Insights: Behavior Change and Energy Efficiency

Proven strategies for encouraging customers to use new technologies and seek financing are critical to the diffusion of energy efficiency solutions. Even with financing, energy efficiency programs face significant hurdles in driving customer demand, particularly in the small- and medium-scale markets. The recent Behavior, Energy & Climate Conference (BECC) 2014 offered insights on customer motivation.

Prepayment for energy services appears to change the way consumers behave. With prepayment, consumers have increased control over household budgets.

Some studies explored at the conference identify what factors drive or impede consumer demand for energy efficiency. The presenters described opportunities to incorporate these findings into marketing programs.

Prepayment for Electricity

Nat Treadway, managing partner at Distributed Energy Financial Group (DEFG), said prepayment for energy services in the United States could change the way many customers interact with energy.

DEFG organizes the Prepay Energy Working Group for industry professionals. The group estimates 200,000 customers currently prepay for electricity in North America.

Prepayment is not a new concept. Everyone prepays for gasoline to fuel their cars. We pay for groceries in the supermarket before we can eat them. Nearly 30 percent of cell phone users are on prepaid mobile plans, according to AT&T. Prepayment for electricity is already commonplace in Europe.

“Prepayment for energy services appears to change the way consumers behave,” Treadway said. Analysis of monthly billing data shows energy savings of 10-15 percent for these programs.

If prepayment results in greater customer engagement in the future, it could drive demand for energy efficiency and lead to interesting interactions with programs like on-bill repayment.

“With prepayment, consumers have increased control over household budgets,” Treadway said. “They receive daily usage and cost information, which informs them about their behaviors that affect usage.”

Treadway described the customer experience with prepaid electric service in Texas, where competitive retail electric providers offer service to the majority of residents. In Houston, 11 retail electric providers offer prepayment options.

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