Most businesses and residential consumers surveyed realize the need to address climate change. But while businesses are upping the ante in managing resources, some residential consumers are still held back by cost and complexity.
Businesses and residential consumers of electricity generally agree on the need to address climate change and reduce their carbon footprints. And both segments are interested in new and evolving technologies and applications to help them manage resources and use cleaner energy sources. But beyond that, the two groups diverge. Residential consumers are circling in a holding pattern, sometimes stymied by costs (time- and budget-related) or by the complexity or lack of options, while businesses are moving resolutely forward, becoming more sophisticated, achieving success, and upping the ante.
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These are the themes that emerge from the ninth annual Deloitte Resources 2019 Study, which asked more than 1,500 US residential consumers and 600 US businesses about their attitudes and actions regarding energy and resource management.
Businesses see opportunities to create new value by conserving resources, diversifying energy sources, procuring renewables, and deploying energy management systems and applications. Residential consumers are doing the best they can, but for many of them, the value proposition either isn’t there or isn’t clear. First adopters have already taken the plunge, while other consumers may be seeking warmer waters before they dive in.
Consider these key business results from the 2019 Study:
While the desire to cut costs is the top driver for resource management programs, cited by half of business respondents, just the “right thing to do” rose 11 points in 2019 to second place, at 39 percent (figure 1).
Eighty-four percent of respondents were aware of US and global climate change reports issued in late 2018 containing grave assessments.1 Nearly two-thirds of those familiar with the reports reviewed or changed their energy management strategies in response, and 83 percent of those increased their commitment (figure 2).
Nearly 9 in 10 reported having resource management goals, and the percentage that reported having formal goals rose 9 points from 2016 to 63 percent in 2019, with a corresponding drop in those reporting informal goals.
The percentage of businesses that reported allocating the highest degree of effort and resources to their resource management programs rose from 39 percent for 2016 to 67 percent for 2018.
About two-thirds say their customers are demanding that they procure a certain percentage of their electricity from renewable resources, and a rising portion (72 percent) actively publicize their sourcing of renewables.
Nearly 9 in 10 (87 percent) reported participating in demand response programs at least occasionally if available in 2019, up 8 points from 79 percent in 2017.
As these findings suggest, while businesses are still driven to manage resources for economic reasons, they’re increasingly motivated by climate change and sustainability as well. They’re paying attention to environmental issues and upping their game. They’ve set more ambitious resource management goals, increasingly in multiple resource areas (that is, electricity, natural gas, transport fuels, and water), and have put more effort into achieving them, compared to prior years. More businesses have formal resource management plans in place and they’re increasingly linking them to employee compensation. While initial cuts are getting easier and there are fewer barriers to progress, programs are also becoming more sophisticated. Results of resource management programs are improving, and businesses are feeling their success. And that success is no longer the domain of large companies but has spread to many mid-cap and smaller companies, which are also upping the ante.
Many businesses are becoming more flexible in their approach to cutting costs, such as by boosting participation in demand response programs. And in response to customer demand for cleaner energy sources, nearly half of the businesses surveyed are seeking to procure more electricity from renewable sources. This is consistent with prior years, but a rising percentage is actively publicizing their efforts. While most continue to favor simpler energy management tactics such as using sensors and timers on equipment, they’re also looking to diversify energy sources, boost resilience, and manage their environmental impact more actively by turning increasingly to onsite generation.
Consider these residential consumer results from the 2019 Study:
Sixty-seven percent of residential consumers are very concerned about climate change and their personal carbon footprints, in line with previous years (figure 3).
Keeping their total energy bills affordable rose five points to 63 percent in 2019, continuing to be the most important energy issue for households, while using clean energy sources fell slightly from 2018 to 50 percent, in line with prior years (figure 4).
Fourteen percent of residential consumers use a software app for energy management and 22 percent of them consult the app daily. For millennials, the trend is more pronounced: 18 percent use an app, out of which 29 percent use it daily.
Among residential consumers who have not installed solar panels, roughly half would be interested in combining solar panels with a battery storage unit. The biggest hurdle for those who are not interested is uncertainty about the benefits of solar-plus-storage, at 34 percent.
Residential consumers share the business segment’s concern about climate change and reducing carbon emissions, but many are being held back largely by cost and complexity. While businesses see resource management as a way to create value rather than as a cost, residential consumers still see affordability as a barrier to adopting new technologies and cleaner energy sources. What’s more, the messages they’re receiving about new technologies, alternate providers, and other options do not seem to be coming through clearly. Whether it’s installing solar panels, enrolling in green energy programs, or purchasing battery storage or electric vehicles, many residential consumers still see those options as too expensive. Or they don’t understand how to access and implement them or what the benefits would be.
A growing exception is Millennials, who consistently rate clean energy and technology options higher than other age cohorts. Based on responses to the Study, they’re more receptive to messaging about new products and services, more willing to try them out, and even potentially to pay more for cleaner energy sources if necessary. For incumbent electricity suppliers and new entrants, engaging and communicating effectively with residential consumers from this generation and like-minded residential consumers from all generations is a goal that could open up opportunities to create value.
For more insights, read the full report, Deloitte Resources 2019 Study.