Consumer Pulse and Market Segmentation Study Wave 6. June 2017

Transcription

1 Consumer Pulse and Market Segmentation Study Wave 6 June 2017

2 Table of Contents Executive Summary Study Objectives and Methodology...7 Study Objective... 7 Methodology Detailed Findings...9 Respondent Profiles... 9 Consumer Segmentation: Who s Out There Consumer Segmentation: What They Know and Value Consumer Segmentation: Attitudes Toward Energy Efficiency Consumer Segmentation: The Barriers to Action Consumer Segmentation: How They View Their Electric Utility Consumer Segmentation: What They Do Now and What Interests Them Demographic Profiles...28 A Word About Millennials Renters versus Homeowners Economic Differences Geographic Influencers Conclusions and Implications...31

3 Consumer Pulse and Market Segmentation Study Wave 6 3 SGCC s mission is to serve as a trusted source of information for industry stakeholders seeking a broad understanding of consumers views about grid modernization, electricity delivery and energy usage, and for consumers seeking an understanding of the value and experience of a modern grid. Learn more at smartgridcc.org. The New York State Smart Grid Consortium (Consortium) is a unique non-profit public-private partnership that promotes broad statewide implementation of a clean, safe, and reliable smart grid. The Consortium brings together many of the world s leading utilities, technology providers, policy makers and research institutions to identify opportunities for accelerating grid modernization. Learn more at nyssmartgrid.com. This research was conducted by Research Into Action, a market research and evaluation services firm that provides actionable insights about audiences, markets, and processes, and is committed to increasing the responsible use of clean energy and natural resources throughout the nation and the world. Learn more at researchintoaction.com.

4 4 Consumer Pulse and Market Segmentation Study Wave 6 Executive Summary The Consumer Pulse and Market Segmentation study is a tracking survey of nationally-representative U.S. consumers, first launched in This report presents the results from a sixth wave, implemented in March Sampled from each of the nine U.S. census divisions, we obtained 1,652 completed surveys through online consumer panels. The analysis was facilitated by the consumer market segmentation framework developed in Wave 5 and comparisons in this study are to Wave 5. Wave 6 of this survey is an investigation of consumer engagement continuing to build our understanding of consumer awareness, interests and attitudes around energy efficiency and learning how to leverage and adapt services and offerings given these realities. Throughout the years SGCC has been conducting this Consumer Pulse research, we have learned first and foremost that behavioral segmentation works and Savings Seekers How can smart energy programs help us save money? Technology Cautious We want to use energy wisely, but we don t see how technologies can help. Movers & Shakers Impress us with smart energy technology and maybe we will start to like the utility more. Selectively Engaged 40% Rarely Engaged 16% Always Engaged 44% Status Quo We re okay; you can leave us alone. Green Champions Smart technologies fit our environmentally aware, high-tech lifestyles. consumers, once assigned to a behavioral and attitudinal segment, display predictable preferences. SGCC encourages individual stakeholders to leverage this segmentation framework when investigating their own consumers, although the proportional representation of consumers in each segment will vary when specific geographies are studied. As we look at consumer engagement in this study, we find that distinct patterns emerge in how readily consumers engage with their electricity providers. Coupled with the lens of SGCC segments, this is one more way to help us understand consumer values and choices. The Always Engaged (44%) These consumers are largely Green Champions. They are technologically advanced and are best characterized by the phrase smart energy technologies fit our environmentally-aware, high-tech lifestyle. They show the most interest in and place the most value on energy efficiency. They are also likely to be college educated, have higher incomes and live in urban/suburban locations. These consumers are also more likely to be Millennials than other segments. On the other side of the engagement spectrum are The Rarely Engaged (16%) consumers these mostly Status Quo consumers are characterized by the phrase we re okay, you can leave us alone. They are rarely interested in energy efficiency. They are the least knowledgeable about energy technologies, and they participate in fewer energy management programs. The Rarely Engaged consumers are also more likely to be retired, live in a rural setting and have lower incomes than consumers in other segments. Baby Boomers are disproportionately represented in this segment. Between these two extremes lie the 40% of consumers who are Selectively Engaged with and interested in energy efficiency. They are likely to be out of the workforce either retired or unemployed. Their incomes range from middle to low, and their interest and awareness about Smart Grid technologies vary greatly. They can be characterized by phrases such as we want to use energy wisely, but we don t see how technologies can help or how can smart energy programs help us save money? or impress us with smart energy technology and maybe we will start to like the utility more. Engagement on their own terms is common, and they engage only when they have a specific need.

5 Consumer Pulse and Market Segmentation Study Wave 6 5 The Always Engaged Consumers These mostly Green Champion consumers demonstrate the highest levels of interest in utility programs and Smart Grid-enabled products, and members of this segment are the most willing to pay for Smart Grid benefits and the expansion of their utility s use of clean energy resources. Demographically, these consumers are younger, urban and college educated with higher incomes. They are more connected with their utility via digital channels. Consumers in this Always Engaged group attach higher levels of importance to Smart Grid benefits overall, compared to consumers in most other segments. They are also most likely to attribute environmental benefits to saving energy. Consumers who interact with their utility through digital channels (website, smartphone applications or social media) are more concentrated among Millennials and those citing the environment as a top reason for saving energy. Homeowners are more likely to participate in utility programs and purchase Smart Grid-enabled products and services. They also tend to be technologically advanced. The Rarely Engaged Consumers These Status Quo consumers are least likely to report being aware of the term Smart Grid or smart meters. Members of this group are also least likely to report being knowledgeable about how to make their home energy efficient and have the lowest interest in and willingness to pay for utility programs and Smart Grid-enabled products. Demographically, these consumers tend to be older, are more likely to be retired and have lower incomes. These consumers are the least likely to attribute environmental benefits to saving energy. Consumers in this segment are not only the least likely to be willing to pay for Smart Grid benefits but they also rank these benefits as not important. These consumers are more satisfied with their electricity service provider, and they are the most likely to report they would choose their current provider if they had a choice. The Selectively Engaged Middle This middle group of Selectively Engaged consumers exhibits a variety of attitudes, behaviors and demographics. It is this diversity that presents challenges and opportunities for industry stakeholders. While they place high importance on energy efficiency, the Savings Seekers consumers in this group consistently lag in their knowledge and awareness of Smart Grid technologies, and they are the least likely to have participated in any energy efficiency programs. Demographically, these consumers are likely to be Generation Xers, have lower incomes and be unemployed. Interestingly, they also tend to live in larger homes. The Technology Cautious consumers in this group report high levels of knowledge and awareness of Smart Grid, and they place a high value on having an energy efficient home. Yet they are not as likely as most other segments to have participated in energy efficiency programs. Demographically, these consumers are likely to be retired, have middle incomes and have high satisfaction with their current electricity provider. Lastly, the Movers & Shakers in this Selectively Engaged middle report knowledge and awareness of Smart Grid and ways to make their home energy efficient comparable to the Always Engaged group, and they participate in energy efficiency programs at average rates. They place high importance on energy efficiency and are early technology adopters; however, they are also the least satisfied with their utility.

6 6 Consumer Pulse and Market Segmentation Study Wave 6 Overall Consumer Engagement and Interest in Offerings Consumers are interested in all types of Smart Grid-enabled programs and technologies. In fact, 40% or more of consumers expressed interest in most offerings; only one of the offerings we tested generated interest below 33%. Across all segments, one in five consumers report having participated in at least one utility program (21%); 13% have used at least one Smart Grid-enabled product. The most common programs and Smart Grid-enabled products consumers report using are online billing and payment (40%) 1, energy use comparisons tools (9%) and smart thermostats (9%). Almost three quarters of consumers are interested in an energy storage system that could provide backup power for their home. And, over half of consumers are interested in rooftop or shared solar and programmable thermostats (58% and 56% respectively). Consumers are highly interested in participating in real-time reporting of electricity outages, energy use information and Critical Peak Rebate (66%, 65%, and 59% respectively). Conclusions Conclusion #1: There is a strong overlap in demographic characteristics among those who embrace a digital lifestyle and those who have an affinity for a clean energy lifestyle. These consumers tend to be younger, urban and college educated and they are strongly associated with the Always Engaged group. They also demonstrate an interest in and willingness to try smart energy products and services, and they actively engage in digital communications. Conclusion 2: Despite having a stronger affinity for a clean energy lifestyle, younger people especially Millennials generally perceive more barriers in taking energy-saving actions. Millennials have lower rates of homeownership than other generations. This is one reason why they are more likely to perceive more barriers. Millennial renters, in particular, feel disadvantaged due to split incentives, and they are reluctant to cost-share with their landlords. Conclusion 3: The real opportunity when creating programs and working to increase engagement is reaching the Selectively Engaged middle group of consumers. With each piece of research we conduct, we build on what we know about consumer values and behavior. If we understand consumers underlying values, our ability to guess their interests becomes more reliable. This provides a solid base of research to draw from for programming and communications efforts. The largest consumer group, the Always Engaged, is the most aware, knowledgeable and engaged in energy efficiency. They are interested, and they are the most likely to take action. They are already on board. The Rarely Engaged consumers (the smallest engagement group) are the least aware, knowledgeable and engaged. They show very little interest, and they tune out most offers and educational messages. We recommend stakeholders do as they ask and leave them alone. 1 This expressed interest in using electronic bill payment options is well above the current adoption rate of 12% for most utility companies.

7 Consumer Pulse and Market Segmentation Study Wave Study Objectives and Methodology Study Objective The Consumer Pulse and Market Segmentation Study is a tracking survey of nationally-representative U.S. consumers, first launched in The Smart Grid Consumer Collaborative completed the previous wave of this study in March of This report presents the results from Wave 6 and was conducted in March of SGCC explored consumer awareness, knowledge, attitudes, perceived benefits and barriers around the adoption of Smart Grid-enabled programs and technologies. This wave employed the market segmentation framework refined in Wave 5 and examined engagement patterns to focus on the market segments most relevant to SGCC members. Methodology Sampling To produce a nationally-representative sample of consumers, we proportionately sampled from the nine U.S. divisions based on the counts of the occupied households reported in the U.S. Census Bureau s 2015 American Community Survey. Within each division, we controlled the sample balance to the known census proportions by using a set of quota variables, including homeownership, age, household income and education. We obtained a total of 1,652 completed surveys using online consumer survey panels provided by Survey Sampling International (SSI) in March The total sample size is sufficient to achieve 95% confidence and +/-4% precision as an overall national sample. Additional New York Focus The Smart Grid Consumer Collaborative partnered with the New York State Smart Grid Consortium in this research because the Reforming the Energy Vision (REV) strategy in New York is bringing about profound changes for New York citizens. REV will help consumers make more informed energy choices, develop new energy products and services and protect the environment while creating new jobs and economic opportunity throughout the State. The New York State Smart Grid Consortium wished to understand how aware New York citizens are of REV, what their attitudes and values are around specific energy products and services that will be made available to them through REV and what interests them generally around energy. This information will be shared in a separate report to help stakeholders understand how New York citizens perceive REV and how to best engage citizens based on their interests. Data Analysis We applied the segmentation algorithm developed in the Consumer Pulse and Market Segmentation Study Wave 5 to form segments in the Wave 6 dataset. We then corrected sample population differentials by applying weights to reflect the key demographic parameters by U.S. division, homeownership, household income, age and education. Our primary analysis was done by SGCC market segments (Status Quo, Technology Cautious, Savings Seekers, Movers & Shakers and Green Champions) and is presented in Chapter 2 of this document.

8 8 Consumer Pulse and Market Segmentation Study Wave 6 Figure 1-1: SGCC Segment Distribution and Perspective on Smart Energy ENGAGEMENT LEVEL SGCC SEGMENT POINT OF VIEW ON SMART ENERGY Always Engaged Selectively Engaged Green Champions Savings Seekers Technology Cautious Movers & Shakers Smart energy technologies fit our environmentally aware, high-tech lifestyles. How can smart energy programs help us save money? We want to use energy wisely, but we don t see how technologies can help. Impress us with smart energy technology and maybe we will start to like the utility more. Rarely Engaged Status Quo We re okay; you can leave us alone. For this wave, we also examined a variety of demographic characteristics to determine if there were commonalities and insights to help guide industry stakeholders in more thoroughly understanding and engaging their consumers. These findings are described in Chapter 3 Demographic Profiles of this report 2 : Generations (Greatest Generation born before 1945, Baby Boomers born between , Generation X born between and Millennials born between ) Homeownership (owners versus renters) Income level (high, medium and low, based on household income and the number of household members) Choice states (where consumers can choose their energy retailer) versus non-choice states (where consumers receive their electricity from a provider within a defined service territory) Advanced (states in which Advanced Metering Infrastructure or AMI rate exceeds 50%) versus non-advanced states Seasonal billing variance (highest bill in the summer, highest bill in the winter and no seasonal variance) Price sensitivity to energy services (high price sensitive, medium price sensitive and low price sensitive) 3 Important Caveats Wave 6 is the first study in SGCC s Consumer Pulse series to employ an online panel survey methodology; past waves used a Random Digit Dialing (RDD) telephone survey. It is possible this methodology introduced confounding mode effects when comparing data with previous wave results. We have been careful to point out areas where this is most likely to be present. Applying SGCC s segmentation algorithm to this sample achieves a 77% confidence level in the assignment of our nationwide respondents to the appropriate SGCC segment. Each sample is different, and the proportions in each segment are expected to be different in different geographies, smaller samples or with more narrowlyfocused research topics. For this reason, we recommend that industry stakeholders interested in adopting the SGCC consumer segmentation framework start by conducting similar research to discover the distribution of their own consumers within this framework. 2 We referred to Energy Choice Now for the market competition data, Greentech Media for the AMI concentration. Other variables were based on self-report. 3 Price sensitivity to energy services is a similar measure to willingness to pay for services enabled by Smart Grid as detailed in the section: Consumer Segmentation: What They Know and Value on page 16

9 Consumer Pulse and Market Segmentation Study Wave Detailed Findings Chapter 2 presents detailed results from Wave 6 of the Consumer Pulse and Market Segmentation Study. It explores consumers knowledge and perceived benefits of Smart Grid and smart meters; attitudes toward and perceived barriers to adopting energy efficiency; and relationships with their respective electricity providers. Participation and interest in energy programs and the adoption of and interest in advanced energy products varies by SGCC segment, and is linked as well to factors such as generational cohort, homeownership, income level, education and other variables. Respondent Profiles The Wave 6 sample is representative of key demographic and housing characteristics of the U.S. population and is presented below after correcting for differentials in homeownership, education, age and income. Figure 2-1: Sample Characteristics Compared to the U.S. Census Note: In this figure, bar colors simply distinguish sample vs. US census, and do not represent statistical significance.

10 10 Consumer Pulse and Market Segmentation Study Wave 6 Consumer Segmentation: Who s Out There We applied the same segmentation algorithm developed in the Wave 5 study to form segments among the Wave 6 study sample. In addition to the behavioral characteristics, each market segment exhibits likely demographic, housing and attitudinal characteristics, which were largely consistent across Waves 5 and 6. In many cases, we are able to provide additional insights about predominant characteristics within a segment. These insights can help industry stakeholders frame and target offers that are likely to engage consumers. The following tables highlight additional insights for each segment. Green Champions SEGMENT CHARACTERISTICS WAVE 5 WAVE 6 Demographic and Housing Characteristics More likely Millennials 3 3 Higher income or belonging to the higher-income class 3 3 College educated 3 3 Employed 3 3 Always Engaged Living in non-rural areas 3 3 Living in multifamily homes 3 Attitudes and Behaviors More likely Average level of utility satisfaction and want a choice of providers 3 3 Attach a higher importance to Smart Grid benefits 3 3 Higher interest in pricing options 3 3 Higher interest in new utility services 3 3 Higher interest in new energy technologies 3

11 Consumer Pulse and Market Segmentation Study Wave 6 11 Savings Seekers SEGMENT CHARACTERISTICS WAVE 5 WAVE 6 Demographic and Housing Characteristics More likely Generation X 3 Lower income or belonging to the lower-income class 3 3 Non-college educated 3 Unemployed 3 Living in larger homes (# bedrooms) 3 Selectively Engaged Living in single family homes 3 Moderate to high average summer and winter electric bills 3 Attitudes and Behaviors More likely Lower satisfaction with current provider and want a choice 3 3 Lower awareness of Smart Grid/meters 3 3 Highest interest in pricing options 3 3 Average level of interest in new utility services 3 3 Higher interest in home energy efficiency 3

12 12 Consumer Pulse and Market Segmentation Study Wave 6 Technology Cautious SEGMENT CHARACTERISTICS WAVE 5 WAVE 6 Demographic and Housing Characteristics More likely Greatest Generation 3 3 Belonging to the middle-income class 3 3 Single, living alone 3 3 Retired 3 3 Living in multifamily, manufactured or mobile homes 3 3 Selectively Engaged Lower average summer and winter electric bills 3 3 Attitudes and Behaviors More likely Higher Smart Grid/meter awareness 3 3 Knowledgeable about energy efficiency 3 3 Satisfied with current utility 3 3 Preferring to purchase from current provider 3 3 Attach low importance to Smart Grid benefits and smart technology programs and services 3 3

13 Consumer Pulse and Market Segmentation Study Wave 6 13 Movers & Shakers SEGMENT CHARACTERISTICS WAVE 5 WAVE 6 Demographic and Housing Characteristics More likely College educated 3 3 Unemployed 3 Higher income or belonging to the higher-income class 3 Lower summer electric bills and high winter electric bills 3 Selectively Engaged Live in the Pacific Region 3 3 Living in suburban areas 3 Attitudes and Behaviors More likely Attach above average importance to home energy efficiency 3 3 Higher level of energy efficiency knowledge 3 3 Lower satisfaction with current provider and want a choice 3 3 Average level of interest in pricing options 3 3

14 14 Consumer Pulse and Market Segmentation Study Wave 6 Status Quo SEGMENT CHARACTERISTICS WAVE 5 WAVE 6 Demographic and Housing Characteristics More likely Baby Boomers 3 3 Lower income or belonging to the low-income class 3 Single, living alone 3 3 Non-college educated 3 Retired 3 3 Rarely Engaged Living in multifamily, manufactured or mobile homes 3 3 Living in rural areas 3 Lower average electric bills 3 3 Living in smaller homes 3 Attitudes and Behaviors More likely Lower Smart Grid/meter awareness 3 3 Know little about energy efficiency and don t think it s important 3 3 Satisfied with current utility 3 3 Preferring to purchase from current provider 3 3 Attach low importance to Smart Grid benefits and smart technology programs and services 3 3

15 Consumer Pulse and Market Segmentation Study Wave 6 15 The table below summarizes the most dominant characteristics of the five segments. 4 Summary of Dominant Segment Characteristics Rarely Engaged Selectively Engaged Always Engaged SGCC Segment STATUS QUO TECHNOLOGY CAUTIOUS SAVINGS SEEKERS MOVERS & SHAKERS GREEN CHAMPIONS Generation Baby Boomers Greatest Generation Generation X Millennials Income/class Low Middle Low High Education No college No college College College Employment Retired Retired Unemployed Unemployed Employed Community type Rural Urban/ Suburban Housing type Multifamily or Manufactured Multifamily or Manufactured Larger homes Smart Grid/meter awareness Low High Low Energy efficiency importance Low High High High Energy efficiency knowledge Low High High Importance of Smart Grid benefits Low Low High Interest in new utility services Low Low Average Average High Interest in new technologies Low Low High Satisfaction with utility High High Low Low Average 4 It should be noted that these market segments have a limited ability of characterization, and over-characterization is a common pitfall in market segmentation exercises. Though the primary task of segmentation exercises is connecting attributes to segments (for instance, Millennials to Green Champions), most segments are more diverse than the attribute itself. In fact, Green Champions, for example, is constituted with respondents of all the generations, despite the labeling of Millennials. It simply means that Green Champions have statistically speaking disproportionately higher chance of being Millennials.

16 16 Consumer Pulse and Market Segmentation Study Wave 6 Consumer Segmentation: What They Know and Value Most people have now heard of Smart Grid and smart meters. Awareness of Smart Grid and smart meters increased significantly between Waves 5 and 6; now, more than two-thirds of the U.S. population have at least heard of these terms. 5 Even though we cannot definitively measure the increase attributable to the change in survey mode, this rise in awareness is good news for industry stakeholders. A more aware consumer base may be easier to engage and may also be more interested in products and services dependent on Smart Grid or smart meter technologies. Figure 2-2: Smart Meter and Smart Grid Awareness Have heard of Smart Meter* 52% 72% Wave 5 (1,004) Have heard of Smart Grid* 47% 70% Wave 6 (1,652) 0% 20% 40% 60% 80% * Indicates responses from Wave 5 and Wave 6 are significantly different. Examining differences among consumer segments within this Wave 6 data provides deeper insight that can help industry stakeholders target messages and education efforts. Awareness of Smart Grid and smart meters is significantly lagging among the Rarely Engaged Status Quo and Selectively Engaged Savings Seekers. However, examining the awareness and knowledge of Movers & Shakers (40% for Smart Grid and 47% for smart meters) and Technology Cautious (43% for Smart Grid and 50% for smart meters), it is important to recognize they may have been listening and taking advantage of the growing body of Smart Grid information made available by SGCC, industry organizations, organizations, news outlets and energy providers. In this Selectively Engaged set of consumers, these may represent the best opportunities for properly timed and targeted offers. Figure 2-3: Awareness and Knowledge of Smart Grid 6 Total 1652 Status Quo (A) 258 Technology Savings Movers & Green Cautious (B) Seekers (C) Shakers (D) Champions (E) Basic or complete understanding 33% 5% 43% 14% 40% 42% A C A A C A C Heard the term, but don t know much 37% 13% 53% 26% 53% 39% A C E A A C E A C Have not heard the term 30% 83% 4% 60% 8% 19% B C D E B D E B D Q1: Which of the following statement best describes your current level of knowledge about the Smart Grid? 5 It is unclear whether this change is due to methodological change from telephone to online panel survey or as a result of a real change. One hypothesis is that consumer knowledge of Smart Grid/smart meters is positively correlated with improvement of Advanced Metering Infrastructure (AMI). According to Energy Information Administration (EIA), the predominant metering technology installed and operational throughout the U.S. is now advanced meters. EIA publishes AMI saturation data, but at the time of this study, 2014 saturation data was the most up-to-date information available. EIA estimated the penetration of smart meters at 41% nationwide. 6 A,B,C,D,E indicate statistical significant differences between segments. For instance, in row Basic or complete understanding of Smart Grid, the percent among Technology Cautious (B) is statistically significantly different from those of Status Quo (A) and Savings Seekers (C).

17 Consumer Pulse and Market Segmentation Study Wave 6 17 Figure 2-4: Awareness and Knowledge of Smart Meters Note: A,B,C,D,E indicate statistically significant differences between segments. Q2: Which of the following statement best describes your current level of knowledge about smart meters? Perceived Benefits of Smart Grid Respondents most frequently rated saving money and preventing power outages as important Smart Grid benefits, regardless of segment. This is consistent with SGCC s Consumer Pulse Wave 5 and Consumer Voices research. It is also important to note that reducing greenhouse gas emissions by connecting renewables is in the top three benefits for all but the Technology Cautious consumers. Figure 2-5: Importance of Potential Smart Grid Benefits Status Technology Savings Movers & Green Total Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) Basic or complete understanding 39% 12% 51% 21% 47% 46% A C A C A C Heard the term, but don't know much 34% 25% 37% 28% 41% 36% A A A Have not heard the term 27% 63% 12% 51% 12% 18% B D E B D E Total Status Technology Savings Quo (A) Cautious (B) Seekers (C) Movers & Green Shakers (D) Champions (E) Save money by using energy more efficiently Prevent and reduce length of outages Reducing greenhouse gas emissions by making it easier to connect renewable energy Limiting the need for new power plants Range of rate and billing programs Provide instant information to increase operational efficiency for utility Deliver quality power for increasingly digital homes Meet the requirements for electric vehicles 74% 66% 73% 76% 67% 74% E E A D 70% 62% 67% 80% 58% 70% C E C A B D C E A D 65% 65% 56% 67% 58% 65% E E B D 62% 48% 57% 67% 51% 62% C E E A D C E A B D 59% 47% 55% 62% 47% 59% C E E A D C E A B D 58% 50% 58% 51% 42% 58% E D E B E A B D 56% 51% 53% 53% 50% 56% E E A D 45% 35% 40% 48% 38% 45% E E E A B D Note: The percent above are those reporting each benefit as important. Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Q7: Smart Grid refers to a set of new technologies to upgrade the grid that carries electricity to homes and businesses. Smart meters are part of the Smart Grid system. They provide more detailed information about when consumers are using electricity. The following statements describe potential benefits of Smart Grid and smart meters. For each one, please indicate how important each benefit is to you.

18 18 Consumer Pulse and Market Segmentation Study Wave 6 Willingness to Pay for Benefits Of all the segments, Green Champions are the most willing to pay for benefits associated with Smart Grid (40%). Like other segments, Technology Cautious consumers rank saving money and increasing reliability as important; however, they are not willing to pay for the benefits of Smart Grid technologies (77%). Status Quo consumers are not only unwilling to pay, but some of them do not consider the benefits of Smart Grid to be important (6%). Figure 2-6: Willingness to Pay for Smart Grid Benefits Important but only if provided at no additional cost Important and willing, but unable to pay $3-4 more per month Important, willing, and able to pay $3-4 more per month Status Technology Savings Movers & Green Total Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) % 52% 77% 58% 61% 33% E A C D E E E 23% 25% 13% 20% 22% 27% B 26% 17% 9% 19% 16% 40% B B A B C D Not important 2% 6% 1% 2% 1% 0% B E Note: Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Consumer Segmentation: Attitudes Toward Energy Efficiency Importance of Having an Energy-Efficient Home The majority of respondents believe having an energy-efficient home is important, though the Status Quo segment appears to perceive it as slightly less so than other segments. Savings Seekers rated the importance of having an energy-efficient home the highest. Figure 2-7: Importance of Having an Energy-Efficient Home Wave Total Wave 6 Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Important (Rating of 6-10) 88% 85% 76% 87% 94% 83% 85% A A D E A Neutral (Rating of 5) 6% 8% 12% 10% 3% 8% 8% Green Champions (E) C C Not important (Rating of 0-4) 5% 7% 12% 3% 4% 9% 7% B C Note: Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments.

19 Consumer Pulse and Market Segmentation Study Wave 6 19 Level of Knowledge About How to Make a Home Energy Efficient A significant portion of the population does not feel sufficiently informed about ways to make their home more energy efficient. Respondents level of knowledge in this area represents a significant decrease compared with the results reported in the Wave 5 study. We hypothesize this may be because many consumers have already taken the easiest and most publicized actions (such as replacing lighting or adjusting their thermostat a degree or two) while larger energy savings may be available by replacing major appliances, which requires more up-front investment and more knowledge on the part of the consumer. It is also noteworthy that Technology Cautious consumers are some of the most knowledgeable about energy efficiency, yet they are some of the least likely to take action. Figure 2-8: Level of Knowledge on How to Make Home Energy Efficient Wave 5 Total Wave 6 Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) Knowledgeable (Rating of 6-10) 74% 59% 31% 75% 49% 80% 60% * Indicates responses from Wave 5 and Wave 6 are significantly different. A,B,C,D,E indicate statistically significant differences between segments. Note: Analysis excludes Don t Know responses. Reasons to Save Energy Consumers in all segments see saving money as the most important reason for saving energy. Saving money is a very tangible and personal benefit that drives consumer behavior in many instances. We also note that consumers understand broader, societal benefits since they cite environmental benefits most often after that. Figure 2-9: Most Important Reason for Saving Energy * A C E A A C E A C Neutral (Rating of 5) 14% 20% 33% 16% 22% 7% 20% * B D E D D D Not knowledgable (Rating of 0-4) 12% 21% 36% 10% 29% 13% 20% * B D E B D B Status Technology Savings Movers & Green Total Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) Saving money 56% 65% 63% 58% 50% 51% D E E Environmental benefits 24% 17% 19% 24% 25% 28% Future of our children and grandchildren 9% 4% 8% 9% 11% 11% A Reduce need for foreign energy sources / Improve American competitiveness 7% 7% 7% 6% 8% 7% A To be socially responsible 4% 7% 3% 3% 7% 3% Note: Analysis excludes Don t Know responses and those who said, saving energy is not important to me. A,B,C,D,E indicate statistically significant differences between segments.

20 20 Consumer Pulse and Market Segmentation Study Wave 6 Consumer Segmentation: The Barriers to Action Rental properties and initial cost are the leading barriers to taking energy-saving actions across all segments. Millennials, who are disproportionately represented in the Green Champions segment, are more likely than other segments to report barriers to saving energy. This is likely related to their lower rates of homeownership. Figure 2-10: Barriers to Engaging in Energy-Saving Activities Unable to change features to make home more energy efficient (Renters Only) Total Status Technology Savings Movers & Green Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) % 56% 64% 42% 52% 59% Replacing inefficient equipment costs too much money 40% 42% 39% Energy saving programs do not fit needs 26% 29% Efforts to save energy at home do not positively impact the grid Other members of household do not care about saving energy E E B C D E D E A C A C 23% 27% 23% E 22% 22% 21% 48% 40% 40% 28% 29% 32% 26% 22% 26% 23% 27% 24% 22% A Do not know what to do to save energy 16% Do not use enough energy to save 13% 14% Saving energy makes home uncomfortable or inconvenient 16% 13% 10% Too busy to be thinking about saving energy 11% 8% B 14% 16% 14% A 22% C E C E A B A B 17% D A E D 17% 8% 11% 16% 8% 10% 16% 13% 13% 13% 11% Note: The percent above are those reporting each barrier as very often applies or always applies. Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Q9: The following is a list of potential challenges people may have to be engaged in energy-saving activities at home. For each one, please tell us how often each applies to you.

21 Consumer Pulse and Market Segmentation Study Wave 6 21 Challenges Among Renters Many renters (56%) are not able to ask their landlord to make energy efficiency improvements; even fewer believe their landlord would make the improvements even with shared cost (35%). This was especially an issue among members of the Status Quo segment. Status Quo renters are also the least likely to be willing to pay for energy efficiency improvements. It is important to note that the Movers & Shakers are more willing to ask their landlords to make improvements, which represents an opportunity for electricity providers and other stakeholders to engage these consumers. Figure 2-11: Renters Willingness to Pay for Efficiency Improvements Status Technology Savings Movers & Green Total Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) $0 - Landlord should pay the full cost 53% 78% 56% 32% 48% 48% B C D E Would invest $25 to $50 of own funds 32% 17% 35% 29% 29% 34% A Would invest $100 or more of own funds 15% 4% 9% 22% 22% 18% A A Note: A,B,C,D,E indicate statistically significant differences between segments. Consumer Segmentation: How They View Their Electric Utility Satisfaction with Electricity Provider Savings Seekers and Movers & Shakers both characterized as Selectively Engaged report being least satisfied with their electric utility. Between Wave 5 and 6, the proportion of respondents who reported being unsatisfied with their electric utility increased slightly. Owners are more likely to report being satisfied compared to renters (83% versus 74% satisfied), as are respondents who reported no seasonal change in their billing (84% versus 75% satisfied for those who reported variations in the winter). Figure 2-12: Level of Satisfaction with Electric Utility Wave 5 Total Wave 6 Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) Satisfied (Rating of 6-10) 82% 80% 82% 89% 69% 65% 83% C D C D C D Neutral (Rating of 5) 11% 10% 11% 5% 14% 14% 9% B B Not satisfied (Rating or 0-4) 6% 10% 7% 6% 17% 21% 7% * Indicates responses from Wave 5 and Wave 6 are significantly different. A,B,C,D,E indicate statistically significant differences between segments. Note: Analysis excludes Don t Know responses. * A B E A B E

22 22 Consumer Pulse and Market Segmentation Study Wave 6 Accuracy of Utility Outage Reporting Green Champions and Technology Cautious consumers report finding electricity outage reporting more accurate than other segments. The proportion of respondents who said electricity outage reporting has become more accurate has increased significantly since the Wave 5 study. The accuracy of electricity outage reporting is also related to overall customer satisfaction; utility satisfaction increases in tandem with perceived increases in reporting accuracy. 7 Industry stakeholders are advised to take note of this relationship. Near real-time outage reporting is one of the Smart Grid-enabled programs that draws high consumer interest across the board. And, it provides a direct opportunity to affect customer satisfaction. Figure 2-13: Accuracy of Utility Outage Reporting Wave 5 Total Wave 6 Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) More accurate 31% 40% 22% 54% 10% 20% 57% * Indicates responses from Wave 5 and Wave 6 are significantly different Note: Analysis excludes Don t Know responses and those respondents who have not experience an outage in the past five years. A,B,C,D,E indicate statistically significant differences between segments. Q6: Thinking about when the power is out, would you say the time your electricity company gives you for having your power restored is more accurate, about the same, or less accurate than estimated restoration times from five years ago? Preferred Choice of Electricity Provider * C A C D A C D About the same 56% 50% 73% 38% 84% 67% 30% * B E B D E B E Less accurate 10% 10% 5% 9% 6% 13% 12% Status Quo and Technology Cautious are most likely to choose their current electricity service provider given a choice. Figure 2-14: Preferred Choice of Electricity Service Provider A A Total Status Quo (A) Technology Savings Movers & Green Cautious (B) Seekers (C) Shakers (D) Champions (E) Current electric utility 69% 89% 84% 46% 44% 67% C D E C D E C D A solar installer 18% 6% 4% 32% 27% 22% A B A B A B Another electric utility 10% 4% 11% 18% 18% 8% A A E A E A telecom provider 4% 1% 1% 4% 11% 4% Note: Analysis excludes Don t Know and Other responses and those respondents who do not pay electricity. A,B,C,D,E indicate statistically significant differences between segments. Q17: If you have a choice of which company you can buy electricity from, would you choose A B E 7 Mean satisfaction score by accuracy level: more accurate (9.1), about the same (8.2), less accurate (6.4)

23 Consumer Pulse and Market Segmentation Study Wave 6 23 Support of Electricity Provider s Clean Energy Expansion By a wide majority (82%) consumers favor clean energy investments when no additional cost is involved; however, a substantial percentage (41%) is willing to pay $15/month to receive it. Homeowners are more likely than renters (56% versus 48%) to support expansion of their electric company s clean energy programs at an additional cost of $2 $15 per month. Figure 2-15: Support of Electric Utility Clean Energy Expansion Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) Free ( 315) 82% 55% 75% 74% 95% 90% A B A Two dollars per month ( 336) 64% 49% 59% 69% 35% 74% D A D Five dollars per month ( 317) 57% 45% 44% 61% 33% 73% A B D Ten dollars per month ( 327) 39% 25% 48% 36% D 14% 48% A D Fifteen dollars per month (315) 41% 30% 34% 44% 47% 46% Note: Sample sizes vary because we randomly assigned equal proportions of respondents to each of the five price levels. The percent include responses probably would support and definitely would support. Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Q15. Suppose your electricity company wanted to greatly expand its use of a range of clean energy sources, such as solar energy, wind power, geothermal and biomass, and estimated that the extra cost reflected on your bill would be about [Amount] dollars per month per customer. Based on that assumption, how likely would you be to support your electricity company s plan to expand clean energy?

24 24 Consumer Pulse and Market Segmentation Study Wave 6 Mode of Contact with Electricity Provider The use of online tools to contact their electric utility is particularly high among the Always Engaged Green Champions and lowest among the Rarely Engaged Status Quo consumers. We also find that consumers across all segments frequently use the telephone. From our Customer Experiences and Expectations research, consumers tell us they prefer to use the telephone for more complex transactions and when they need immediate validation or feedback. Figure 2-16: Mode of Contact with Electric Utility by Segment (Multiple responses allowed) Wave 5 Total Wave 6 Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) By telephone 69% 52% 42% 46% 54% 47% 56% * E Visited electricity utility s website 33% 49% 23% 31% 41% 47% 61% Received or sent an to my electricity utility * A A B C D 24% 15% 5% 12% 9% 15% 20% * A Visited office or service center 18% 14% 14% 20% 17% 11% 12% Someone from electricity utility came to house * 19% 7% 6% 4% 11% 7% 7% * Used smartphone application % 2% 0% 5% 4% 11% Received or sent a text message to electricity utility % 3% 6% 5% 1% 8% B Posted a comment on electricity utility s social media % 0% 0% 1% 0% 3% Some other method % 7% 8% 1% 1% 0% * Indicates responses from Wave 5 and Wave 6 are significantly different. Note: A,B,C,D,E indicate statistically significant differences between segments. Note: Analysis excludes Don t Know responses. Analysis is conducted among those who reported having contact in past six months. Q22: Which of the following methods have you used to contact your electricity company or has your electricity company used to contact you in the last 6 months?

25 Consumer Pulse and Market Segmentation Study Wave 6 25 Social Media Use Facebook is used by the majority in all segments (77% of respondents), yet few are using it to manage energy usage (11%). Millennials were significantly more likely to report using any social media for energy savings information than those in other generations (32% versus 20% of Generation X, 8% of Baby Boomers and none of Greatest Generation). For industry stakeholders, this active use of social media in the Millennials cohort provides a channel to deliver messages or offers uniquely tailored to them. Figure 2-17: Social Media Use (Multiple responses allowed) Total Use for Any Use, by Segment Energy Savings Status Technology Savings Movers & Green Any use Information Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) Facebook 11% 77% 77% 73% 76% 77% 80% YouTube 7% 50% 41% 36% 49% 61% 56% A B A B Pinterest 5% 30% 25% 17% 27% 27% 37% A B Instagram 3% 29% 19% 18% 26% 32% 37% A B A B Twitter 2% 26% 16% 21% 22% 26% 31% LinkedIn 1% 15% 8% 8% 7% 20% 21% Tumblr 1% 6% 3% 3% 4% 8% 7% Other 1% 9% 5% 8% 7% 10% 10% A B C A B A B C Do not use 81% 12% 15% 17% 17% 7% 9% D E D E Note: Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Q18: Which of the following social media do you routinely use? Q19: Which of the social media you mentioned, if any, are you using to help you manage energy usage or get energy efficiency tips?

26 26 Consumer Pulse and Market Segmentation Study Wave 6 Consumer Segmentation: What They Do Now and What Interests Them Overall Interest and Participation in Utility Programs Real-time reporting on outage and energy usage information receive the highest interest. Looking a little deeper at participation, energy usage comparisons are popular in part because consumers are often opted in by default; real-time outage reporting would be considered essential by most consumers due to the disruption that outages cause in their home. Participation rates are low across all programs we included in this research. For industry stakeholders, this represents real opportunities that are yet untapped. Interest is high in many of these programs. Stakeholders who offer well-targeted programs when the consumer engages are more likely to tap into this interest and move consumers to action. Figure 2-18: Interest and Participation in Utility Programs Near real time outage reporting and tracking Critical Peak Rebate Program Total Already Participaitng 5% Real-time energy usage information 4% 65% 4% Energy usage comparison 9% 48% 30% Pre-paid billing plan 6% 38% 32% 66% 44% 60% 67% 59% 23% A A A A B 45% 59% 69% 60% A A A A B D A A B D E A B D A A A B C Home Energy Management 2% 49% 35% 32% 51% 46% 61% Direct Load Control Program 3% 29% Total Those reporting "probably" or "definitely" would participate Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers & Shakers (D) Green Champions (E) % 92% 35% A B B A B D Critical Peak Pricing Program 4% 44% 27% 27% 49% 42% 54% 14% A B A B A B D 22% 41% 39% B B A B 16% 31% 32% 68% 76% A B A B A B Note: The percent (other than the total already participating column) includes probably would participate and definitely would participate. Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. Q10/Q13: [Program description] If you were offered this program, how likely would you be to participate? 38% 44% 75% 75% 48% 58% 45% 37%

27 Consumer Pulse and Market Segmentation Study Wave 6 27 Consumer Adoption and Interest in Advanced Energy Products Energy storage systems that will provide backup power for the home receive high interest ratings, especially among Savings Seekers, Movers & Shakers and Green Champions. Coupled with the high value consumers in all segments place on reliability, industry stakeholders should find a large and receptive audience for energy storage options. Respondents who reported already participating in online billing and/or payment were more likely to be Green Champions (65% participating versus 33% Movers & Shakers, 24% Savings Seekers, 13% Technology Cautious and 14% Status Quo). Large percentages of consumers are already interested in many of these advanced technologies, but the technologies can be complex and many require significant up-front investment. This presents an opportunity for industry stakeholders to educate consumers by assuming the role of trusted advisor and by providing incentives that help boost adoption. Figure 2-19: Use and Interest in Other Smart Grid-enabled Products Total Already Use or Have Total Those reporting "somewhat" or "very" interested in using or purchasing Status Technology Savings Movers & Green Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) An energy storage system 2% 74% 56% Rooftop or a shared solar installation 2% 58% Programable or smart thermostat Appliances with communication capabilities An all-electric or plug-in hybrid vehicle 9% 1% 1% Online billing and/or payment 40% 35% 41% 69% 81% A A A A B 51% 56% 29% 47% 51% 24% 38% 20% 26% 61% A A B D A A B D A A B D A A A B A B C 33% A A A B C D 35% 36% A 74% 68% 51% 39% 49% 59% 28% 74% 50% 58% 56% 51% 36% 38% 45% 35% Note: The percent (other than the total already use or have column) includes somewhat interested and very interested responses. Analysis excludes Don t Know responses. A,B,C,D,E indicate statistically significant differences between segments. The following illustrates other group differences we observed for each product.

28 28 Consumer Pulse and Market Segmentation Study Wave 6 3. Demographic Profiles Chapter 3 presents additional information about demographic groups that we studied in Wave 6. Unlike our consumer segmentation, which is based on behavior and attitudes, these profiles rely on demographic commonalities. As predictors of action, they are not as reliable as attitudinally-based segmentation, but they can provide additional insight and ways to engage consumers. A Word About Millennials Millennials, those born between 1982 and 1999, are the subject of an upcoming SGCC study in the summer of In Wave 6, our investigation of energy knowledge and values among these younger consumers has confirmed some notions and debunked others. As expected, Millennials are more likely than members of other generations to consider delivery of quality power for increasingly digital homes as an important benefit. These younger energy users are more likely to participate in many energy efficiency programs, including real-time outage reporting, real-time energy usage information and comparisons, home energy management programs and pre-paid billing plans. When they contact their utility and along with Generation Xers they do this more often than other generations they are more likely to use digital means, including apps, websites and social media. While they are heavy users of apps and technology, Millennials do not place as much importance on how Smart Grid can help their utility be more operationally effective as Baby Boomers (those born between 1946 and 1964). Helping Millennials see the connection between the delivery of quality power and operational effectiveness within the utility may be a unique engagement opportunity for this age cohort. Contrary to the notion that Millennials expect many things for free, they are considerably more willing to pay more for Smart Grid compared to other generations (62% versus 35% for the Greatest Generation, 45% for Baby Boomers and 47% for Generation X). And, if they are renters, they are more likely to be willing to invest their own funds to save energy. Finally, it seems that it is not all about them. They are more likely to care about environmental benefits than the oldest respondents from the Greatest Generation (born before 1945) and their slightly older cohorts in Generation X (born between 1965 and 1981).

29 Consumer Pulse and Market Segmentation Study Wave 6 29 Renters versus Homeowners Electricity providers have often found it difficult to engage renters, and this can be a significant challenge in territories populated by students, military or other more mobile consumers. We examined differences between renters and homeowners in this research 8, and as we would expect, renters are more likely than homeowners to feel that energy-saving programs do not fit their needs. And, not at all surprising, homeowners are more interested than renters in technologies that require more permanent installations, such as energy storage systems and programmable or smart thermostats. In addition to the discussion in the section Challenges Among Renters on page 21, we highlight some observations: Significantly more renters reported being willing to pay more for Smart Grid benefits than homeowners (55% versus 46% respectively). Critical peak rebate programs are equally available to renters and homeowners, but renters are less willing to participate in them. While 90% of the renters in our sample pay their electricity bills separately from their rent, they may not be clear about who receives the rebate the renter or the landlord. Renters are more willing than homeowners to participate in pre-paid billing plans. Economic Differences Income levels were assigned based on the number of people in the household and household income. Here, most of our findings are in concert with what we would expect: The higher the income, the more awareness and knowledge reported by respondents. Satisfaction with their utility also rises with income. Higher-income respondents are more likely than lower-income respondents to report environmental benefits as a reason to save energy. Higher-income respondents are more interested in home energy management solutions and near real-time outage reporting while lower-income respondents show more interest in pre-paid billing plans and online billing/payment. Lower-income respondents are more likely than those with higher incomes to report that replacing inefficient equipment costs too much money and is a barrier. They also are more likely to feel that energy-saving programs do not fit their needs. Lower-income respondents are also less likely to have visited the utility s website. Interestingly, when given a choice in their electricity provider, lower-income respondents are more likely to choose a solar installer compared to those in middle or higher income levels. And, they are more likely to cite the Smart Grid s ability to meet the requirements for electric vehicles as an important benefit. This seems to support the notion that monetary support could encourage more lower-income consumers to participate in programs that improve operational efficiency as well as expand access to renewables. 8 SGCC plans to publish a spotlight on renters late in 2017.

30 30 Consumer Pulse and Market Segmentation Study Wave 6 We also examined price sensitivity in this research. Price sensitivity is defined as willingness to pay for energy services and was further explained in the Willingness to Pay for Benefits section on page 18. Following what we would logically expect, the less concern consumers have over price, the more aware and interested they are in energy efficiency and the more likely they are to cite a broad range of benefits of Smart Grid technologies. These less price-sensitive consumers are also more satisfied with their utility. Conversely, the more sensitivity to price that consumers demonstrate, the more likely they are to feel that energy efficiency programs do not fit their needs and if they rent, are less likely to invest their own funds in energy efficiency programs. The message for industry stakeholders is clear help consumers understand the cost/benefit of energy efficiency offers and consider how incentives/rebates that subsidize costs can bring price sensitive consumers into the fold. Geographic Influencers This research examined four different geographic influences: advanced/non-advanced states, choice/non-choice states, seasonal billing variances and urbanization. Seasonal billing variances don t make much of a difference among consumer attitudes, but we find notable differences where technology implementation, electricity regulatory environments and urbanization are concerned. Residents of states with more advanced Smart Grid infrastructures are significantly more knowledgeable about energy efficiency actions. Consumers living in advanced states are also more likely to consider delivery of quality power for increasingly digital homes and meeting the requirements for EVs as important. Respondents in advanced states also report higher satisfaction and more recent contact with their utility than those who live in non-advanced states. Consumers in advanced states are also more willing to participate in direct load control programs and critical peak pricing programs. Residents in the non-choice states are more likely to want to purchase electricity from a solar installer if they had a choice. Consumers in non-choice states are more willing to participate in home energy management programs, critical peak pricing programs and direct load control programs. They are also more interested in online billing and/or payment. Urban and suburban dwellers are more likely to report environmental benefits as important; urban dwellers are also more likely to cite meeting the requirements for EVs as an important benefit. Urban and suburban dwellers are most interested in near real-time outage reporting and tracking, real-time energy usage information, home energy management, online billing and/or payment, all electric or hybrid vehicles and appliances with communicating capabilities. Also, urban dwellers are more interested in rooftop solar than rural dwellers. Consumers living in rural areas are more likely to contact their utility than those living in the suburbs, and they are less likely to use the utility s website to do it. Rural dwellers express less interest in most energy efficiency programs than those living in urban or suburban areas.