U.S. utilities spend billions of dollars every year on energy efficiency programs, but maximizing the kilowatt-hours saved per program dollar spent isn’t a simple task.
Utilities have to balance consumers’ desire to shop in ways they’re familiar with in today’s e-commerce-driven world with demands from regulators, contractors, home improvement retailers, and energy-efficient appliance and smart thermostat vendors.
These are the challenges that Simple Energy is hoping to solve with its newly launched Marketplace platform. On Tuesday, the Boulder, Colo.-based startup announced it is taking the platform live with long-time customer San Diego Gas & Electric and an unnamed Midwest utility, collectively serving 2.5 million customers in California and Colorado.
Marketplace will offer products such as smart thermostats from Nest, Honeywell and ecobee, energy-efficient washers and water heaters from General Electric, and other energy-saving gear through a high-end online portal white-labeled under each utility partner’s logo.
It’s a good-looking interface, and it’s informed by Simple Energy’s analysis of smart meter and customer account data, along with social media and other outside-the-utility data sources. That’s not atypical for the more consumer-conscious utility-to-home technology providers such as Opower, Tendril and C3 Energy.
But importantly, Simple Energy’s platform will also offer rebates at the point of sale, rather than through a mail-in rebate, said founder and CEO Yoav Lurie.
That’s important, because the company's “initial data shows that instant rebates can increase efficacy by an order of magnitude," according to Lurie. Anyone who’s felt it a hassle to fill out a rebate card and send it in -- or has forgotten it completely -- might understand why instant POS rebates could be attractive.
“We are the only player with an integrated instant rebate for utilities,” Lurie claimed in a Monday interview. The key term here is "integrated" -- “It’s really hard to do all the work in the background to weave together a broad swath of partners who have contracted with us,” he said.
Beyond the brand-name vendors on its website, Simple Energy has integrated with the back-end systems of companies such as Ecova and CLEAResult, which run massive utility efficiency programs, he noted. Those companies, or their in-house utility equivalents, are tasked with recording and reporting on every aspect of the efficiency program process, from figuring out what combo of products, services and cash-back offers will get the most people involved without costing too much, to making sure that all that’s purchased ends up getting installed and delivering a measurable efficiency payback.
Often enough, utilities have trouble meeting their target spending -- energy audit data from The Nielsen Company shows that less than 7 percent of customers make use of utility rebates, Lurie noted. Utilities are under pressure to meet those targets because “the vast majority of the regulatory compacts for energy efficiency now have specific kilowatt-hour goals,” he said.
There’s also something of a pent-up desire for utility help on home energy efficiency. According to a 2013 Accenture report, 58 percent of customers want their utility to provide recommendations on energy-efficient appliances and housewares. Simple Energy is already delivering personalized online, email and mobile alerts and information to about 500,000 customers per month at utilities including SDG&E, National Grid, the municipal utility of Hamilton, Ontario, and a few others Lurie declined to name. It will use the same combination of behavior-informed channels to target efficiency pitches to Marketplace customers, he said.
Simple Energy likely won’t be the only company to break the instant online utility efficiency rebate barrier -- if in fact somebody hasn’t broken it already without broadly announcing it. But Lurie hopes the new platform will catch on with customers sufficiently well to get more utilities interested. As for how his company profits, “every time we sell a Nest thermostat with a $100 rebate” or anything else, “we’re making the margin, just like Home Depot or Amazon would make the margin.”
At the same time, different companies in the space are taking on different utility needs that Simple Energy isn’t going after, he said. Take Arlington, Va.-based Opower, the country’s market leader, which last week launched its newest set of utility customer engagement and back-end support software tools, adding such functions as customer calling centers to its portfolio. That’s something Simple Energy isn’t doing, Lurie said. Likewise, the company hasn’t sought non-utility partners such as third-partysolarcompanies, as its hometown rival Tendril has done with SunPower, he said.
But all three companies are there to help utilities compete for customer attention and loyalty against a long list of potential rivals on the home energy front. Home automation and security players, telecom and cable companies, and rooftop solar aggregators are all trying to grab a piece of the still-nascent market.
Utilities are struggling to keep customers in this new landscape, making this kind of customer marketplace a launching pad for new products and services.
“Utilities need to find ways to monetize the customer in ways they’re not doing today,” he said. “This is the very first step.”