December 20, 2019
DERs, Solar, Research, Consumers
For many distributed energy resources (DERs), such as rooftop solar and residential battery storage, growth has been remarkable in recent years. Technologies have improved and prices have fallen considerably, leading more and more consumers to find DERs suitable solutions for their home energy needs.
The total energy storage market in the U.S. grew 232 percent from Q1 2018 to Q1 2019, according to Wood Mackenzie, with residential storage growing 138 percent over the same period. Rooftop solar, meanwhile, had its best quarter ever in Q3 2019, according to the Solar Energy Industries Association (SEIA), and total photovoltaic (PV) capacity is expected to double over the next five years.
Similarly, demand response has grown steadily in conjunction with smart meter proliferation, according to the Federal Energy Regulatory Commission (FERC). As smart meter rollouts continue and consumers increasingly install smart thermostats, demand response is likely to evolve and grow in the coming years.
But, while this growth is certainly impressive, it’s important that electricity providers, technology companies and other industry stakeholders stay attuned to the needs and wants of residential energy consumers around DERs. To provide insights and guidance to the industry, the Smart Energy Consumer Collaborative (SECC) recently published the “Distributed Energy Resources: Meeting Consumer Needs” report.
The new report, which is based on separate samples of 1,500 Americans and 543 Canadians, is an exploration of what consumers know about DERs, what benefits they expect, what barriers hinder adoption, how programs should be delivered and more. In addition to the three DERs mentioned above, the report also highlights consumer insights related to home energy management systems, residential wind turbines and community-based DERs (i.e., community solar, microgrids, community wind and energy storage located in the community).
According to SECC’s research, here are the top needs consumers have when it comes to DER participation:
1) Consumers need guidance from their electricity providers along the way.
When it comes to DERs, consumers are often faced with many conflicting sources of information; they may hear one thing from a private contractor, see something else on social media and hear yet a third thing from a friend of the family. Considering the size of investment for some DERs, it’s important that consumers have access to an accurate, trusted source of information.
While there are reliable third-party websites, such as EnergySage, the new report revealed that consumers usually want their electricity providers to be involved in the process of adopting a DER and to provide them with trustworthy information. More than two-thirds (69 percent) want their current electricity provider as the DER provider compared to less than a quarter (22 percent) who want to select a private contractor. However, those who prefer a private contractor generally still want their electricity providers to offer a vetted list of preferred contractors or ratings/reviews of contractors.
Most consumers have an established line of trust and accountability with their electricity provider, especially compared with a private contractor, and this may be why they prefer provider involvement over an unfamiliar third party.
2) Personalized information on estimated savings and payback period is very helpful.
Consumers seem to have preference for electricity provider involvement, but what are their most pertinent areas of need for DER-related information? According to the new report, consumers need information about the savings from DERs — both monetary and usage-related — in order to feel comfortable adopting DERs.
When asked about the benefits they expect for adopting a DER, three-quarters (73 percent) of respondents expect to save money, and half (49 percent) expect incentives upfront to participate. However, looking at consumers’ top barriers to participation is perhaps more revealing of their needs.
With rooftop solar, for example, the top-three barriers are 1) uncertainty around the length of the payback period, 2) the inability to cover the high upfront costs and 3) lack of trust around the estimated savings. Even for DERs with less of a financial investment, such as demand response and home energy management systems (HEMS), similar barriers rise to the top; consumers are skeptical of the promised savings and need help with upfront costs.
Tools that estimate savings based on actual consumer data can be very helpful for consumers in their journey to adopting DERs, as can financing, rebates and incentives that help with related costs.
3) DER adopters are much more likely to adopt – or be interested in – other DERs.
The “Distributed Energy Resources: Meeting Consumer Needs” report also looked at characteristics of current DER adopters, including whether adopters of a particular DER, such as demand response, have adopted any others (known as DER stacking). The report revealed considerable synergy among DERs for current adopters.
For example, among current users of home energy management systems, 62 percent report currently participating in a demand response program – compared with the national average of just eight percent. These HEMS users are also significantly more likely to have solar PV and battery storage at their homes and are more likely to drive an electric vehicle or plug-in hybrid car.
To better meet the needs of these important early adopters, electricity providers can provide them with clear information and offers on DERs that are complementary to what they might already have, thereby improving the customer experience.
Conclusion: Consumers are ready for DERs – if information and guidance are provided
The new report revealed many significant insights on consumers’ needs and wants around DERs, but a big-picture takeaway is that many consumers – especially those in SECC’s Green Innovators and Tech-savvy Protégé segments, who are much more eco-conscious and tech-friendly – find that DERs are good fits for meeting their energy-related values and needs.
However, like in many past SECC reports, the report also found that more guidance and information – especially around the financial aspects – are needed for consumers to confidently adopt these technologies. Electricity providers have a key role to play in helping these consumers learn about and adopt their desired DERs, a win-win scenario that will boost customer satisfaction, reduce peak demand and help create cleaner communities.
To learn more about distributed energy resources and what consumers want, download SECC’s “Distributed Energy Resources: Meeting Consumer Needs” report here.
About the President
Smart Energy Consumer Collaborative President & CEO
I am the President & CEO of the Smart Energy Consumer Collaborative. Before coming to SECC, I worked for Georgia Tech, where I focused on smart grid research projects and helped to submit almost $10 million in grants to ARPA-E and DOE. Before that, I served as the Executive Director for the Georgia Chapter of the Sierra Club where I focused on energy policy and programs. I also served for two years on the Board of the Smart Grid Society for the Technology Association of Georgia.