Selling the smart grid

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For the first time, the utilities industry is preparing to deal with a challenge it has not encountered before: customer relations beyond billings and outages. As cities across the United States gear up to introduce the smart grid, utilities are hoping to find ways of convincing customers that the new technology is beneficial. Unlike smart-grid deployment challenges such as costs and infrastructure development, marketing is one area of business strategy in which utilities are not known for their expertise. With the government allotting $4.5 billion in smart-grid provisions under the American Recovery and Reinvestment Act of 2009, customer adoption and satisfaction are keys to making a successful transition to a digitized electricity grid.1

Utilities may need to get down to marketing basics by educating consumers on what a smart grid is: a digitized electricity grid that allows for two-way communications between consumers and utility companies at a minimum. Essentially, the smart grid—and its enabling technologies—will let consumers access their energy consumption information in real time. Electricity prices could be displayed at all times, thereby enabling customers to make informed decisions about how and when they use energy, helping them to reduce their energy bills.

But this will not be easy. Sixty-eight percent of Americans have no knowledge of the smart grid, and 63 percent have never heard of a smart meter. Privacy is also a major concern. In fact, 22 percent of Americans surveyed did not want utility companies to know about their electricity usage and habits in real time. Demographics matter, too. The technology-savvy population—mainly younger consumers—might be an easier sell than older consumers, who might feel that operating smart meters adds an unnecessary layer of difficulty to their lives.

In regions that have already deployed smart meters, companies have found that ignoring consumer education is a big mistake. In California, for example, a backlash occurred when a utility company didn’t educate its consumers on rate changes and the billing impacts the new rates bring. More than simply complain, consumers launched protests and initiated lawsuits.

Despite such setbacks, steps are being taken to win consumers over. The American Council for an Energy-Efficient Economy launched a program called Behavior and Human Dimensions of Energy Use. The program focuses on gathering consumer feedback on advanced metering. Earlier this year, a new nonprofit coalition of utilities, academics, and smart-grid companies formed the Smart-Grid Consumer Collaborative in an effort to better understand consumer needs related to the smart grid.

Ultimately, utilities are rethinking their customer relationship strategies. The two-way communication capability of the smart grid is forcing utilities to change the traditional approaches they take to engage customers, and the success of the smart grid will be measured by the benchmarks of customer adoption and participation.

1 PwC, Smart grid growing pains, May 2010.
of Americans have never heard of the smart grid.