June 19, 2020
Research, Consumers, Beneficial Electrification
As electric utilities and policymakers look for ways to address climate change and decarbonize the economy, electrification is one emerging strategy that is increasingly gaining attention in the industry. With the emissions rate of electricity generation declining year-by-year, electrification is likely to decrease greenhouse gas emissions in many areas. According to the Regulatory Assistance Project, beneficial electrification can also save consumers money and enable better grid management.
Given this potentially bright future for beneficial electrification, the Smart Energy Consumer Collaborative (SECC) commissioned a nationally representative survey of 1,200 Americans to investigate consumer interest in transitioning to electricity from fossil fuels in transportation, space heating, cooking and water heating. The “Beneficial Electrification: The Voice of the Consumer” study also examined potential barriers that might stand in the way of this transition, how consumers view the role of utilities and policymakers in facilitating this transition, and what messages might encourage action.
Based on the new study, here are three key takeaways on how residential consumers think about beneficial electrification:
1. Consumers are highly supportive of electric transportation infrastructure.
Perhaps one the of most remarkable findings from the research is consumers’ widespread support of transportation electrification, including electric vehicle (EV) charging stations, electric public transportation, electric school buses and more. In the online survey, consumers were asked to rate the importance of these types of investments on a scale from “very unimportant” to “very important”; respondents were asked about the importance of government and electric utility investments separately.
The survey revealed that consumers find these investments important at surprisingly high levels. More than two-thirds (68 percent) of all consumers believe it is very or somewhat important for the government to invest in EV charging stations, and the same percentage would like utilities to invest in EV charging. This number is much higher than the percentage who would likely purchase an EV for their next car, suggesting that consumers believe these investments are important for the future of our society.
Consumers are also supportive of investments in the electrification of public transportation and municipal fleet vehicles at high levels; 61 percent believe it is important for government to invest in electric public transportation, and the same percentage supports government investments in electric municipal vehicles. While electric school buses were the lowest of any investment tested, over half all consumers still believe it is important for both utilities and government to make this investment.
2. A price differential does not significantly impact those that are most interested.
In the report, we investigated the impact that a cost differential would have on whether consumers will purchase an electric vehicle, water heater, cooking range or home heating system. Green Innovators and Tech-savvy Proteges are expectedly the most interested in switching when there’s no cost differential, although the Movable Middle demonstrate considerable interest in electric hot water and space heating (21 and 24 percent would make these purchases, respectively).
It’s no surprise that adding a 10-percent cost increase to all of these products lessens consumers’ willingness to purchase them; however, the impact is far from universal. The Movable Middle are severely impacted by a price increase. Twenty-one percent would buy an electric water heater if the price is the same; however, only seven percent are interested with the price increase. Green Innovators and Tech-savvy Proteges, on the other hand, are steadfast in their willingness to make these purchases, suggesting that these two segments are motivated more by their core values of sustainability and an affinity for technology. For the Green Innovators, willingness to purchase an EV or plug-in hybrid only drops from 51 to 47 percent with a 10-percent increase in cost, and willingness drops from 41 to 37 percent for the Tech-savvy Proteges.
For both of these segments, willingness to purchase an electric water heater drops five percentage points with a price increase, while an electric home heating system is the most significantly impacted by price. Interest drops five percentage points among the Green Innovators, but seven percentage points for the Tech-savvy Proteges.
3. Consumers’ top barriers to residential electrification are mostly cost related.
Consumers that stated that they were not interested in switching to electricity for water heating, cooking, space heating and other tools were asked to select their top reasons. These insights can be helpful to stakeholders as they design programs and educational initiatives to maximize consumer education and engagement.
For both electric space heating and water heating, the top barrier cited by consumers – by a considerable margin – was the belief that fossil fuel-powered heaters are less expensive. While this may be the case in some service territories, heat pump heating systems, for example, can be much cheaper to operate than a natural gas-powered equivalent. In addition, time-varying rates, smart thermostats and demand response programs may further decrease the cost to operate electric space heaters and water heaters. For these technologies, stakeholders can provide cost estimate calculators, bill simulators and other tools to make the financial comparisons more transparent and understandable for consumers. Rebates – either through an online marketplace or at brick-and-mortar retailers – can also help mitigate upfront costs for consumers that would like to make the switch.
With cost being a top concern for the most energy-intensive electric appliances (electric water heaters and space heaters), stakeholders also need to ensure that rate design helps customers save money when electrifying and encourages them to engage with these technologies. Demand charges, which drive up consumers’ energy costs in an opaque manner, may inhibit the transition to beneficial electrification.
For electric cooking, functionality – not cost – is the top barrier for consumers. Forty-two percent of those not interested stated that they dislike using electricity to cook and that they have better control with gas. Since there are improved control benefits with new electric induction cooking, stakeholders can introduce consumers to this technology through live demonstrations and through educational materials around use of modern electric cooking technology. For other tools (such as yard tools, sump pumps and generators), no single barrier received more than 18 percent. Coupled with the very high consumer interest in this area, this suggests that these types of tools could be a good starting place to begin engaging consumers in the concept of electrification.
Conclusion: Consumers are ready for beneficial electrification
The new “Beneficial Electrification: The Voice of the Consumer” report reveals that Americans are generally supportive of a transition from fossil fuels to electricity for transportation and residential applications. If electric utilities and policymakers pursue beneficial electrification as a means to address climate change, they will likely find many consumers engaged and supportive participants in these efforts. There are barriers that need to be addressed, but these can be easily overcome if stakeholders start by listening to consumers’ needs and wants.
To learn more about residential consumers, beneficial electrification and climate change, download SECC’s “Beneficial Electrification: The Voice of the Consumer” 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.