New Best Practices Unleash the Value of Demand Management in Online Utility Marketplaces
The following is an article written by Daniel Talero, Research Analyst at Guidehouse Insights.
Online utility marketplaces have untapped potential in demand side management (DSM). New approaches to incentive targeting, product financing, adoption of Distributed Energy Resources (DERs), and revenue-generating models add undeniable value to utilities in their efforts to achieve savings goals. In particular, traditional approaches to product discounts, access for low-income groups and socket load reduction are being overhauled using improved data analytics and business models. .
New DSM programs leverage replacement cycle data by using upfront product financing, rather than rebates, to increase low-income people’s access to energy-efficient appliances. Additionally, enhanced behavioral techniques amplify the impact of home energy reports on customer engagement and their ability to expand DSM program participation. Marketplaces are also expanding their contribution to DER adoption and diversification of utility revenue streams. DSM officials and their business allies need to closely monitor these and other trends to improve results.
Utility markets are key to delivering a new generation of cost-effective savings at a time when many easily achievable energy savings have been achieved. Marketplaces are key integrations with utility registration systems as portals for customer e-commerce data, facilitating rebate processing (rebate delay), online program registration, targeting incentives, endorsement validation, and other key DSM program metrics. Glimpses of the House of Guides analyzed the many ways marketplaces can differentiate themselves from other e-merchants, and their combination with the structures of the DSM program is one of them. Improved data collection and analysis capabilities are a key part of this integration, and one of their most powerful new applications is home energy reporting.
Home energy reports improve personalization and customer engagement
Improved home energy reporting is a key part of improving customer experience, personalization, targeted incentives, and product sales. In particular, cost-effective, module-level customization is a key enhancement of the new digital home energy reports. This software development challenge is addressed through a more unified configuration, the use of GraphQL query language for web APIs and most importantly, the continued integration of device-level disaggregation data, which Opower has used for years to drive behavior change with utility customers.
Oracle Opower uses this deeper customization and additional messaging for high billing alerts, weekly energy updates, peak management alerts, and its home energy balance. The behavioral techniques employed have also improved beyond social benchmarking to include eco-feedback and gamification, providing additional triggers for behavior change. Utilities markets that capitalize on these capabilities are likely to improve existing pipelines for product purchases, program enrollment, and improved DSM results.
Device financing increases DSM savings through reduced outlet load
Home energy programs improve customer engagement with markets. However, the conversion of market sales depends not only on prices, but also on the ability of utilities to effectively target the end-of-life device replacement market. Appliance plug charges are key sources of new DSM savings and their share of building energy consumption increases as buildings become more efficient, making it a major concern alongside other efforts to improve the energy efficiency of the building stock. This is highlighted in the White House report U.S. Long-Term Strategy: Pathways to Net-Zero Greenhouse Gas Emissions by 2050published in November 2021, which says:
“Buildings and their energy-consuming systems – the electricity used and the fossil fuels burned on site to heat air, heat water and cook – have long lifespans. Therefore, the priority of this decade is to rapidly improve energy efficiency and increase the share of sales of clean and efficient electrical appliances — including heat pumps for air conditioning, heat pump water heaters, electric and induction cookers and electric dryers — while improving energy affordability and equitable access to efficient appliances. »
To capture plug-in savings from device sales in marketplaces, new programs show that a financing model can be more effective than product discounts, especially among low-income shoppers, who make less to reduce initial expenses. Increasing DSM savings among low-income program participants may depend on such an approach. According to 2021 Low-Income Potential and Goals in California Study57% of the electricity savings potential in this demographic in 2030 is associated with appliances and other outlets.
Southern California’s (SoCal) Gas Appliance Program uses “green finance” loans ranging from $200 to $5,000 at point of purchase through the utility’s online marketplace, which is powered by Angry. IInterest rate buyouts for the most financially stressed buyers within income-skilled or disadvantaged communities are also a feature of Enervee’s marketplace, which is unique in offering an online retail financing option that leverages natural replacement cycles in the purchase.
Program results in California are encouraging: SoCal Gas quarterly data shows that 56% of all EcoFinancement loans go to underserved borrowers who make monthly payments instead of one-time purchases. Additionally, the California Alternative Energy and Advanced Transportation Financing Authority, which oversees the evaluation of Enervee Eco Financing, reported that 298 microloans were issued after only 2-3 months of operation. This issuance rate significantly outperforms a comparable traditional lending program, which has seen just 1,709 loans since its inception in 2016. While other results may vary by utility jurisdiction, this funding approach holds promise for DSM programs looking to achieve plug-load savings through the purchase of devices on market platforms.
Improve adoption of DER and create new revenue streams
Marketplaces also have a key role to play in enabling adoption of DER, a key source of new DSM savings. Disaggregated AMI data can improve DER program updating, pre-registration, and category sales through targeted outreach. The application is particularly relevant to electric vehicle charging, as proliferation potentially increases the cost of service as well as the potential for behavioral load management.
Bidgely Charge Disaggregation successfully targets potential buyers of charging equipment as well as peak hour charging customers. The latter allows utilities to reward successful load shifting with paid incentives that can be paid out directly; while the former may be linked to market promotions on smart charging. As part of solar PV programs, Bidgely also supports post-solar installation customer experience, traditionally a key data gap, allowing customers to see their energy production versus utility consumption. This experience can be used to improve marketing and targeting of incentives for rooftop solar PV programs.
Along with improved targeting of DER programs, data can be used across business divisions to preserve and diversify revenue streams through affiliate promotion, especially as regulatory rules evolve. Bidgely platforms offer cross-promotion of services such as window sealing, weather protection and insurance, as well as innovative incentives such as content streaming subscription discounts with Disney+ and Hulu when customers sign up for rates based on the time of use.
This level of sales integration more effectively leverages e-commerce shopping habits and further leverages the sales potential offered by utility marketplaces within DSM. Within the Uplight Marketplace, e-commerce best practices combined with optimized customer experience (CX) also improve product sales and fulfillment rates.
While cross-selling and product bundling is a staple e-commerce technique, reducing friction in the checkout process is also a key driver for Uplight customers through guest checkout and checkout capabilities. single sign-on that do not require customers to create a dedicated marketplace account. . This reduces dropouts and increases conversions. The impacts have been significant, as 25% of shoppers will abandon their cart if forced to create an account, according to Shopify.
Uplight also bundles energy-efficient product purchases with enrollment in the Demand Response Program. Stacking these incentives reduces upfront costs for the customer and provides a simple customer experience. Behind the scenes, data integration with product manufacturers and automated email campaigns support installation, improving fulfillment rates. While shopping for products such as appliances or thermostats improves with these tailored e-commerce methods, they are also highly applicable across the entire DER technology stack, helping utilities expand their load transfer and maximize DSM savings.
A new era for marketplaces
Improved home energy programs, financing appliances in replacement cycles, and more diversified approaches to DER and revenue streams are just a few of the emerging value-added approaches that can be incorporated into utility market platforms. DSM managers and business allies who implement these approaches dramatically improve results and realizing the true value of marketplaces as DSM assets.