A Marketing Challenge for the Electric Utility Industry

Triplepundit logo2 According to the 2009 Nielsen Energy Audit, 95% of households are willing to change their energy consumption in order to reduce costs. There is an opportunity for utilities to connect with that audience if they use messaging that conveys the cost-savings and non-green benefits of energy reduction.

“Ninety-five point six percent of households are willing to
change their energy consumption behavior to save money on their energy
costs.” — Jonathan Drost, Nielsen Account Executive-Utilities

Drost shared with me this finding from the 2009 Nielsen Energy Audit
(pdf), during a phone interview late last month. “This survey strongly
suggests the timing is right for utilities to engage their customers
with green marketing initiatives,” he said. “The survey points to
utility customers being driven by the desire to lower their costs and
to have increased control of their energy costs.”

This survey also identifies a glaring challenge confronting
utilities. “Eighty percent of households agree the price they pay for
their home energy is too high,” he said. However, the electric utility
industry is projecting 3 to 4 percent annual rate increases. Electric
utilities join the healthcare industry as uniquely increasing prices to
consumers during these recessionary times.

In an effort to align with their customers, Drost has seen utilities
dramatically increase their outreach programs that engage the consumer
on the issue of controlling costs through energy efficiency. “Utilities
that are launching green marketing initiatives like energy efficiency
programs that inform and provide actionable consumer solutions are
addressing their customers’ key drivers,” Drost noted.

At the same time utilities confront a strategic cross-road where
helping consumers reduce their electric bills negatively impact utility
revenues. Except for the five utilities in the United States that do
not have their profit calculation tied to their financial investment in
power plants, the utility industry faces a profit scenario where
helping customers to consume less translates into lower future profits
if the demand for new power plants decline. Further compounding this
scenario is the potential of customer-owned rooftop solar power
achieving grid price parity, which the Neilsen survey suggests could be
hugely attractive to consumers searching for both lower costs and more
control.

But sustainability also offers revenue growth opportunities for
electric utilities. One such area is the plug-in electric hybrid
(PHEV). The November issue of National Geographic features The Big
Idea: Electric Cars with a diagram showing an electric car fueled with
coal-fired electricity producing a lower level of greenhouse gas
emissions than the average American gasoline-fueled car. And the cost
comparisons are not even close with the gasoline car costing 12 cents
per mile compared to the 2 cents per mile for a PHEV. This diagram also
notes that a PHEV fueled with renewable energy would have zero
greenhouse gas emissions.

Green entrepreneurship is another emerging growth trend that Drost
sees, as smaller-sized companies fulfill the consumer’s search for
lower costs and more control. “I am seeing the emergence of companies
that specialize in a specific consumer-oriented solution like home
audits, weatherization, higher efficiency heating and cooling systems
and of course, solar. These companies are experiencing significant
growth by helping customers save money.”

Separate from the Nielsen work is supporting data from a survey of
100 professionals representing key areas of the solar industry’s supply
chain. This research was conducted by Droege & Comp., an
international management consultancy, and Gibbs & Soell, an
independent global public relations firm. The survey found that the
vast majority of participants were projecting revenue growth even in
this recessionary environment with almost a third projecting 25 percent
or higher annual revenue growth. Interestingly, when asked to list the
barriers to growth, the survey participants identified a lack of
financing and little support from utilities.

In The Secret Green Sauce,
I profile actual businesses growing green revenues centered upon the
customer mantra of “cost less, mean more.” Surveys like that developed
by Neilsen identify the opportunity for creating this type of solution
within the electric utility industry.

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