Gautam Aggarwal, CMO of Bidgely, evolving energy analytics for utilities with the power of data and artificial intelligence.
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Achieving nationally established greenhouse gas reduction targets likely means converting as many fossil fuel-powered activities to electricity as possible. While most people are focused on the cresting electric vehicle (EV) wave and electrification of transportation, a new frontier is emerging.
Fossil fuel combustion from buildings—both residential and commercial—accounts for roughly 29% of the total U.S. greenhouse gas emissions, according to the Center for Climate and Energy Solutions. With a large portion of total U.S. home energy use coming from space and water heating as of 2015, there’s enormous potential to amend heating and cooling strategies to be more energy efficient and less gas reliant. A new urgency to electrify also comes as oil prices rise. Then there’s President Biden’s recently invoked Defense Production Act, which centers around what may be a surprising technology—heat pumps.
The Rise Of Heat Pumps
Heat pumps—which are two-way air conditioners for both heating and cooling that can also serve as water heaters—are said to be more efficient, which may result in comparable or lower energy bills. Although buying and installing heat pumps may cost more than installing air conditioners today, a new bill to establish special manufacturing tax credits could help make heat pumps more affordable if passed. However, is that enough to make people actually buy them?
With the exception of a few self-motivated environmental advocates, the majority of people may not go out of their way to make a seemingly unnecessary appliance upgrade. In my experience, many aren’t even aware heat pumps are an option. Utilities, on the other hand, have an opportunity to become the primary resource and motivator for driving change among home and building owners.
Mass Marketing Versus Personalization
Heat pump manufacturers, HVAC resellers and even the federal government may arguably have a more vested interest in the mass purchase of heat pumps, but utilities are perhaps the only entity with the means to market and sell heat pumps en masse.
We talked before about the role of utility marketers in decarbonizing the electric grid, and again I see them as the powerhouse for change because of their unique position between service providers and end consumers.
For one, many utilities possess an enormous repository of energy usage data (a topic my company’s CEO has discussed), which they can break down not only by individual households and businesses but also individual appliances. By doing this, they can determine how much energy appliances use and at what times. Secondly, utility service is the one thing present in nearly every home and building in the country.
If the past has taught us anything, I think it’s that traditional utility tactics of mass marketing will not be enough to convince the general public to purchase a new appliance. So, what can utilities do to effectively sell and market heat pumps?
Step 1: Identifying Customers With Inefficient HVAC Systems And Water Heaters
Sending every household the same marketing mail is both costly and inefficient, as it may not apply to all customers. Some customers, for instance, may already have heat pumps, while others may not use enough air conditioning to warrant an appliance upgrade.
By using their existing data pools, utilities can instead filter their customer base by location, appliance ownership, time of usage and type of observed behavior—like higher-than-average air or heating usage. Since HVAC devices can start consuming more energy than usual due to degradation over the years, utilities can also run queries on changes in the duty cycle curve to identify inefficiencies. The same applies to water heaters, which may decline in efficiency with time and be more prone to leaks.
It’s important to note that uncovering this level of granularity requires some data analytics work, which will likely require utilities to either hire a team of in-house data scientists or partner with a third-party analytics provider. (Full disclosure: my company offers analytics solutions.)
Step 2: Engaging With Targeted Customers In A More Personalized Way
Once customers with the highest impact value are identified, utilities can then leverage these same insights to personalize paper and e-mail communications. For example, they could create individualized home energy reports that show customers how their actual energy usage—itemized by time and appliance—is impacting their monthly utility bill.
From there, utilities can deliver customers personalized marketing messages that detail the benefits of heat pumps, as well as purchasing recommendations, like rebates or preferred installers. Heat pumps are one use case, but the same applies to electric vehicles, solar power or other decarbonization initiatives.
Step 3: Inspiring Customers To Take Action By Aligning With Their Individual Needs
Presenting the right information to the right people is only half the equation. The other half is motivating customers to take action, which happens when marketers are able to connect with the needs and goals that matter most to them.
Does the customer live in the Arizona desert and have expensive monthly bills due to high AC use? Use annual financing savings as a value proposition for heat pumps. Does the customer already have solar power and an EV? Let them know that switching to a heat pump will further electrify their life and reduce their total carbon footprint.
Conversely, utilities can further use these customer insights to drive measures that align with their own needs and goals, whether those are driven internally, or externally through variables like new regulatory requirements, investor relations or public expectations.
Changing The Energy Conversation
Energy awareness seems to be greatly increasing thanks to the conversations taking place between individuals, organizations and the government. Through personalized data-driven marketing strategies that target the right customers at the right time, utilities have the power to turn conversations into real action, first by educating consumers on energy behavior and then guiding them toward products and services that incite scalable change.
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