A Marketing Challenge for the Electric Utility Industry

nielsen logo“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.

Founder of Earth 2017. Author of The Boomer Generation Diet: Lose Weight. Have Fun. Live More that Jen Boynton, Editor in Chief of Triple Pundit , says is "Written in Bill Roth's lovable, relatable tone. A must read for any Boomer who is looking to jumpstart their health and have fun at the same time. I hope my parents read it. "

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