The Energy Efficiency Residential Pulse Check Study conducted on behalf of San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison was published last month. It was undertaken by Opinion Dynamics (ODC) to fill gaps in existing knowledge about residential customers to assist program planners and third-party implementers to develop more effective residential offerings for customers.
Here’s my take on some key nuggets on program gaps identified by ODC and how Enervee is addressing them:
#1 Capture customer attention when they’re in the market for equipment replacement. “Interviewees said a large motivating factor for customer decision-making related to new equipment purchases is when current equipment reaches its end of useful life or ‘breaks’. Customers want a replacement ‘right now’ rather than later.” Tapping into natural replacement cycles is one of the best strategies to achieve cost-effective energy savings at scale (and roughly 50% of major appliance purchases are meanwhile made online). Enervee’s California Marketplace is available 24/7, with quick delivery times from our retail fulfillment partners, including equipment like heat pump water heaters that require professional installation.
#2 Prioritize investments in search engine marketing to reach customers in the market for new equipment. The modern buying journey inevitably begins online. The Pulse Check survey found that the top resource customers most frequently reference when purchasing HVAC and water heating equipment was “general web search”. Enervee digital marketing services have proven highly effective at driving in-market shoppers to our online marketplaces, in cooperation with our partners. The importance of web search and online retail is even higher for product categories like refrigerators that don’t require professional installation. Yet utilities are often reluctant to engage in the type of high-frequency marketing demanded by the online retail setting, and regulations can interfere with effective marketing strategies like use of Google Shopping feeds.
#3 Address the cost barrier with incentives and/or financing. “The incremental cost of efficient products and the lack of access to (affordable) capital are both common barriers among residential customers.” Traditional energy efficiency rebates at levels that are cost-effective under California regulations do not meet this need. The report recommended bundling multiple funding/incentive sources, incorporating the recent influx of federal and state funding for energy efficiency upgrades, as well as financing, to mitigate upfront cost barriers for customers. Enervee’s marketplace platform does just that, automatically serving up eligible instant rebates, partner discounts and financing as a payment method at the online point of sale. We’re seeing over 80% of major purchases financed, and underserved customer segments are able to afford most types of efficient appliances without any incentives at all.
#4 Address the “hassle factor”. The ease in purchasing, installing, and using a technology is important when making replacement decisions. “Programs need to provide easily accessible information on equipment options, costs, and benefits at the places where customers are currently researching options and purchasing this type of equipment” (see next point). Enervee’s consumer-facing marketplaces were designed from the ground up with behavioral science insights in mind and provide shoppers with everything they need to quickly make energy efficient purchases, from personalized total cost of ownership and bill savings estimates, to buying guides and eligible incentives and financing – with the ability to bundle installation and other services into the online transaction. As a result, consumers make better purchases faster. We’re also seeing great uptake of used appliance recycling services, complementing energy savings to deliver more greenhouse gas emissions reductions.
#5 Program awareness is relatively high in the residential market, but participation is low, partly because incentives are not high enough for customers to afford equipment or the equipment customers need is not covered by programs. This is one of the most important findings in the study. The regulatory framework needs to facilitate the types of programs that the market is demanding to overcome barriers and steer program dollars to them. Traditional rebates are no longer widely available and those that are by and large fail to overcome financial barriers for those most in need. The report mentions financing options (e.g., GoGreen Home, which is a loan guarantee program to facilitate private lenders to extend credit to underserved borrowers) as an alternative to traditional rebates. Enervee is seeing an overwhelming response to our instant online Eco Financing program, which does not rely on traditional financial incentives. We also believe that more energy efficiency dollars need to be available for equity and market support programs, less for traditional resource programs (at least under the current cost-effectiveness regime).
#6 The types of customers not participating in EE programs are often renters, hard-to-reach, located in disadvantaged communities, or low-to- moderate income. While the study was not focussed on these target audiences, this is another area where Enervee’s marketplace programs with Eco Financing in California and elsewhere have proven highly effective. In a recent presentation at the Behavior, Energy and Climate Conference, we cited some data on the inclusive nature of our online marketplace programs in California and New York:
- 48% in disadvantaged community
- 75% income-constrained
- 55% credit-challenged
- 45% renter
These results should come as no surprise. In fact, Enervee’s online marketplace solution was designed precisely to overcome barriers that prevent people from following through on their intention to buy clean and energy-efficient products for their homes. According to the ODC study:
“...the Enervee Marketplace taps into natural replacement cycles and eliminates barriers to energy-efficient one-off appliance purchases made at retail by both homeowners and renters. Enervee's program relies primarily on Eco Financing to eliminate financial barriers but integrates point-of-sale instant heat pump water heater incentives provided by the TECH/SGIP programs. As a result, the program is demonstrating its ability to reach underserved customer segments, as evidenced by GoGreen Home reporting.”
A decade ago, we realized that there was a great deal of remaining plug load and appliance potential, despite 30 years of energy efficiency programs. The 2021 Low-Income Potential & Goals Study found that 57% of electric savings potential in 2030 was associated with appliances and other plug loads, not the least because such measures generally are quick and easy to install (don’t require professional installation) and, for renters, don’t depend on building owner authorization. We now have all the pieces in place to convert that potential into energy, bill and climate savings.
Enervee's key takeaways from this study are:
- The need for regulators to allow increasing investment in equity and market support programs;
- The tremendous opportunity to scale the impact of statewide GoGreen Home-backed point-of-sale Eco Financing. This can be accomplished by ramping up marketing; expanding to solar/storage/EV charger concierge services; better integration with income-qualified programs; and leveraging the statewide online marketplace as a delivery channel for state and federal rebates and/or interest rate buy-downs at the point of sale and to support market transformation initiatives.
With large new funding sources and incentives becoming available in 2024, we are on the cusp of offering a truly integrated platform to enable all consumers to make better buying decisions.