Energy: Making flexibility pay off

The head of customer propositions at an energy retailer says that as recently as five years ago it was difficult to engage customers about energy. “Fast forward to where we are today. With the MWHHS on the horizon and access to smart meter readings, we have a different landscape, and some really good tools at our disposal.” By using smart meter data, the utility is incentivising customers to move usage outside peak hours, for example.

But that path has not been straightforward. “We’ve been on an evolution over the last couple of years.” The company started with a single target for customers, asking them to shift demand in a four-hour slot in the afternoon and evening. In practice, the goal was too difficult for many consumers to hit. “Over time customers would get fatigued if they continually failed to get a prize or win. They would disengage with the product, meaning they potentially disengage with flexibility altogether – that’s the danger.”

The proposition was adapted to include tiered layers of incentives, rewarding customers more easily with credits on their bill. “We now effectively reward every single positive action the customer takes. For any energy usage shifted outside the peak, the customer receives entry into a prize draw.” The duration of the peak has also been reduced to two hours to smooth the process.

“We’re now able to speak with customers on a daily basis, showing them where they are at with their daily usage and how close they are to the target. Every tiny movement outside the peak brings entry into the prize draw – and the biggest prize is a year’s free energy.

“As a result, customers are engaging like never before: they visit their data profile frequently; that’s one of the pages with the heaviest traffic on our app. From a social proof perspective, we also find that people want to share the good news that they have engaged and won a prize.”

This proposition has several benefits. The utility experiences the commercial advantages of settling at half-hourly intervals and the net-zero mission benefits, too. “We are passionate about decarbonisation, and we see a massive trend in people using energy outside those peak times.” This has saved 200 tonnes of carbon, while more than £2.8 million has been credited to customers’ bills, and 1.9 million kWh of electricity demand has been shifted outside the peak. The retailer also now offers ‘flex events’ that provide an opportunity to engage without the need for extensive behavioural change.

The result of these initiatives? About 100,000 customers are now involved in flexibility, the head of propositions explains. Using smart meters and being comfortable with digital technology are important starting points, they add.