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There is a growing misalignment between people’s stated intentions, e.g., their desire to be more environmentally conscious or to save energy, and their actual purchasing and consumption behavior. A primary driver of the trend is a green gap between terms and messaging commonly used in the energy and environment space and consumer’s actual understanding, acceptance and perceptions of value connected to these terms.
EcoAlign, a strategic marketing agency focused on energy and the environment, conducted the first EcoPinion survey representing a total of 1,000 online interviews taken the first week in November 2007. The sample is balanced to match the U.S. population by age, gender, region and ethnicity. The results confirm the growing green gap in communications and messaging.
Confusion and Lack of Understanding around Language
In publications such as EnergyPulse and many others, terms such as energy efficiency, energy conservation, demand response, clean energy and smart energy are used all the time. However, key findings from the EcoPinion survey found:
1. Most consumers can’t articulate the difference between the phrases “energy conservation” and “energy efficiency,” while only 13% of respondents think energy efficiency has to do with saving money or cutting down on fuel costs.
2. To conserve energy, a quarter of consumers try to buy energy efficient products, and 19 % lower their thermostats, with women more likely to take actions around conserving energy.
3. Only about one third, 30%, of Americans understand the term “smart energy” and about the same amount, 32%, say they are not doing enough in terms of “smart energy.”
4. One third of respondents do not know what “clean energy” signifies.
5. 41% of consumers polled don’t know what “demand response” is, but nonetheless find it un-popular (44%), annoying (42%) and un-helpful (40%).
Broad Range of Meaning Driven by Demographics and Other Factors
When asked to select adjectives that can be used to describe a commonly used term or expression in the energy and environment space, the results were illustrative of a broad range of perceptions for most Americans over what these terms and expressions meant to them personally. For example, almost an equal number of survey respondents felt that energy conservation was “old fashioned” and “futuristic.”
Certain mircotrends are discernible when breaking out the responses along demographic and income levels.
The younger set, age 18 to 34, tend to use the words “conserve,” “efficiency,” and “waste less” in their responses. However, it is members of the 55+ group that, when asked what they are doing, have more concrete answers and are less likely than their younger counterparts to answer “nothing.”
Additional differences emerge among the age groups, and even regionally, when responding to the question “what are you personally doing in terms of (energy conservation / energy efficiency). In both cases, the 55+ age group is significantly more likely to mention conserving or saving fuel by driving less, driving hybrids or driving slower than the speed limit. They are also significantly more likely to mention lowering the thermostat or using less air conditioning. It would seem the 55+ demographic is more likely to take action, while the younger group is more likely to use “buzz” words and less likely to articulate how that translates into action.
When considering differences between income groups, EcoAlign is starting to pick up some concern between the many Americans that are struggling economically due to a number of factors, including rising energy prices, and the perception that the elites are trying to raise taxes or increase prices due for environmental protection, higher efficiency standards, or other measures that could impact their wallet. More survey work will need to be done to confirm the depth of this concern.
What Does It All Mean?
Language matters. When conveying significance or meaning, language is the basic building block of our thoughts, ideas and expressions.
While there is a level of awareness regarding consumers’ energy and environment footprint, there is confusion and a lack of understanding surrounding the language and terms used within these industries. Perceptions regarding energy conservation, efficiency, smart energy and the like are muddied by consumer ignorance and this directly affects consumer-purchasing behavior.
Opportunity exists for companies and utilities to educate and guide consumers in the environment and energy space. By educating consumers about the energy they use, their impact on the environment and what actions they can take, consumers will feel more confident in making changes. Clearly consumers are aware they could be doing more in terms of conservation and efficiency, but they don’t know what to do and they don’t think it will be easy. This is illustrated in the high percentages answering they are not currently doing enough and the low percentages choosing “easy to use” to describe any of the energy terms.
In addition, these changes do not have to be on a large scale. But consumers may not understand this. Only small percentages in this study are aware of, or purchasing energy efficient appliances or light bulbs or using alternative fuel sources. It is EcoAlign’s position that the lack of understanding and education leads to consumer paralysis, but that by tracking consumer awareness, attitudes and behavior and by asking different questions to better understand consumers (and thus communicating with customers differently), the gap between the stated intentions of customers to be more conscious of their energy and environment footprint and their actual purchasing behavior can be closed.
Readers can obtain a copy of the EcoPinion Report at no charge by visiting: www.ecoalign.com
For information on purchasing reprints of this article, contact sales. Copyright 2013 CyberTech, Inc.
I would at least recommend caution in extrapolating such a minimal survey data set to statements like "41% of consumers polled don’t know what “demand response” is, but nonetheless find it un-popular (44%), annoying (42%) and un-helpful (40%)." Of the 59% of consumers polled who DID know what demand response was, what DID they know it as in order to coment so negatively?
Jose Antonio Vanderhorst-Silverio 12.12.07
Jamie, Andrea and Len,
Objective data and subjective perceptions are two realms, which follow very different logics. Objective data can be extrapolated; subjective perceptions cannot in this case.
Jamie and Andrea’s thesis is precisely that “A primary driver of the trend is a green gap between terms and messaging commonly used in the energy and environment space and consumer’s actual understanding, acceptance and perceptions of value connected to these terms.”
By developing business model innovations to integrate demand, 2GR will develop service plans with the needed messaging to close the green gap for customers to make the best decisions about value in the competitive market about the investment and service plan decisions. For example, how much short run demand response and how much long run demand response (demand side energy efficiency) to purchase in the marketplace.
“… Hydro Quebec has decided that the expense of installing the meters would be borne by consumers through higher electricity rates…”
"Time-of-use meters are less about energy conservation and more about raising the cost of electricity to pay for private power generation,"
"There is little evidence that smart meters will reduce electricity consumption and plenty of evidence that prices will increase. The cost of installation alone in Ontario is more than $2 billion," he said. "There really is nothing smart about basing an energy plan on time-use-meters in Ontario homes… That money would be better spent on an effective energy conservation plan."
The lack of a consistent market architecture and design paradigm shift creates such a Babel Tower. There is a need to consider the whole power industry and not isolated incremental shifts like installing “smart meters in all homes in the province.”
Under EWPC, demand integration (as explained in the above post) is about both energy conservation and reducing the cost of electricity by developing demand elasticity with efficient pricing.
There is a great risk that the smart meters bet made by regulators and utilities will result in a price increase for customers. Those risks are better handled through the market by competitive 2GRs service plans that combine interdependent decisions on investments by customers. In addition, instead of installing meters in all homes, it is more efficient to close the green gap during a transition period under competition.
Smart metering just by itself will certainly result in increased costs to consumers. What's not appreciated by many in the electricity industry and in governments i.e. regulators, is that smart meters have the POTENTIAL to enable better consumer understanding of electrical energy use and energy conservation.
If smart meters are implemented together with additional technology to communicate with consumers in their homes, with their utility company, and with demand response systems, they could be used as consumer education tools to achieve far better understanding, more energy conservation behaviours, and more energy efficiencies read lower costs to consumers on balance.
Bob Amorosi, Resident of Ontario Canada
Jose Antonio Vanderhorst-Silverio 12.13.07
Did you see my response on FERC's Demand Response and AMI to what I had written that “I will show that the storage issue is very important to increase the efficiency of the use of energy and to make it less political.” The post ended with:
"It is the need of system reliability that makes the need for Second Generation Retailer - 2GR to optimize customers’ interdependent investments and to bridge the retail market with the wholesale market. Potential innovations, such as the Zigbee options board made by 4C Energy Solutions will have much more opportunities and sooner in the global market under EWPC than under todays slow political market architecture and design paradigm."
Bob Amorosi 12.13.07
Hi Jose Antonio,
I did indeed see your comments, and I think I understand what you are saying.
I can see how it would add to system reliability particularly for energy supply to be able to store electrical energy more easily. But I always assumed that without storage of electricity, the reliability of system supply is provided usually by havng large excess generation capacity that repsonds on demand. I suppose since the cost of building and maintaining excess generation capacity is becoming tougher to afford over time, our electricity system supply reliability is threatened.
As far as EWPC, I am very much in favour of less price regulation if it promotes free markets for consumers. The Zigbee options board for smart meters you mention is intended to enable Zigbee based in-home technology for real-time energy monitoring and education of consumers, customer communication with utility companies, and for connecting to demand response and home automation technologies. But even with energy price controls hindering its advancement as you imply, there is still a growing need to educate consumers and close the communication gap that this article talks about. It's especially true for people combatting climate change and for people looking for ways to participate in it read enable more energy conservation.
Jamie Wimberly 12.13.07
Thank you for your comments and insights. I always enjoy reading them and am glad our article is the focus of some discussion.
I did want to make a few clarifications and comments of my own:
1) I want to assure Len and other readers that the survey is statistically valid, and the survey data set is actually quite rich and not as Len described it as being "minimal." The article only teases out the major findings. The full report and much of the crosstabs can be accessed at no charge at www.ecoalign.com
2) While the concept of demand response is a very important one, and one that we very much support, the survey results are clear that the term currently is not going to get far with consumers. I would also argue that the term, like a lot of industry jargon, creates a mindset that is difficult to break out of when finally focusing on the consumers that will actually adopt it or not.
3) 2GR is an interesting concept, and I believe in customer-generated solutions leveraging communications technologies and next generation networks. However, I do believe that politics will continue to play a major role in regard to outcomes in alternative energy and demand response, especially with the installation of AMI and who pays for that.
Thanks again for your comments.
Jamie Wimberly CEO, EcoAlign An Affiliate of DEFG LLC
Jose Antonio Vanderhorst-Silverio 12.15.07
Hi Bob and Jamie,
With the exception of views about barriers on the political will and leadership required to make it a viable way forward, thanks for praising EWPC. I respectfully disagree on the possibility of taking down those political barriers.
1) The gasoline electricity analogy does not hold.
2) Demand integration is a revolutionary move that requires a paradigm shift. The shift enables much higher value of electricity for customers with less political intervention in the industry.
3) Educating customers under price controls without enabling efficiency will only raise the rates for most customers. That is an expensive way to close the communication gap.
4) Even if the survey is statistically valid, the existence of a revolutionary customer service model based on a discontinuous innovation - such as demand response - makes market research initially invalid.
5) 2GRs will do the job to have consumers change their perceptions and adopt demand response as they lower their costs and/or receive much higher value from electricity. At that time the service model will get better and better as a series of continuous business model innovations and market research will help a lot from there on.
6) AMI can be implemented by 2GRs Enterprise Solutions. If “politics will continue to play a major role in regard to outcomes in alternative energy and demand response, especially with the installation of AMI and who pays for that,” as Jamie stated, great opportunities will be lost and a lot of value destruction will continue to occur.
Bob Amorosi 12.17.07
Jose Antonio, the simple fact that electricity is a commodity of choice for consumers and is usually available on demand means that consumers can and do have a major influence on their total energy consumption, and consumption behaviours over time.
Since energy use is discretional to a large extent with consumers, there is also the desire by consumers to know what their individual buying costs are, as with any other commodity such as gasoline. The analogy with gasoline is admittedly not perfect due to heavy electricity price regulation and the lack of electricity storage, but this does not change consumer's expectations, since there is obvioulsy some relationship between how much energy they use and how much it costs them, with regulated pricing or not.
There's no doubt new technologies such as AMI, smart metering, and demand repsonse systems come at a cost to consumers, particularly as long as energy prices are heavily regulated and there are no improvements in efficiencies either within the electricity system or within consumers' homes... But without better education, better electricity monitoring, and the ability to segregate energy consumption into discrete (appliance) transactions in the home read more technology, the majority of consumers will continue to consume electricity blindly.
If you ask most consumers if they would accept demand response, the majority will oppose it if they are told their utility company will control it. The last thing most consumers want is someone outside their home controlling their environment and private personal choices in consuming energy. A small minority will accept it if they are told it will save them some money on their energy bill, and are at the same time promissed the demand curtailment effects will not be noticed in their homes.
Consumers would however be far more receptive to demand repsonse systems that consumers themselves can set up and control, and can program to their meet their own individual preferences. This arrangement would typically be undesireable to utility companies though because the total energy curtailment realized is far less predictable than if the utility company controls them.
Picture also the ability for consumers to segregate their energy uses into separate appliance transactions in the home. Under this scenario the uneducated consumer could use the information to educate themselves about relative energy uses and costs in the home, and ultimately decide whether to practice more or less energy conservation, in the interest of saving money or benefitting the environment, or both. Heavens, they might even be encouraged to spend more on buying energy efficient appliances once they learn just how much they are spending on the energy for the ones they have. Having the ability to measure this makes calculating the payback period of buying more energy efficient products relatively easy under regulated prices, even for uneducated consumers.
Best Regards, Bob Amorosi
Jose Antonio Vanderhorst-Silverio 12.17.07
Thanks Bob for your interesting defense of education of customers without going through a required paradigm shift of the power industry.
I am sorry to tell you once again that electricity is not a regular commodity like gasoline, unless it meets the requirement to properly managed systemic risk of system failure. Please read the necessary details in the EWPC article Making Electricity a Commodity.
Bob Amorosi 12.18.07
I agree completely that electricity is not a "regular commodity", but consumers do not readily distinguish between regular and irregular commodities, because both types are consumed by their discretionary purchasing activities. Consumers therefore expect the rules of commerce to be the same for both types, rightly or wrongly.
Siince the electricity industry and governments set different rules of commerce for electrictity due to its unique irregularities, it stifles the adoption of new technologies that could enable consumers to behave more prudently and make more intelligent judicious buying choices for electrical energy.
Len Gould 12.18.07
Jose Antonio: I would point out that there is no such thing as a "regular commodity", including gasoline. Roses and fresh poultry have almost the same storageability as electricity but no-one has decided they need to be heavily regulated at point of production. Most people have no idea of the effort that goes into making a poultry processsing plant / delivery system 100% reliable either, they simply expect to be able to choose among all available suppliers on every purchase. Electriciy is a lot simpler to market than that, because there is nothing but price to distinguish Company A from Company B's procuct.
Bottom line is, given presently available digital electronics technology, electricity could easily be competitively marketed with minimal regulation without ANY perceptible disturbance to customers unless they wanted to reduce their costs.
Len Gould 12.18.07
Also, perhaps an electricity marketing system which required a grade 10 physics education to understand (heavens forfend, of course) might make an excellent incentive for schoolkids to start studying a little science again.
Jose Antonio Vanderhorst-Silverio 12.18.07
Dave Stefles wrote the following which should be is in accordance with your ideas.
“Before spending $100 billion to hang more wires across the country, the US should ensure that electricity consumers face real price signals by installing advanced metering technology and by implementing pricing reforms. This technology and pricing upgrade would provide all consumers, and especially residential and small commercial consumers, with the necessary tools and information to make rationale electricity consumption decisions. Only then, when consumers understand the costs and benefits of electricity, will society be able to calculate properly the cost and benefit of new transmission infrastructure.”
“How did we get here? … For many years the electricity industry has operated inside a black box environment. An “omniscient” regulator worked with system engineers to develop the “right” plant and equipment to keep the lights on within a pre-defined failure probability and then computed the “right” electricity rates for all consumers with the help of the utility accountants. Consumers had little or no idea about what was really happening behind their electrical outlets.”
I will try to say what I have written in what I believe is even simpler terms.
The cost of electricity depends on the investments in generators and transportation. Under EWPC 2GRs will drive the process to learn how much generation and transmission investment is needed, taking into account the differentiated cost perceived by customers not having electricity. That is how the systemic risk of failure (not a pre-defined failure probability) will be calculated with market information under EWPC. The optimal is to avoid overbuild or underbuild generation and transportation infrastructure, incorporating demand elasticity (that is driven by the costs of not having electricity the customers).
Buying gasoline you don't need to tell the gas station the cost of not having gasoline. Nor will the gas station discriminate you if you get first to the pump when gas is tank of the station is almost empty. In electricity we are all at the "pump" at the same time, while synchronous operation is about to have the system collapse.
I agree that government can ignore the idea. But it is in the best interest of a any society to try to shoot for maximum welfare. That is what EWPC pricing reform is all about.
In which "store" (pun intended) can I get frozen electricity?
Jose Antonio Vanderhorst-Silverio 12.19.07
Hi Jamie, Andrea, Bob, and Len,
In the old paradigm of non-refrigerated flowers, an irregular commodity, roses spoiled very quickly. For many years now refrigerated roses have become a regular commodity. “FLORATECH tests show that roses refrigerated in their coolers have a 100% increase in their life after being removed from the cooler, versus those which were never refrigerated at all.”
Exports from Colombia and many other countries are flown to the US in the new paradigm. Paradigm shifts make irregular commodities into regular commodities, creating a lot of value in the meantime.
Thin-film solar panels, which can be printed in high-throughput processes could make solar as cheap as electricity from the grid, are being deployed by Nanosolar as central station installations of 1 MW. Even though the solar panel is a distributed technology, the impact of the old paradigm in communication and messaging is great. Please see the article Nanosolar Breakthrough and the Old Paradigm, to confirm that the “energy-making business” is what is positioned in most people’s mind.
If asked about electricity being an “energy-moving business,” how many people will know what the hell that means. The results will be no doubt even worst than those of demand response reported in the above article, as demand response is a key instance of the more abstract “energy-moving business” concept at the time being. Flower exports from Colombia and Ecuador to the U.S. were at some point in time such an abstract concept.
If proven in the field, Nanosolar products have the potential to empower customers as “pro-sumers” that export competitive generation from the homes under the EWPC “energy-moving business.” However, most people can only expect the benefits of net-metering as it is a concept well defined under the old paradigm which is inside the utility box. The EWPC paradigm discoveries are the result of thinking outside of the utility box.
Seasons's greetings Jose Antonio: "Hi Len, In which "store" (pun intended) can I get frozen electricity? " -- Try your local Aluminum supplier?
Jose Antonio Vanderhorst-Silverio 12.20.07
Merry Chritsmas to every one.
Ja, ja, ja... very good Len. I have been told that refrigerated electricity should be in the same shelves of new paradigm high tech refrigerated fish and chicken in the local supermarket or maybe in the flower shops near the roses. Refrigerated electricity is much reliable than frozen electricity. So, there is no need to go to the Aluminum supplier anymore.