The efficacy of natural gas utility energy efficiency programs is clear, as detailed by the American Gas Association’s latest Natural Gas Efficiency Programs Report: Natural gas utility spending on efficiency programs reached nearly $1.6 billion in 2020, and that investment is showing huge benefits, both in terms of reduced greenhouse gas emissions and lower bills for customers. States also recognize energy efficiency as perhaps the lowest-cost tool for reducing GHG emissions.
Going beyond structural energy efficiency programs, some natural gas utilities are engaging their customers with behavioral energy efficiency programs and predictive analytics. The goal is to locate and reach their most vulnerable (limited income) customers, confirm eligibility and then enroll them in programs that can help with both bill assistance and energy efficiency opportunities.
Two types of customer-focused energy efficiency programs are predominate among utilities: structural energy efficiency and behavioral energy efficiency. What’s the difference?
SEE programs begin with an energy audit of the customer’s home and recommendations for making structural changes, such as reinsulating the house. Energy savings are generated over long periods of time—up to 30 years depending upon the structural changes made and their initial costs.
BEE programs begin with a home energy report, which applies behavioral science to nudge customers into energy-saving actions. The report provides personalized insights on energy consumption and simple steps customers can take to reduce usage and save money. Although the energy savings per participant are lower than with SEE programs, those savings begin immediately. Further, BEE programs can operate at scale and apply to all customer segments—at no cost to the customers.
Changes in human behavior can deliver immense reductions in GHG emissions. While some changes may seem minor—such as shifting thermostat settings or utilizing sensors and timers—when done at scale, these actions deliver an outsized contribution to climate mitigation strategies at a cost point less than one-quarter of other energy efficiency programs. Behavior change is accessible to all and, when rapidly scaled, provides these quantifiable benefits immediately.
In 2020, the Analysis Group published a study that evaluated the relative effectiveness of different types of energy efficiency programs in delivering the highest GHG reduction value.1 It determined that BEE programs achieve the same amount of carbon dioxide emission reductions as SEE programs in less time and at a lower cost. How? Behavioral programs employ applied artificial intelligence, data science, human-centered design and customer experience automation to influence customer actions on a broad scale.
Quality of content is critical when a utility is engaging with its customers. Messaging that’s generic and redundant—with no personalization—fails to provide much value. BEE programs following that formula will often realize a similar fate: ineffectual results. To capture customers’ attention and achieve long-term energy savings, program managers need to talk to their customers as individuals, sharing highly personalized content that mirrors customers’ experiences and preferences. Effective customer communications work by influencing people to act without even thinking about it.
What does behavioral science add to the equation? It’s all about understanding:
The unique motivations of individual people
What drives customers to respond to certain insights and/or prompts
Social norms and priorities How does AI help put behavioral science to use? It can:
Segment customers/granular archetypes more intelligently.
Leverage a wider set of data points in finding patterns.
Adjust its algorithms as the world and customer needs change.
Reducing GHG emissions and customers’ bills is dependent on getting customers’ attention and getting them to act. Combining behavioral science with AI is a winning equation.
The most effective BEE programs drive more than just energy savings. By capturing customers’ interests across different content channels—mobile app, website, social media, e-mail, phone and mail—effective BEE programs also prime customers to notice and respond to subsequent utility communications and participate in other energy efficiency programs. Coupled with highly targeted messaging, the result is a powerful marketing engine that improves a utility’s entire demand-side management portfolio.
If everyone just wanted to use one channel, this would be simple. But they don’t. There are distinct generational differences with respect to communications channel preferences.
The right customer platform allows utilities to deliver flexible and customized engagement through all channels. Customers can define how and when they would like to receive communications from their utility, as well as what type of information they want to receive. With a view of customers’ real-time preferences—in a centralized point within the utility—teams across the utility can work together to offer a more personalized service to customers on the channels those customers prefer, in areas ranging from energy efficiency to outages to billing payments and more.
In addition to driving offline behavior, BEE programs also motivate customers to engage online, raising their likelihood to log into the utility’s web portal or complete an online audit, for example. These tools give customers more information about programs and ways to save energy and money, and they benefit the utility by shifting customer interactions to lower-cost channels.
The outcome of this more personalized engagement is increased customer satisfaction, increased program signup and, in competitive markets, increased customer retention.
Especially for limited-income customers, the first step for utilities is to apply predictive analytics to utility, third-party and customerprovided data to identify the customers most in need. The utility can then bring together both bill assistance and energy efficiency programs, confirm a customer’s eligibility and show each customer their best first step toward achieving energy efficiency.
These behavioral strategies, along with predictive analytics, also help utilities craft outbound, personalized messages to reach customers with money- and energy-saving opportunities, making it even easier for them to act.
Sending the right messages to increase customer awareness and adoption is an important piece of this equation, particularly for financially vulnerable customers. BEE programs allow utilities to reach customers on a more personal level with updates such as account status alerts, combined with program offers, before customers enter collections or disconnect, along with weekly energy updates, high bill alerts and other ongoing engagement. Customers can then take the next best steps to increase their savings and avoid service disruption.
1. Utility energy efficiency program performance from a climate change perspective. Analysis Group, August 2020.
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