Throughout the electricity industry, there is growing recognition that harnessing distributed energy resources (DERs) through Virtual Power Plants (VPPs) is the most cost-effective way for utilities to decarbonize while maintaining reliability. Today fully half of US states are actively pursuing VPP opportunities, as the benefits of VPPs for individual customers, communities, and the grid as a whole become increasingly clear. But to deliver on their promise, over the next six years VPPs will need to buck historical enrollment trends and instead follow adoption curves of mainstream consumer technology products and achieve at least 30%-40% penetration of eligible customers.
Although there are pockets of excellence, current industry averages in terms of participation are well short of where they need to be. When it comes to electric-vehicle (EV) managed charging, today most programs achieve less than a third of their enrollment targets. When it comes to demand response, participation rates need to not just reverse a recent decline of 10% but increase by a factor of 10. This pattern persists across other utility programs as well. Fewer than 1 in 4 households participates in energy efficiency programs and only 8% have adopted any form of time-varying rate.
So how can utilities bridge the gap and turn VPP potential into reality? By focusing first and foremost on the customer experience.
Too often, decision-making processes around VPP initiatives begin with elements like technology standardization, DER eligibility, incentive models, and market rules. Each of these is important to consider, but not without consideration of the customer experience, too. Designing a VPP strategy in this way is like setting up food, music, and decorations for a party without also considering the guest list, sending invitations, and making sure people can attend.
A better strategy is to think more like a consumer product company, and begin with the customer journey. Consider which customer segments are eligible, and how (and where) will they learn about the VPP opportunities. What messages will motivate them to participate, and what should their enrollment experience be like? Once they sign up, how will they stay informed, engaged, and satisfied? Using customer experience as the North Star helps ensure that all other regulatory and programmatic VPP elements are set up for success.
Designing Experiences to Educate, Motivate, and Delight Customers
For VPPs to scale effectively utilities need to reach the right customers, compel them to take action (i.e. enroll), and keep them committed so that those customers become lasting VPP participants.
In many instances, customer awareness is the foremost barrier to VPP adoption. In our annual Voice of the Energy Customer survey, we found that only half of respondents were aware of any utility programs and incentives that they were eligible for. The most common way utilities attempt to reach customers is through traditional email-based marketing strategies, which can be effective but are limited. Utilities need to increasingly meet customers in other channels where they already are – such as utility websites or third-party ecommerce platforms.
While awareness is a prerequisite, ultimately VPPs are predicated on customers proactively opting into a program that grants third-party companies access to monitor and control their most personal and financially significant assets: their homes (and/or businesses) and vehicles. Utilities need to earn that trust by communicating the rules and benefits of a program to every customer in a way that is simple, tangible, and speaks to their unique circumstances and motivations.
Smartphones (and apps like social media) have proven that people are willing to share personal data in exchange for an experience or product they consider valuable, and is tailored to them. This is true in the electricity sector as well – Uplight’s Voice of the Energy Customer’s annual survey found nearly 60% of customers would be willing to share more data for more personalized offers.
If customer flows aren’t thoughtfully designed, streamlined, and individualized then enrollment can be a hurdle for many: at Uplight we’ve seen examples where utilities lose one out of every three applicants due to issues like the inability to verify eligibility and lack of context (for example, a substantial share of customers drop out when asked to approve access to their electric vehicle telematics due to privacy concerns). Enrollments for different devices can also be consolidated into one flow––making it easy for customers while increasing the load flexibility potential.
And the importance of personalization goes beyond enrollments. As a VPP operator controlling customers’ assets (and by extension impacting their comfort and/or their experience) every customer must understand what to expect during a dispatch, when one is happening, and receive individualized feedback about the impact of their participation. Feedback could be how the event affected their bill (or rewards), how the customer contributed to avoiding power outages, or how they helped reduce carbon emissions. Doing so results in high satisfaction, and low attrition rates; failing to do so can cause programs to stall, as customer churn prevents sustainable VPP growth and reliability.
By putting the customer first in VPP program design through an easy enrollment process, clear benefits, and personalized communication throughout the journey, utilities can ensure that customers won’t miss out on the VPP party and their chance to contribute to a decarbonized grid. At Uplight we invest heavily in every aspect of the customer experience, with a user experience and design team that leverages customer insights to ensure every step in their journey is not just simple, but delightful. And now that we pair industry-leading customer engagement tools with best-in-class asset management capabilities, we’re ready to help VPPs truly lift off.
