Survey Reveals New Type of Energy Concern: Lack of Consumer Understanding

IBM has unveiled findings from its "2011 IBM Global Utility Consumer Survey," which revealed that many consumers around the globe do not understand the basic unit of electricity pricing and other energy concepts used by energy providers. The company also identified a list of crucial behavioral patterns that have the potential to impact how providers communicate and drive motivation among consumers.

IBM surveyed more than 10,000 people across 15 countries to explore the wants and needs of energy consumers worldwide. The findings expose a major gap between what consumers currently know and what they need to know to reduce energy consumption and benefit from smarter energy initiatives. Over 30 percent of those polled, for example, have never heard of the term "dollar per kwh" or the equivalent currency, and more than 60 percent are unaware of smart grids or smart meters.

The survey also revealed that knowledge is linked closely to people's willingness to embrace change and their approval of local energy initiatives. Sixty-one percent of people with a strong knowledge of energy technology and pricing terms viewed smart meters and smart grid deployment plans positively, compared to only 43 percent of those with minimal knowledge.

"There have been major strides with new energy saving technologies, new programs and incentives, but in many cases the market is seeing more confusion amongst consumers than expected," said Michael Valocchi, Vice President, Global Energy & Utilities Industry Leader for IBM Global Business Services. "This year's survey points to a need and an opportunity to go back to basics and educate consumers by using terms that they understand, behavioral triggers and channels they already use. People want to conserve energy; we just need to get better at showing them how."

Shifting consumers perceptions and influences

The perceptions, expectations and influences of the energy consumer have changed over the last four years. Despite efforts by utilities and others in the industry to create consumer-friendly conservation tools, many consumers still do not have the information or the proper incentives to make better energy choices.  

Some of the key findings from the 2011 IBM Global Utility Consumer Survey find additional relevance when combined with related IBM efforts. Last year, IBM industry experts along with academic experts in consumer decision-making identified several key factors related to consumer usage of electricity. By examining the energy usage through the lens of behavioral economics, utilities have better insight into the thoughts of consumers, their motivations, misconceptions and triggers for change. These behavioral factors include:

Alternative Motivation: Financial incentives are not the only factors that encourage consumers to decrease their energy consumption. In fact, based on the consumer survey, money no longer dominates the decision-making process compared to years prior. Instead, younger consumers today are evaluating choices based on the environment while those over 55 noted the health of their national economy as a key motivator for behavioral change. The first step towards activating behavioral change is by acknowledging that consumers are not simply triggered by monetary drivers, but also motivated by benefits such as comfort, sustainability, and confidence in the nation's economic prospects when making decisions about energy use.

Information Availability: How a choice is framed and presented can make a big difference.  For instance, presenting too many options can at times be detrimental.  While in theory more options should always be a plus, the resulting complexity can ultimately demotivate consumers. This finding is consistent with the IBM survey results which showed that consumers under 25 are prone to follow the lead of others rather than sort through the options on their own, being two and one-half times more likely to rely on their personal networks as a primary source for information than those 55 or older.  By presenting the right balance of choices, utilities can help reduce the need for complex, time-consuming decisions that can hinder a consumer's desire to make independent choices about their energy consumption.

Social Drivers: Another approach for greater adaption of smarter energy is to tap into people's inherent social nature.  People rely on social proof, or the behavior of others, to determine the right ways to act in many situations. This social action trigger is behind the introduction of new programs such as consumer portals which allow consumers to see and compare their usage to those of their neighbors. For energy providers such as Enemalta Corporation and Water Services Corporation in Malta, the portal is instrumental in encouraging consumer adoption and lowering overall usage. This approach demonstrates that social comparisons are frequently a more powerful lever of persuasion.

By understanding the human psychology of choice and decision making, the industry can identify the greatest barriers inhibiting change, discover opportunities for improvement; adopt new methods of communication and design programs that are in line with consumer demands.

Comments

KISS-Keep it simple stupid

All of the above is to complicated, because its a world run by computer geeks and complex technologys. People do need to be educated about energy (why don't they do this in our schools?) but just let energy costs go up and people will respond. An example is the Hawaiian Islands. The residential energy rates are 38 cents per KWhr in some areas. Walk down their streets at night and lights are turned off. They use insta hot water heaters (the showers are shorter). The main services are 100 amp max. I met several people who are building their own wind generators. Utilitys and governments don't want energy rates to go up because they will lose votes.

jerrym's picture

Global Utility Consumer Survey

Not that I think public ignorance of utility operations is a good thing, but I believe that when the public at large DOES get educated about so-called energy "choices" and energy "conservation", they're going to see that these so-called "choices" do not benefit them (CONSUMERS) at all--rather, they benefit the energy PRODUCERS. It has been discovered, usually way too late, that the general public is smarter than the average CEO cares to admit.
This industry has become very adept at making a silk purse out of a sow's ear.
I understand the energy producers' point of view: they want to continue to produce energy, but they're not wanting to invest in the infrastructure to substantially increase the supply--something that would have to happen as world population grows and more countries develop technology and industry. This is not an entirely selfish attitude, but by and large, it is. In North America and Europe, it is difficult to get permission to build new traditional power plants that will satisfy long-term needs. Difficult, but it CAN be done. And it NEEDS to be done. We need to be educating people to combat the false ideologies of the environmental wackos, rather than educating people that supply shortages and inconveniences of a lower standard of living are inevitable. And if we fail to do this, we WILL see supply shortages and a lower standard of living, because we will be forced, at first, to limit our energy uses to certain times of the day, and eventually, to expect regular power outages.
And that is all that energy consumers will see if we push ahead with the "education" talked about in this article. Higher prices, time-shifting our energy usage, and blackouts when someone higher up the food chain wants more power. All the new technology, "green" or otherwise, won't produce a single more kilowatt of power; it will simply better manage the shortage.