Energy customers are keen to be green — as long as it doesn't put them in the red. Sixty-five percent of US consumers say sustainability is important when choosing an energy provider, according to the EY Navigating the Energy Transition Customer Survey — but less than half of them (45%) are willing to pay more for sustainable products and services. And with cost-of-living expenses on the rise and energy price volatility growing, the gap between green ambitions and reality is likely to widen.
Meanwhile, sustainability is a bigger issue in the boardroom. Almost all (90%) of investors say that environmental, social and governance (ESG) performance is more important in their decision-making than before COVID-19. For the most part, energy providers recognize this but are struggling to translate sustainability initiatives into significant operational gains or customer experience benefits. Delivering on the elusive triple-bottom-line is a challenge for any organization, and energy providers increasingly face a mandate to do everything all at once. This means enhancing the customer experience while delivering on emissions reduction targets, investing in new infrastructure, increasing the availability of renewable energy and supporting vulnerable consumers — while keeping rates low. Achieving these myriad outcomes will require organizations to reinvent their approach to sustainability with a focus on three consumer priorities.
Consider diverse motivations and desires
One size does not fit all when it comes to sustainability for energy consumers. The EY survey found some common ground around interest in new energy products and services — 86% of consumers are interested in generating their own electricity at home, about one-third plan to buy a smart thermostat, and 19% are considering an electric vehicle. But the reasons for considering these new energy products and services are driven by a diverse set of values. Cost is still the most critical factor, followed by impact on the environment (37%), convenience (35%) and control (35%).
Creating sustainable products and services that meet different expectations will require providers to leverage data, insights and behavioral research to understand and align with the motivations for individual consumers. Timing also matters — our survey found certain events, such as buying a new appliance, working from home, receiving a high energy bill or renovating a home, increased interest in energy efficiency. Taking a human-led and insight-driven approach will help energy providers better connect with consumers at the right time through concepts they understand and value.
Make it "my energy, my way" for the new majority
Millennials and Gen Z now make up the majority of the US population. These consumers are more energy-engaged, about twice as likely to monitor their energy on a weekly basis, and are significantly more likely to pay more for sustainable products and services.
These consumers expect a new kind of energy experience. For example, two-thirds of Gen Z say they would like to pay in advance or as they go for energy, preferring the financial control and payment convenience of these programs, which have been shown to also drive energy conservation behaviors.
The new majority also differs in how they access information and engage in conversations around sustainability. Energy providers will need to master digital channels — about half of millennials say they trust social media to provide reliable advice and guidance on sustainable energy providers.
Rethinking the fundamentals of the energy experience, including default assumptions that underpin tariff, billing and payment, and engagement can help providers deliver on the sustainability expectations of a changing customer profile.
Walk the green talk
Consumers are alert to greenwashing. They expect energy providers to demonstrate a holistic commitment to sustainability, going beyond offering sustainable products and services to clean up their own operations, supply chains, buildings, facilities and fleets. About half of consumers also say they want providers to engage in their local communities, supporting sustainability programs that deliver broader benefits.
With eMobility, energy providers have an opportunity to do this, particularly as more governments invest in decarbonizing transport. In the US, the Biden administration's Infrastructure Investment and Jobs Act includes significant investments in eMobility, with much of the investment going to state and local transit and other public sector agencies. Energy providers can use their expertise and networks to bring stakeholders together with consumers to develop infrastructure and programs and build a better customer-oriented eMobility experience.
Meeting customers' green expectations will not be easy for energy providers. A genuine commitment to sustainability and ESG as a whole can help align corporate purpose, brand promise, offerings and operations, and create value for the business, people and planet.
The views expressed by the author are not necessarily those of Ernst & Young LLP or other members of the global EY organization.