Q&A: Andrea Fabbri, COO of EcoAlign, Focuses on Smart Grid

Earlier this month EcoAlign, a strategic marketing agency primarily focused on energy and the environment (where I am a senior adviser), published a new report “Separating Smart Grid from Smart Meters? Consumer Perceptions and Expectations of Smart Grid. ” It is the eighth EcoPinion report, the latest in a series of a bimonthly, proprietary research reports on assessments of consumer values, drivers and behavior around energy and environmental needs.

This new report focuses on consumer perceptions of the smart grid and I spoke with Andrea Fabbri, COO of EcoAlign, about the findings.

JK: Hi Andrea. Before getting to to your most recent EcoPinion report, could you introduce your company and tell us a bit about why you choose to do research in this market?

AF: EcoAlign is a strategic marketing firm that works with utilities and energy vendors to understand the gap between consumers’ stated intentions and their actual behavior.  We’ve found that the gap is generally caused by two factors. First, it is caused by consumer behavior, which has implications to our clients in terms of market size and scalability.  Second, by the offerings’ characteristics and value proposition, which determine economic viability and consumer appeal.  Much of the energy sector messaging and marketing is technology-focused and consumer values are absent or not fully understood.  So at our firm, we investigate what drives and influences people’s decisions—or lack thereof—and then use that insight to enhance effectiveness of conservation efforts, energy management programs and speed up the adoption of new clean energy and energy efficient technologies.

JK: The report is entitled “Separating Smart Grid From Smart Meters?  Consumer Perceptions and Expectations of Smart Grid.”  First, can you tell us the difference between ‘smart meters’ and ‘smart grid’ and why the distinction is important?

AF: The smart meter is a component of the smart grid.  A smart meter is a digital device that identifies energy consumption and provides an economical way of measuring this information. It also allows for different pricing models for consumption based on the time of day and the season and improves outage detection and responsiveness. The smart grid is an integrated set of technologies that deliver electricity from suppliers to consumers using two-way digital technology to control home appliances’ consumption, save energy, reduce cost and increase reliability and transparency.  In other words, through smart grid consumers have access to a panel or web site in their home with more information, oftentimes real-time, to help manage their energy use and energy bills. As a result, consumers have new options for billing, payment plans and taking advantage of promotions and/ or incentives.  In order to effect consumer behavior, and ultimately buy-in to the smart grid, it people need to understand the difference.

JK: The report clearly focuses on the consumer perceptions and expectations. What were you hoping to uncover?

AF: Our objective was to uncover people’s expectations and concerns around smart grid and compare the findings against how utilities are communicating smart grid investments to their customers and the communities.  We wanted to see if messaging was aligned with consumer expectations, how it effectively it is used by utilities to communicate the value of smart grid to stakeholders. Bottom line: to answer the question whether current messaging is conducive to success or potentially detrimental.

It should be noted that in focus groups we conducted on behalf of utility clients, smart grid was labeled as an ‘expensive fantasy.’ The comment derived from connecting two key thoughts: first, utilities today are far behind in terms of customer experience and empowering energy management; and, although appealing, the smart grid vision seems to so far from reality that it seems like a fantasy. At the same time, people recognized that improvements had to be made but were afraid of the costs that they would have to bear.

JK: It makes sense that consumer acceptance is a key driver to the success of the smart grid. Where do things stand on that?

AF: On one hand, Smart Grid is up for grabs. The lack of awareness around it provides an opportunity for companies to establish and define it. On the other hand, consumers currently see smart grid primarily as a means to lower and manage rising energy bills. This is in line with the fact that almost 65% of Americans are either cost conscious or value buyers. The implication here is that if smart grid does not reduce utility bills, or the savings are not visible or don’t offset by rate increases, smart grid will likely be seen as an expensive failure.

Smart grid is seen as a commodity. Customer’s expectations of lower bills and expectations that bills may go up with new meters, presents a communication challenge especially as utilities implement new time-based rate designs.

JK: What did the research reveal about how well utilities are about communicating with consumers and what are the key challenges they face?

AF: Utilities face two messaging challenges. The first one is around timing.  Savings will be a benefit delivered through smart grid but it will take time for this advantage to be delivered to customers. Prices of energy are going up and it may be dangerous to promise savings in the short term. We argue that utilities should focus on a two-tier messaging strategy. A first phase could wrap smart meter deployment with a focus on enhanced reliability, outage responsiveness and visibility into energy consumption. A second phase could be focused on savings, convenience, pricing plans, and other bundles. This would set expectations correctly and time messaging to correspond with when benefits will actually be delivered not just promised. This is critical given energy is perceived to be a commodity.

The second challenge pertains to the operational side of communications.  Utilities will have to significantly improve their online assets and show that they truly understand and know their customers. The potential backlash here is that customers may not perceive technology to be ‘smart’ if the customer interface is outdated and doesn’t recognize customers’ preferences can characteristics.

JK: Thanks, Andrea. It sounds like there is still a lot of opportunity to shape the conversation and you are helping to do just that.

AF: We certainly hope so.

Readers can get more details and the complete analysis by going to EcoAlign.com to download the full report for free.

Jennifer Kaplan is adjunct faculty in Marketing at Marymount University, author of the new book, Greening Your Small Business and a Senior Adviser to EcoAlign.