People who work in the energy industry think it's pretty important that the rollout of "smart" technologies for energy distribution is proceeding rapidly, worldwide. In the US, it is now estimated that smart meters have been installed at about 20% of all households, with millions more being added this year.

But the general public just doesn't seem to be all that interested.

Market Strategies' recent national Consumer Pulse survey on behalf of the Smart Grid Consumer Collaborative (SGCC) reveals that roughly half of all US adults say they have never even heard the terms "smart meter" and "smart grid," while another one-fifth say they have heard the words but don't know much about their meaning.

Can you imagine them saying the same thing about smartphones? How can a fast-proliferating new technology like smart meters go largely unnoticed by the general public?

No Marketing Required

The answer seems to be that the benefits of smart meters and the smart grid improvements that surround them haven't had to be sold to consumers. With government, regulatory and utility approval, work begins—sometimes accompanied by a relatively low-budget effort to reassure consumers that the new technologies won't be harmful and can actually provide some meaningful benefits.

Is this good enough, or is this a missed opportunity? Utility executives are talking about a new era of increased customer engagement, driven by smart information and services, but so far it seems many customers have tuned out.

Smart grid and smart meter implementation calls for utilities to make huge investments at a time of relative economic hardship. Although our research shows that most consumers who know about smart grid and smart meters tend to be favorable toward the new technologies, too few understand their potential benefits.

Consumer Benefits

Building consumer understanding, support and true engagement is one of the most important challenges of the next decade. Some argue that the best approach is a singular message focused on how consumers can use smart meter information to reduce their electricity costs.

While it's true that everyone wants to save money, an important finding of the Consumer Pulse research is that most consumers recognize the importance of a wide range of smart grid and smart meter advantages, including improved reliability and environmental benefits. About 80 percent say that each of the following seven benefits is important to them:

1. A smart grid senses problems and reroutes power automatically. This prevents some outages and reduces the length of those that do occur.
2. A smart grid helps meet growing demand for electricity while limiting the need to invest in new power plants.
3. A smart grid delivers the quality of power necessary to run our increasingly digital homes—power with fewer sags, spikes and interruptions.
4. Smart grid reduces greenhouse gas emissions by making it easier to connect renewable energy sources to the electricity grid.
5. Smart grid and smart meters help consumers save money by providing near-real-time energy usage information and the ability to manage electricity use.
6. Smart grid and smart meters make it easier for utilities to offer new kinds of rate plans to help customers manage energy usage and cost—for example, by shifting some types of usage to times of day when electricity costs less.
7. Smart meters eliminate the need for meter reading—instead, usage information is transmitted directly to the utility for timely, accurate billing. There is never a need to send an estimated bill to the customer.

In fact, it may surprise you to learn which benefit people choose when asked if they would be willing to pay for it: "It is important enough to you that it would help justify a total extra cost of $3-$4 on your monthly electric bill to implement smart grid and smart meter improvements." More than for any of the other benefits tested, people say they would be willing to pay for: "Smart grid reduces greenhouse gas emissions by making it easier to connect renewable energy sources to the electricity grid."

Understanding Smart Consumers

Another important finding of our work with SGCC is that it's very worthwhile to use segmentation analysis to understand how different groups of consumers react differently to the introduction of these new technologies. One clear example: They value different smart technology benefits.

While it is true that, overall, more consumers say they are willing to pay for improved ability to connect renewable resources to the grid, there are other people who do not value this benefit. Based on the SGCC segmentation framework, developed through analysis of Consumer Pulse survey data, one segment is most willing to pay for the opportunity to save money by using near-real-time usage information, while another is most willing to pay for improved reliability.

The segments also differ along many other dimensions that are actionable for anyone who wants to communicate with them effectively and design programs and services to encourage their engagement. These include:

• Energy efficiency behaviors and attitudes
• Energy usage patterns
• Home energy management
• Environmental behaviors and attitudes
• Technology adoption
• Shopping behaviors and choice drivers
• Perceptions of energy companies
• Lifestyles and values
• Income levels, age and other demographic characteristics

Click here to learn more about this valuable segmentation framework. We've also developed a short battery of questions that can be added to any survey to analyze the results through the lens of the SGCC segmentation structure.

Next Steps

Market Strategies continues to work with SGCC, the Edison Electric Institute and our other energy clients to improve understanding of how consumers and businesses are reacting to the important technology changes being introduced in the energy sector.

In one current example, we are working with SGCC on a qualitative project where we will record in-depth interviews to illustrate the key characteristics, attitudes and preferences of each of the five segments. Edited video will bring the segments to life "in their own words." Watch for the results in June.

Notes on Survey Methodology

The initial SGCC Consumer Pulse survey on which the segmentation framework is based was conducted by telephone from August 15 to September 6, 2011. A national RDD (random digit dialing) landline and cell phone sample was used. To qualify, respondents had to be over the age of 18 and a head of household. The data were weighted by age, ethnicity, gender and region to align with national population parameters. The margin of error for the total sample size of 1,200 is ± 2.8 percentage points at a confidence level of 95%.

Data on consumer awareness of smart grid and smart meters are from Wave 2 of the SGCC Consumer Pulse, conducted by telephone from November 12 to December 6, 2011. Again, a national RDD landline and cell phone sample was used; to qualify, a respondent had to be over the age of 18 and a head of household. The data were weighted by age, ethnicity, gender and region to align with national population parameters. The margin of error for the total sample size of 1,003 is ± 3.1 percentage points at a confidence level of 95%.

Market Strategies will supply the exact wording of all survey questions upon request.

Contact Jack Lloyd for more information.

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