Having never worked in Texas, I was delighted to be part of this year’s Texas Energy Summit and to meet some of the key players, from new entrants to some of the longtime movers & shakers.
Among the latter, Houston Mayor Sylvester Turner opened the 2018 Texas Energy Summit with an inspiring expose about why Houston is focussed on rebuilding a more resilient city for the future after Hurricane Harvey in 2017, rather than just replacing & repairing what was lost.
With 365,000 homes damaged across 41,500 square miles and damage estimated at $125 billion, Turner and other Houstonians regard Hurricane Harvey as a much needed wake-up call.
Hurricane Harvey was Houston’s third so-called “500-year” flood in as many years. While there was relatively little done following the first two events to make the city more resilient, Mayor Turner now considers the current approach unsustainable, given the possibility that the next “500-year” storm may be just around the corner.
This explains why Turner has emerged as an outspoken advocate of climate action, speaking at the Global Climate Action Summit earlier this month in San Francisco, co-chairing Climate Mayors (a group of over 300 mayors of cities from coast to coast working together to strengthen local efforts for reducing greenhouse gas emissions and to support efforts for binding federal and global-level policymaking) and announcing Houston’s Climate Action Plan. As Mayor Turner put it:
“You can be the energy capitol of the world, and still acknowledge that climate change is real.”
Ninety percent of Houston’s energy already comes from wind and solar sources — including the recent launch and expansion of the City’s 50 MW solar power purchase agreement — and Houston has reduced municipal greenhouse gas emissions by 35% since 2007.
Transportation and residential buildings are among Houston’s top three sources of greenhouse gas emissions — both areas where the decisions of individual consumers matter.
Do Texans care about energy efficiency?
In a panel session on “Smart Home Innovation and the Texas Retail Energy Market”, Enervee unveiled new consumer research on the attitudes of Texans with respect to the efficiency of appliances and vehicles they buy for their families.
The bottom line? Texans care about energy efficiency.
A whopping 83% of Texans think it’s important to buy energy efficient appliances for their home that can save them money, 20% higher than the national average, and 29% think it’s extremely important.
Unfortunately, consumers in TX don’t yet have a good way to compare products based on their energy efficiency. But if they could see that a highly energy efficient appliance was no more expensive to buy, and would save them money over its lifetime, 95% of respondents would be likely to buy the efficient product, 69% extremely likely — which is over twice as many as we found in our US national survey.
This is particularly important, because 77% believe that energy efficiency comes at a higher price, which is often not the case.
Given that any consumer is typically only in the market for a single product, it’s almost always possible to find a super-efficient product at a retail price point that can compete with the cheapest models, particularly if operating costs are also taken into account. We find that when a zero to 100 relative energy efficiency score is added to the shopping experience, we’re able to dispel the lay theory that more efficient equates to more expensive — with the result that people choose more efficient products to meet their budgets.
The same holds true for cars. 88% think it’s important that their next car is economical to operate (in terms of low fuel costs) and 45% care if their car is zero-emission or eco-friendly. Texans appear to ascribe greater importance to fuel economy (and less about emissions) than the US as a whole.
This desire to purchase cars with low fuel costs explains why 89% would find an online tool to compare different car types (diesel, petrol, electric), in terms of purchase price and running costs useful (over half “extremely useful”). When such a choice engine is available, car shoppers may discover that electric vehicles deliver lower fuel costs than the internal combustion vehicles that they’re familiar with.
This points to an opportunity to capture market-based energy savings and stimulate the adoption of EVs to advance transportation electrification by providing shoppers with choice engines like those common in other sectors and now available to support energy-related buying decisions.
Consolidated Edison is just one example of a utility providing their customers with efficient product, solar and vehicle decision support.
Could greater promotion of energy efficiency be a differentiator for Retail Electricity Providers?
We also asked people who they trusted the most to provide accurate information about how much energy an appliance or product uses, including Retail Energy Providers (REPs). Although there were mixed views in the audience about how trustworthy REPs might be perceived to be, they ranked second (21% most trusted), behind manufacturers (34%), just nudging out the government (20%), with only 10% putting their trust in product retailers.
So, REPs may be a trusted source of advice, but are they doing enough?
Over 70% of Texans said “no” (36% strongly disagreed that they were doing enough), specifically with respect to helping them understand the benefits of owning an electric vehicle. One respondent commented: “This survey made me wonder WHY I never hear anything about eco-friendly cars from our local energy company.”
So there’s clearly an opportunity – in fact, a consumer call to action – for Retail Energy Providers to help customers make better energy-related buying decisions.
We also have data from studies of existing online utility marketplaces that many customers walk away feeling better about their energy company after visiting the marketplaces. Because they make a stressful, unfamiliar buying decision easier.
This is the kind of result that can encourage customers to stay with you – and the many new touch points offered by intervening in the consumer shopping journey can lower acquisition costs.
What’s the potential for market-based energy savings in Texas?
We know that by making efficiency visible and actionable to consumers, in particular with the zero to 100 Enervee Score, double-digit energy savings can be achieved, without mass market incentives.
And we’re beginning to obtain field data from some of our longer-running utility deployments, such as the PG&E Marketplace, launched in 2015. If we assume that the same results could be achieved in Texas per residential energy customer as were achieved by the PG&E platform on an annualized basis, a single year of platform deployment in TX could yield the following gross lifetime savings for residential customers:
- Electricity: 80–230 GWh
- Demand: 14–38 MW
- Natural gas: 5–14 million therms.
What remains unclear to me following my time at the Texas Energy Summit is the best entry point to deploy such market-based solutions in Texas. Although utility companies have demand and electricity savings requirements under an Energy Efficiency Resource Standard, and they fund standard offer programs executed by REPs and other third parties, measures involving “plug loads” (equipment or appliances that are plugged into standard electrical outlets) generally are not permitted by the likes of Oncor and CenterPoint.
This means that plug load end-uses responsible for roughly one-third of total energy bills (and between 40%–50% of electricity bills) are excluded from Texas standard offer efficiency programs.
What about the market transformation pathway? Certainly, eliminating one of the most pervasive and persistent barriers preventing private investment into efficient technologies – by making efficiency visible and actionable to consumers – can transform the market.
And there is perhaps one other opportunity…tapping into the motivation of local government climate leaders, like Houston Mayor Turner.
One of the simplest ways to engage all citizens in reducing their carbon footprint is to empower them to make better buying decisions. Texans make roughly 190 million energy-related buying decisions annually, everything from appliances and electronics to vehicles and water heaters.
Nudging these 1-time buying decisions towards more efficient choices will save energy and cut bills over the lifetime of the product – not to mention avoiding greenhouse gas emissions. And it can be done through efficient markets, rather than subsidies. Texas Style.