Demand side management programs (DSM) can be frustrating in many ways: They are often met with apathy or distrust, their impact can be difficult to measure and demonstrate to stakeholders, and many fall short of expectations. In a perfect world, energy managers would estimate the potential savings of energy efficiency measures and customers would implement them. But the human dimension of such programs inevitably entails managing a host of complexities such as seemingly irrational behavior, split incentives, and unintended consequences.
DSM programs are arguably about influencing human behavior to create a lasting change in energy consumption habits. Here are a few strategies to help rein in the uncertainties of DSM programs:
1. Begin with Evaluation in Mind
To evaluate a Demand Side Management program is to measure its impact compared to a hypothetical world in which the program never took place. Evaluating a program is necessary to demonstrate its effectiveness to stakeholders, to compare its success against other approaches, and to make decisions about future programs. But evaluation is not easy; one must control for building code, age, weather, economic conditions, and occupant behavior. Evaluators must also consider the social response to the program.
For example, some DSM programs encourage home owners to implement energy efficiency measures, while others induce vendors to market energy-efficient appliances more aggressively. There may also be “free-riders”; customers who would have implemented efficiency solutions in the absence of any DSM programming.
The expertise to rigorously evaluate a program may not be available in-house, but it is necessary to reach an agreement early on about how the program will be evaluated and the data necessary to complete the evaluation. Good places to start are the Uniform Methods Project which includes protocols that standardize how to determine the savings due to different energy efficiency measures, or the Evaluation, Measurement, and Verification framework.
2. Pick the Right Metrics
Performance indicators are important metrics to help track progress, identify problems and take corrective action. There are many metrics that can be tracked, the key is to choose indicators that are valid (measure what they are intended to), non-overlapping, and reliable.
Indicators also need to cover the different stages of the program; for example, offering programmable thermostats to participants goes through at least 3 distinct stages and therefore requires 3 distinct indicators:
- Distribution: How many customers were treated?
- Delivery: How many Home Energy Reports were delivered?
- Impact: What are the attributable savings?
Other examples of potential indicators include email open and reopen rates for customer energy reports. When New Zealand’s Genesis Energy partnered with Ecotagious to add value for its customers, the program generated an 82% email open rate and 68% reopen rate – indicative of very high customer engagement.
3. Forge Alliances
Numerous individuals, groups and organizations have either an interest in your program or at least the ability, for better or worse, to influence its success. There are likely many more potential allies than first comes to mind. Since DSM programs can reduce energy bills for low-income households, local charities may want to be involved; the same can be said of senior citizens and the organizations that serve them. And environmental groups may be interested in a program that reduces resource waste as well as carbon emissions. There are local media outlets and community leaders that can both help with outreach efforts, trust-building and even open rates. Finding allies early on, engaging them, and securing their support can increase Demand Side Management program success.
4. Listen Carefully to Your Customers
One cannot assume customers will adopt a certain energy efficiency measure just because they have been told it will save them money. They may not take up an offer to insulate their attic because they dread the thought of clearing it, they may not install that water-saving showerhead simply because they think it’s too difficult, or they may procrastinate replacing their inefficient fridge because they don’t know how to dispose of it.
There may also be barriers from past negative experiences. Overcoming these barriers requires conscious efforts from the side of the program administrator. To uncover these barriers, introduce creative customer engagement methods that get people talking – and listen to them attentively. One worthy mention is the underrated focus group, which allows the opportunity to probe the participants’ perceptions, experiences and expectations relatively quickly and inexpensively.
5. Leverage Big Data to Maximize Program Impact and Reduce Costs
During the DSM program’s design phase, program managers must make challenging decisions about the program’s strategic priorities, participant selection and timing.
Ecotagious can help you eliminate the uncertainty and identify the most cost-effective program configuration by disaggregating each account’s energy consumption. Augmenting the analysis with household characteristics can help you focus your efforts further on the customers with the highest potential savings. This focus on customers with high saving potential has the additional benefit of reducing marketing costs as well as the burden on customer service staff.
6. Find the Right Channel to Engage Customers
Throughout the program, you will need to engage customers at different times and through multiple communications channels. Utilities now have the option to reinforce the message by delivering insights to customers through print, email, web, mobile and smart speakers.
Behavioural science principles teach us that the message is most effective under certain conditions: Timing, personalization, precision and social proof all make the message more likely to positively influence customers’ consumption choices.
Feedback channels are needed to confirm that the message has been delivered effectively, and the best confirmation is actual change in energy consumption over time. By disaggregating smart meter data, Ecotagious can break down individual customers’ energy consumption and track changes in consumption down to the appliance level without extra hardware or consumer input. This is an extremely powerful feedback mechanism for both the utility and their customer.
DSM programs need not be a frustrating endeavor: Our solutions can simplify all the stages of your program including design, implementation, engagement and evaluation to realize your conservation goals and increase customer satisfaction.