Online shopping, efficient choices and private investment poised to expand the impact of low-income energy efficiency budgets
Far too many Americans are having to choose between heating their homes to a comfortable temperature, putting food on the table and paying for medication. The cost of energy that wealthier folks take for granted represents a real burden for low- and moderate-income households. The 22.9 million households with annual incomes under $20,000 spend over 7% of total income to pay energy bills (and the 27.3 million with incomes up to $39,000 spend 4% on energy).
While existing bill subsidy and energy efficiency programs help, roughly one-third of U.S. households still reported facing a challenge in paying energy bills or sustaining adequate heating and cooling in their home .
At Enervee, we’re excited about opening up the retail product channel to modernize low-income energy efficiency programs and reach more people in need. It’s something that we’ve been working towards for several years now and we recently had the opportunity to test our capabilities, in partnership with AEP Ohio.
Rather than relying on bill subsidies or traditional energy efficiency programs under which a limited range of products is installed for free in people’s homes, with little choice, AEP Ohio’s online retail low-income pilot program gave customers the opportunity to select from among four leading smart thermostat models and purchase them online, with an instant discount of $75 provided by the utility, leaving copays ranging between $32 and $60.
This program was delivered using Enervee’s choice engine platform, the Enervee Marketplace, in partnership with Lightbulbs.com, Ecobee, Emerson, Google Nest, and Greenlite Lighting Corporation, demonstrating the effectiveness and feasibility of functionality new to the energy sector:
These measures leveraged an average of $0.85 of new private investment for every incentive dollar spent, to maximize the impact of utility efficiency program spending.
The AEP Ohio online retail product pilot not only demonstrated new technology; it also provided the following valuable utility customer feedback:
While the discounted price was universally appreciated, half of respondents also said the selection of products to choose from and the convenience of online shopping were things they liked best about the program. These features are new in the low-income efficiency space.
While the pilot numbers were small, these results suggest that we are onto something: Empowering low-income customers to buy efficient products themselves resonates.
With the success of this pilot, two complementary retail product strategies for the low-income segment have been revealed:
Efficiency doesn’t have to cost more, and a series of randomized controlled trial experiments has documented that the presence of the zero to 100 Enervee Score leads consumers to make more efficient product choices, and that personalized energy bill savings information is particularly salient and impactful for low-income shoppers. Both of these levers are integrated into Enervee’s online choice engine platform.
With a retail product approach, we are able to address the ubiquitous plug loads – appliances, electronics and other gadgets that plug into electrical outlets – that are a major contributor to energy bills across all income groups, accounting for roughly 1/3 of total energy costs (or 40% to 50% of electricity bills).
Plug load efficiency is notoriously difficult to address with traditional incentive schemes, and few are included in low-income programs.
We look forward to working with utilities and governments to roll out these new capabilities and offerings, making 2020 the year of empowering low- and moderate-income customers to shop energy smart at scale!
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