How consumer understanding is key for utility engagement

Energy management programmes continue to be proven methods of flexibility for utilities. And tapping into the potential from residential- and business-side consumer engagement becomes an ever more attractive avenue. But Sean Layerle of CInsights warns that, before anything, understanding what is salient for the consumer needs to be a priority.

Participation in these advanced digital energy management programme opens new doors for utilities to a source of consumption management, whether from aggregated assets such as heat pumps or the use of an electric vehicle to balance the power grid as a battery on wheels.

However, their potential has not been fully tapped into, because their importance is not yet understood by the end customer.

For Layerle, who is the Managing Director of France-based boutique consultancy CInsights, establishing what is salient for consumers should be viewed as a lighthouse for utilities that seek to tap into the potential that such consumer engagement provides.

As energy systems become more connected, how has the position of the consumer changed?

From my point of view, the customer's position has never changed. They've always been at the centre.

In a way, the energy sector has been looking at the problem from the wrong angle. It's the sector that's been going through a revolution and there’s been this ‘bubbling’ around the customer about what and where their role is.

The dust has yet to settle though around the questions of what actually engages the customer and which insights are the most meaningful for them so that they can better optimise their energy usage.

What's made all of this significantly more complex for energy sector players is that, while this dust hasn't settled, more use cases are being thrown into the mix every year, whether from electric vehicles or demand side flexibility, or the growth of renewables and residential solar and storage.

So while the customer has always been there, the sector itself hasn't quite figured out how to position itself around them.

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Why do you think that is?

What we've become convinced of is that it's due to the DNA of the sector.

The energy sector by and large has a very technical infrastructure and data-strong DNA.

Because of this, the comfort zone of the sector is to look at infrastructure solutions, technical solutions, smart home solutions or algorithm solutions to answer the question of consumer engagement. This compounds when you consider the abundance of devices and insights that one can find that already have very precise data science behind them.

But the piece that's missing in our view is the linkage between all of this abundance of technical ideas and solutions, and what is actually salient to an average user.

Take for example a digital product for a building facility manager. Someone who manages a university campus or a big office building has an abundance of digital tools available to them that give them all kinds of insights about their building. Yet many of them are still sticking with their good old Excel sheets, with their notepads or their post-its in the control centre.

There’s been a slower adoption than we would like to see of these digital products and what’s missing has been the bridge between the digital solution and what is actually salient for the end user.

How do we bridge that gap?

To start with, there's a myth that needs to be busted - this notion of ‘educating’ the customer; that educating them will flip this magical switch and the customer becomes super engaged.

We've seen this assumption over and over for years and it just never happens. Not because energy suppliers or energy companies, or even tech companies in the energy sector, are doing a bad job at explaining things. That's not the issue.

The issue is that this approach is akin to screaming into the wind.

Topics are being explained that haven’t been made salient and it’s incredibly unlikely that, as the educator in this scenario, you will have the time and space necessary to explain to an average person the distinction between industry concepts such as TSO, DSO and retailer, for example. These concepts just aren’t part of people's daily lives.

There needs to be an acceptance that not understanding this minutia of detail is okay. The customer doesn’t need to know why there is a time-of-use rate, or even how this might impact national-level grid emissions.

Rather, they need to be aware of the impact at their level, that which affects their daily lives, regardless of broader grid implications.

Enabling this understanding will be key if utilities want to really tap into the potential that consumer engagement can provide.

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What are some of the challenges and opportunities such engagement provides utilities?

There's already consensus on the huge opportunities that smart tech offers, such as flexibility from electric mobility, for example. These are the things that we already understand.

But some of the untapped opportunities are for the players that are going to be able to bridge that gap between digital products and end-user salience.

The players that can acknowledge the data and tech they already have, put it aside for a moment, and then look at how users understand their consumption, will be able to tap into that potential.

And this is the case whether it’s a business user in a control centre somewhere or whether it's a residential consumer.

Take a minute to try and gain a deeper understanding of how these customers perceive their role, how they understand their energy consumption, what is actually salient to them in terms of the impact of their energy consumption and what kind of insights they will pay attention to.

Then start building your products around that, as opposed to what's happening now, which is looking first at available data, followed by features that can be developed based on said data and trying to convince people that these features are useful for them. This is the current pattern and it hasn't been working.

You have significant experience in the US. When it comes to engagement, are there parallels or contrasts between the US and Europe that you’ve noticed?

The US and Europe are apples to oranges.

In the US, by and large there are still regional monopolies with integrated utilities, where the utilities are responsible for production, T&D and retail.

The US has also been much more focused on surviving the energy transition. These legacy utilities have the entire grid to manage, not just the retail portion, which means that the downstream aspects are a much smaller consideration.

The imperatives therefore, are very different compared to Europe.

In Europe, where energy retailers compete almost like mobile phone providers, insurance companies, or banks, the consumer has access to 20 or 30 different options.

Because of this, these companies have different imperatives and are ahead of the US in terms of customer engagement, personalised experiences, and in the question of fostering loyalty with their customers by generating more insights for them.

There’s also room for the US to learn from Europe in terms of innovative use cases, not only on consumer engagement but also on flexibility, grid management and even regional sharing, that is, how distribution system operators share data regionally on common platforms, integrating flexibility into wholesale markets.

So yeah, I think we're quite a bit ahead in Europe.

Sean Layerle will be moderating a panel discussion at Enlit Europe - Customer Engagement: Data-centric? User-centric? Or does the magic lie with both - make sure to register below and attend.