Gautam Aggarwal, Marketing Director of Bidgelyscalable energy analysis for utilities through the power of data and artificial intelligence.
The Inflation Reduction Act (IRA) was designed to accelerate energy efficiency and decarbonize the power grid through a series of new economic and industrial policies, leveraged by $369 billion in funding. Although the bill broadly describes how funding is distributed (i.e. 47 billion dollars for the electrification of transport, 3 billion dollars for the modernization of transport infrastructure and $8.8 billion for home energy efficiency rebates), state governments, energy regulators and utilities have the reins in determining how this money is allocated and implemented.
Since these entities all agree that significant energy efficiency will be best achieved through home energy programs and initiatives that support energy efficiency for low-to-moderate income (LMI) homes, they have placed a strong emphasis on using IRA funding to shift the times of day when homes use the most energy.
Prior to the IRA, utility proposals for time-of-use (TOU) rate plans were often blocked by approval from regulators. Today, however, approval is coming faster than ever, with regulators actively encouraging – and in some cases requiring – utilities to implement TOU plans.
The problem: Utilities now must recruit customers into TOU plans under very tight deadlines. Since history has proven that most people will not willingly sign up for new rate plans if it means their bill might increase, utilities are incorporating artificial intelligence (AI)-based marketing strategies not only to improve how And What they communicate these changes to customers but also improve WHO they are targeting new TOU pricing plans.
Management of pricing plans based on time of use
Implementing time-based utilization plans is a delicate balance. This can certainly save money for some people, such as those who work outside of traditional 9-5 hours, charge an electric vehicle (EV) overnight, or have flexible schedules at home that allow them to easily move high-load activities like laundry and dishes. until the middle of the day. But not everyone can be that flexible, in which case lifetime pricing can actually increase monthly bills.
Additionally, if every customer were to switch during the same off-peak hours, a new peak would subsequently form, leaving utilities once again with limited network assets. This is why, rather than recruiting customers en masse or imposing a territory-wide rate change, utilities are seeking to select customers for lifetime targeting based on two main categories : those with the greatest load demands and those with the greatest money-saving potential. .
But utilities serve millions of customers, and sending the same marketing message that encourages households in both categories to sign up for TOU plans is a surefire way to fail. Instead, utility marketers can personalize communications based on individual home consumption habits, such as electric vehicle charging or heavy air conditioning use.
Crack down on high energy consumption
Take electric vehicles, for example. AI helps utility marketers know the exact times, day or night, that customers charge their cars at home, which marketers can then use to segment customers who charge during the hours peak from 4 p.m. to 9 p.m. and thus contribute to higher volumes of load on the network. (The same goes for other appliances, like air conditioning.)
Now marketers can provide personalized messages detailing how much a customer’s current billing models cost them each month, along with a sample TOU invoice. Equipped with better knowledge of their actual energy consumption, customers are ideally more inclined to subscribe to a TOU tariff plan.
For example, a sample message might look like this: “Hi, Bob. You charged your electric vehicle for a total of 12 hours this week. The majority of your recharges occurred during peak hours, 5 p.m. to 9 p.m. If you sign up for our new time-of-use pricing plan and change your charging from 10 p.m. to 2 a.m., you can save $35 every week.
Personalization is key in these cases because messages about electric vehicles only resonate with customers who own electric vehicles, messages about air conditioning only resonate with customers who own air conditioning units, etc. .
But what happens when customers sign up for TOU plans but don’t always change their usage? Their bill could see a significant increase.
However, this should not be a real concern for customers as long as utility marketers also use this same segmentation and targeting strategy to communicate when the customer’s usage is about to reach hours of point. For example, utilities can send email or text alerts before the customer crosses this maximum threshold. And because TOU rates can be confusing to many people, utilities can also send out personalized educational materials, like FAQs or webinars focused on electric vehicles. By speaking the same language as their customers, utilities gain more trust from their customers.
Create transparency between customers and utilities
The primary objective of IRA funding, and by extension TOU strategies, is to support greater energy efficiency. Although much of society shares this sentiment, energy consumers need adequate motivation to make meaningful changes to their lifestyle. It’s up to utility marketers to develop sophisticated communications strategies that give customers insight into how their personal energy consumption impacts the grid as a whole.
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