Understanding Customer Motivations Impacts Enrollment & Participation in Demand Response Programs

Electric utilities are facing unprecedented challenges to meet an evolving public demand. Investments in the distributed generation market indicate an uptick in distributed energy resource (DER) market adoption, including, but not limited to increases in electric vehicle (EV) manufacturing and the associated charging and infrastructural needs, greater battery and solar adoptions, and smart thermostat market growth. While altogether, these elements present an existential challenge to meet demand, they, in turn, provide opportunities for demand flexibility initiatives like demand response, conservation strategies designed to lower energy consumption during peak periods of demand. Encouraging demand response program enrollment and participation is critical to defray the high energy costs associated with peak demand needs, helping to keep customer energy rates lower while increasing grid resiliency.

Incentives

Program incentives are the most straightforward and tangible motivator for customers who enroll in a demand response program. These are most impactful for commercial and industrial DR programs, which tend to have larger incentives but are still a primary driver for residential programs. While incentives almost always play a role in customer participation, they become increasingly important as a program scales. The first people to enroll in a DR program are typically those who are interested in demand response for other reasons (more on these customers later). Once these early adopters have enrolled, the remaining customers in a utility’s service territory may be driven more by financial incentives than by other factors.

Desire to Help

Outside of receiving incentives, some people who enroll in demand response do so because they feel it’s something they can do to help their community. This type of motivation typically falls into two categories:

• People who are more focused on sustainability and the environmental benefits of demand response,
• People who want to act as part of a larger system to help stabilize the grid and prevent outages.

Many utility customers may fall into both of these categories. Different types of messaging focused on one of these benefits or the other can help to target slightly different groups of customers, but for both, the primary underlying motivation is a desire to help and a sense of community.

For utilities and program implementers, there is a lot of room to better educate customers about the environmental and grid benefits of demand response. While this is a motivator for people who already have a basic understanding of how the energy system works, the majority of utility customers don’t fully understand how DR ultimately leads to emissions reductions and grid stabilization. Utilities and program implementers can consider using existing forms of customer outreach – such as email newsletters or social media – to run demand response customer education campaigns as a way to increase customer understanding and engagement of DR programs.

Other Financial Benefits

It is somewhat common for demand response participants to report bill savings as a motivator for enrolling in the program. While customers’ energy usage is reduced during an event, any pre-conditioning for the event as well as restoring normal system function after the event often zero out any reduction in energy use overall. For customers on a time of use (TOU) rate, demand response may prove effective in shifting some of their energy consumption to off-peak hours, and this does result in bill savings for these customers. Generally, though, where residential customers are not on TOU rates, bill savings remain a perceived rather than an actual benefit of program participation.

Demand response programs do, however, offer several sources of financial benefit, in addition to the incentives participants receive upon enrolling. These include any ongoing participation-based incentives; the potential for overall lowered energy rates over time; and ancillary benefits of installed equipment. For example, customers who enroll a water heater control device in a DR program also benefit from the added fault and leak detection capabilities offered by these devices, which represent significant potential savings on repair costs. Additionally, replacing traditional thermostats with smart thermostats has been shown to help people save on their energy bills by better optimizing energy use, even absent participation in demand response.

Customer Motivations & Demand Response Conclusion

Utility customers are driven by a variety of factors in their decision to enroll in a demand response program. These motivations can shift over time, both as a program matures and as additional customers become harder to reach. Gaining a better understanding of what customers care about and what drives participation in demand response can help utilities and implementers not only grow but future-proof their programs.

About The Guest Author

Alex is a senior consultant with CLEAResult’s Distributed Energy Resources practice. She works with clients to help them build, manage, and grow their demand response programs and has experience working with utilities on energy efficiency and demand response program design and evaluation. In her free time, she enjoys running, skiing, reading, and spending time with her husband and dog.