This year has without question been one of the most interesting in our lifetime. But while the world was awash in chaos and uncertainty, the utility industry did what it always does, safely and reliably deliver energy to customers. And while this came with a bevy of challenges, from front line worker safety to rethinking how to engage customers, the utility industry also continued to hold steadfast to its mission of eliminating carbon from its operations, or decarbonization as it’s commonly being called. This is no small feat, which is why many of the commitments being made are set to be achieved over the next 30 years.
There are two fundamental truths to utility decarbonization. First, it can't wait. This exemplifies why, in this difficult year, utilities did not put these efforts on the back burner. Energy saved today affords more "climate value" in the future. Much like establishing a savings account today will grow your initial investment over time, avoiding emissions today has more value than doing so five or ten years from now.
The second truth is that success is dependent on getting the customer involved. When you really boil it down, the core components of utility decarbonization are renewable supply, energy efficiency, electrification, and demand flexibility. The latter three of those require the customer to take some kind of action, whether that be reducing consumption, buying an electric vehicle, or opting into a time-of-use (TOU) rate, just to provide a few examples. Some of those actions are easy and free, while others are time-consuming, expensive and sometimes scary (range anxiety continues to be a main blockage to people buying EVs). No matter where the action falls on the spectrum of ease and cost, it requires educating customers and influencing their behavior.
Here Are Some Utilities Leading the Way
More than 60 utilities across the world have made carbon reduction commitments. We work with many of them. But as we think about those two truths – act now and focus on the customer – there are several utilities who are already making standout progress:
Arizona Public Service and the Power of When Energy is Used
Arizona Public Service Company (APS) announced in January 2020 that it would transition to sourcing 100% clean, zero-carbon electricity by 2050. In a state like Arizona, where the sun shines A LOT, renewables are absolutely part of the equation. But so is demand side management (DSM), which is probably why (in part) the Arizona Corporation Commission recently voted to extend energy efficiency requirements through DSM programs.
APS understands the power of DSM and it starts with getting customers to realize that when they use energy is just as important as conserving it.
APS saw the benefits of this approach play out over the summer of 2020. Despite a record heat wave (145 days at or above 100 degrees in Phoenix) and a lot more people home because of COVID-19, APS didn't have to call any rolling blackouts. Innovative rate designs and demand response programs were critical to shifting usage, but those programs likely would have struggled to gain traction had APS not previously engaged customers with personalized insights on ways to save energy.
At the heart of that engagement was robust technology used to produce insight-driven digital communications showing the benefit of using energy at different times of the day. Those communications included personalized insights on how certain enabling technology, like a smart thermostat, would complement their existing rate and make it seamless to shift energy. They also linked to APS Marketplace, a one-stop, online shop where the customer could easily purchase that complementary smart home technology, qualify for a cost-saving rebate, and automatically enroll in a demand response program.
By working with customers to shift energy usage to when clean energy is plentiful and "clean," APS eliminated the need to implement rolling blackouts and educated customers on the importance of time-based savings. Shifting from "any time" efficiency to "time-specific" efficiency delivers savings today, while charting a path to decarbonization in the future.
National Grid and Using Innovation to Put Customers at the Center of Decarbonization
National Grid is emphasizing the role of customers in their Net-Zero by 2050 plan. They are working hand-in-hand with customers to lower their energy use and lower their bills while also reducing demand on the grid. Like APS, National Grid is actively working to provide customers with the information and tools necessary to flex their energy use to off-peak hours. Recognizing the role of electrification, they are also making it easier for customers to electrify things like transportation and heating.
But these things won't happen without providing a pathway for customers. National Grid is working to make it easier for customers to participate in energy efficiency programs, access EV charging, and respond to a set of price signals or incentives that capture and create value from distributed resources. To drive these behavior changes, they are educating, experimenting and ensuring all customers can participate.
Here are some examples of the efforts they have underway:
- Today, when one of National Grid’s residential customers log into their web account, the first thing they see are personalized energy-saving insights and advice. Millions of those customers also receive recurring, personalized reports and a variety of alerts that help them reduce energy, save money, and adopt the array of programs and energy solutions National Grid has to offer. These personalized insights are educating customers on the power of participating in these programs, while also generating significant results, including well over four terawatt-hours (TWh) of energy savings to date.
- Recognizing the way in which people consume information has changed, National Grid is also experimenting with new engagement tools. They recently ran a new digital engagement pilot - including personalized videos - that netted a click rate 20 times higher than the industry average and five times more daily traffic on their efficient products and programs pages. Driving that type of engagement will ultimately make customers more aware of the products, like electric heat pumps, smart thermostats and level-2 EV chargers, that are critical to decarbonization.
- Lastly, recognizing that all customers must be able to benefit from these types of programs and services, this summer, National Grid worked to identify hundreds of thousands of potentially financially vulnerable customers, so they could prioritize helping customers pay their bills with assistance programs.
There is no silver bullet to achieving our net-zero goals. It will take a range of initiatives – some we haven’t conceived – but one commonality will be ensuring all customers have access to the tools they need to make choices on energy consumption.
CPS Energy and Making Decarbonization Fun and People Centric
Another utility that has committed to achieving net-zero carbon emissions by 2050 is CPS Energy, as part of its Flexible Path plan. A municipal utility, CPS Energy is committed to helping customers "save for tomorrow" through its STEP program, which includes a range of weatherization, solar, demand response and customer engagement initiatives. And while all have been successful, the behavioral demand response (BDR) program that kicked off in 2017, which delivers on the company’s people-first philosophy, has exceeded energy reduction goals and is a lot of fun for customers.
Heading into the summer of 2019, CPS recognized it had to protect customers from incurring exorbitant energy costs on peak days. So, they challenged the team to grow their DR program that summer by 28 megawatts, of which BDR would be a core component. As part of this effort, they decided to engage a local news station. The idea was to add an awareness message as part of the weather segment during news casts on the eve of peak days. When a BDR event was expected, the weather reporter would encourage viewers to reduce their energy consumption throughout the day. At the end of the BDR event, a follow up message, thanking residents for their contributions, was delivered during the nightly newscast.
To promote friendly competition, customers in the program were able to see their kwh reduction versus their neighbors and where they ranked in energy savings. In fact, participants soon took great pride in trying to outperform their neighbors and improve their rankings among the 100 similar households, resulting in increased participation. Through this effort of engaging customers with simple, intuitive and fun tools, CPS Energy exceeded the goal by adding over 40 MWs of DR to the portfolio and it now reaches 300,000 customers.
While originally intended to save customers money on peak days, the BDR program also supports CPS Energy’s Flexible Path plan, which leverages DSM to help achieve its goal to be net-zero by 2050.
There is tremendous work being done by utilities to turn the tide on climate change. While it may sound crazy to say now, 2050 is not too far away. That is why it is critical to begin the process of decarbonization today, while ensuring customers are at the center of it. After all, your customers are partners in this collective mission to eliminate carbon from utility operations. Without engaging them at scale, we will not get where we need to go. Our hope is that by highlighting some of the innovative programs in play, they can serve as an example of the types of customer-facing programs you could bring to your decarbonization efforts. Click here to learn more.