$7 billion later …

$7 billion later …

Lawrence Berkeley National Lab published a study in January of last year which quantified that, as of 2011, utilities were spending a collective total of $6.7 billion annually on customer-funded energy efficiency programs. “Customer-funded programs” are the ones where utility customers are charged a small monthly fee on their utility bills, and all that money goes into a $6.7 billion pot that gets used for rebate programs to encourage people to buy more efficient products.

Given that the cost of building new power generation starts at about $1,000,000 per megawatt (for the cheapest fuel sources), and, according to the EIA, we built out 13,506 megawatts of power in 2013 (so we spent north of $13.5 billion), the notion of spending $7 billion/year to get people to actually use less energy, thereby eliminating the need for some of that new generation in the future, makes sense.

There’s just one tiny problem: most Americans have absolutely no clue these utility efficiency programs exist.

This year’s recently released Energy Pulse study revealed that only 20% of Americans knew their utility offered rebates, cash incentives or low-interest loans for energy-efficient products or home improvements, and only 41% knew their utility offered information on products and habits to improve a home’s efficiency.

How can that be? How can we be spending nearly $7 billion a year and not be making a bigger dent in the public consciousness? Three reasons:

  • We use language that doesn’t resonate or make sense. In the utility efficiency arena, most advertising loudly promises that you’ll “save money” if you engage with their programs. But our Energy Pulse study reveals every year that a majority of Americans report their utility bills are going up, not down, despite the things they do to make their homes more efficient. So it’s a message that’s not believable and, therefore, not committed to memory. We also throw around a lot of jargon the average American doesn’t understand. According to this year’s Energy Pulse study, even seemingly basic terms like HVAC are simply not correctly, confidently understood by 76% of the population. If they don’t understand what we’re talking about, they can’t engage, mentally or financially.
  • We keep trying to “educate the market,” instead of trying to engage the market. When we frame our marketing as “education,” it gets really boring, really fast. And a boring message is also one people never really see.
  • We keep advertising the drill bit. There’s an old adage in the marketing world: “Nobody wants to buy a ¾-inch drill bit; they want to buy a ¾-inch hole.” But we scream about the availability of programs (the drill bit) instead of promising the benefits of comfort, control, peace of mind, better health and resale value (the hole).

So if we want to get some mindshare for the $7 billion we’re spending (and it is, in fact, your money) we need to engage, delight, promise the benefits people care about and talk in human language. If all utilities and their program implementers start doing that, we’ll all be more engaged, and we’ll all see a little more return on our investment.

Dig into these insights further via our latest Energy Pulse report by clicking here.

Suzanne Shelton

About Suzanne Shelton

Suzanne Shelton is President and CEO of Shelton Group, the nation's leading marketing agency focused exclusively on energy and the environment. Drawing on her extensive knowledge of the industry, Suzanne provides unparalleled strategic insights in her writing, research, and client work. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz.com, and she speaks at over 20 conferences a year, including ACEEE, AESP, Greenbiz Forum, and Sustainable Brands.

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1 Comment

  1. There’s another problem, these efficiency programs are a giant consumer ripoff. The whole “purpose” of the program is to “save energy”, yet they only seem capable of delivering about 1/2 of the savings promised to consumers.

    http://bit.ly/NYSERDAandreattareport
    http://bit.ly/MassSaveMisses
    http://bit.ly/VTsucksToo
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    Since typically the consumer has significant investment beyond incentives, not receiving the performance projected equates to a giant con and consumer ripoff.

    When there is less savings to carry costs the difference comes out of consumer budgets for other items. For some this can mean significant harm.

    But incompetent Program Administrators who bury instead of correcting these problems get their paychecks irrespective of performance or public harm.

    Markets need trust. They like receiving what they pay for. They like predictable risk and reward. If iPhones started falling apart after 6 months, the market would be done with Apple.

    Once Home Performance learns to deliver a reliable, measurable, quality product, the markets will recognize it as a resource. Until then it will remain ignored.

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