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In an era of dramatic change, utilities across the U.S. are increasingly focused on engaging customers and finding new revenue as people demand more control over their electricity use.
One potentially valuable way of doing this is through e-commerce, or allowing customers to shop for energy products online — from light bulbs to thermostats to cashing in on energy efficiency rebates — directly through the utility.
Simple Energy, a small Colorado-based firm using software to “fundamentally change how energy … and people engage,” offers a variety of platforms for utilities to connect with ratepayers. Last year, it launched Marketplace, which aims to improve upon a staple of utility offerings: the efficiency rebate.
Utilities offer discounts on energy-saving products like LED lights or smart thermostats to encourage ratepayers to reduce energy use, which also helps utilities meet state-level efficiency targets. The challenge is that these discounts have traditionally been offered as post-purchase, mail-in rebates — a type of transaction that has not kept pace with today’s panache for online shopping.
Despite being offered what amounts to free money, consumers rarely take advantage of these kinds of rebates, studies show. Only 7 percent of consumers took advantage of an appliance rebate in the prior year, according to a 2014 study by Nielsen. Participation for other energy-efficient equipment was even lower, at 4 percent.
Simple Energy’s founder and CEO Yoav Lurie says the problem is too much “friction” in the efficiency rebate process. Consumers are used to one-click buying and next-day shipping and are less inclined to put in the effort to collect their discount after the purchase. Simple Energy’s Marketplace platform embeds the rebate at the point of purchase and allows ratepayers to buy the product online through their local utility.
“You’re not filling out another form. You’re not putting anything in the mail. You’re not even entering your account number,” Lurie said. “We’re validating who you are. We’re validating what account you have. We’re validating if that account is still eligible for the rebate, and then delivering that rebate to you in the shopping cart itself on the website. So when you hit ‘checkout’ and you put your credit card in, you’re paying the price, net of the rebate.”
Midwest utilities catching on
ComEd, which serves 3.8 million customers across Northern Illinois, launched its own e-commerce website this week using Simple Energy’s platform. The utility says its Marketplace is a major step forward in building a “Utility of the Future” — “a new kind of utility that delivers not just energy, but serves as a platform to connect its customers with valuable products and services that can increase their comfort, convenience, and control,” the company said in a press release.
Launching at the start of the holiday shopping season, the site helps users find discounts on top of the embedded rebate benefit. For example, a six-pack of 60-watt-equivalent LED light bulbs is on sale for $30, down from $39. Factor in a $24 rebate and the light bulbs would cost a ComEd customer just $1 apiece. All of this is displayed simply on the website, which looks similar to shopping online through most common retailers.
It’s not just light bulbs, either. The ComEd Marketplace offers smart thermostats, energy-saving power strips, low-flow shower heads and other smart-home devices.
“Our goal is to provide a quality, convenient service to our customers that will help them make smart decisions about energy savings for their homes,” Terence R. Donnelly, ComEd’s executive vice president and chief operating officer, said in a statement. “This idea evolved from one of our employee hubs designed to foster innovation and we envision that this platform will enable additional products and services in the future.”
ComEd isn’t alone in rethinking customer engagement for the digital age. Xcel Energy uses the Simple Energy platform to sell products to the utility’s customers in Colorado and Minnesota.
In total, 25 million households in the U.S. have or will soon have access to a Simple Energy-based marketplace through their utility, the company says. Opower and Enervee, two other energy-engagement firms, have teamed up to offer their own variation on an online marketplace, which has been adopted by Consolidated Edison in New York.
‘New Energy Consumer’
These utility efforts are all part of attracting what consulting firm Accenture calls the “New Energy Consumer” — a tech-savvy, active energy customer who demands diverse, individualized, interconnected ways of using and even producing electricity.
“Successful energy providers will be those that understand how and why the new energy consumer requires much more than the traditional utility service model,” reads Accenture’s 2014 report on the subject. “They will also recognize that strategies for interaction, new products and services, or in-home technologies should be integrated.”
Moreover, if consumers invest in these smart, interconnected gadgets now, it opens up options down the road for increased demand-response energy management, time-of-use pricing and other smart-grid applications.
“In order for us to support that environment … and to drive the renewable, distributed future, we need to have controllable assets, storage, intelligent connections between devices, and we can only do that with customer adoption,” Lurie says. “If customers don’t adopt the technology, then that future is not going to happen.”
Note: This story has been updated with more recent data on household access to Simple Energy’s Marketplace offerings.