeted Facebook advertising and one-click fulfilment on Amazon, the energy sector seems to come from another age. It is the only consumer-facing sector that still speaks in the language of suppliers rather than individuals. And modern consumers are sensitive to this. They switch off. Let us take the Green Deal and smart meters as examples – two flagship programmes that are in some respects leading the world, and yet still require a much smarter consumer proposition if they are to succeed.
Many responses to the first draft of the Green Deal consultation speak of the core issue of consumer engagement. For example, the fact that many people had not taken up the offer of free loft insulation raised alarm for Green Deal prospects. What tipped the balance in favour of people doing so? An accompanying offer to clear the loft. People’s mental association with their lofts was not energy saving – it was junk.
The delivery of the Green Deal as a whole is too couched in terms of future gain, without taking into account consumers’ present considerations. Even the future gains are not specific enough to encourage participation. The current methodology proposed in the secondary consultation on assessment methodologies – known as Standard Assessment Procedure – dates back to 1992 and is based on static models applied to different types of housing stock, different areas of the country and so on.
PassivSystems believes there is room for more precise assessment methodologies using more recent technology that will deliver live assessments for individual dwellings. Such an approach would benefit both consumers – by addressing the core problem of individualisation and projected savings – and providers, by offering an increased level of granularity around the Golden Rule (that the cost of interventions should not outweigh savings). We believe that blue-chip consumer brands will require this level of comfort to advance Green Deal offerings.
Only once they have been given an individualised understanding of their own home can consumers be taken on a journey of energy efficiency, grid balancing and energy diversification with any degree of confidence. The second part of this journey is making the energy-saving interventions that have been identified as best for their homes – including those efficiency solutions that are sufficiently robust to allow people to cap usage during peak times (and, hopefully, be incentivised to do so via a Green Deal II for grid flexibility).
The third part is using similarly individualised home and lifestyle information to identify the most appropriate alternative energy sources for each home, homeowner and energy network.
Successfully balancing energy use around people’s lives brings us on to the second policy – smart meters. Smart metering is an ambitious and hugely more expensive programme than the Green Deal. But people already know that half-filling their kettle will consume less energy – being shown how much does not guarantee they will change their tea-making behaviour.
In a deregulated and increasingly expensive energy market, offering meaningful and understandable long-term savings is going to become the key differentiator for companies seeking to attract and retain customers. This means speaking to people in their language. It means addressing cost and convenience for the consumer first, then building both grid-balancing solutions and corporate incentives such as the Energy Company Obligation around those priorities.
Asking people to adapt their homes – and their lives – to one-size-fits-all central solutions is like saying “Ask not what your country can do for you, but what you can do for your country”. Consumers have moved on and the energy sector needs to move on with them, or people will start looking elsewhere for meaningful solutions to their energy problems.
Colin Calder is chief executive of PassivSystems
This article first appeared in Utility Week’s print edition of 23 March 2012.
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