Best behaviour: getting to grips with behavioural science

Utilities need to build deeper knowledge on behaviour change if they want to prompt demand side efficiencies that will help tackle the impacts of climate change and enable more meaningful support to vulnerable customers. Industry leaders due to speak at Utility Week Live in May share their thoughts on the challenge.

As utilities square up to a resource-stressed future in which they will need to make smarter use of their asset base to maintain affordable services, consumer behaviour is becoming an increasingly critical dependency.

The promise of a low-carbon future will be lost without pervasive changes to consumer behaviour, including a shift in attitudes and awareness to increase uptake of low carbon heating and distributed energy technologies, which still face financial and practical barriers.

Demand-side flexibility and the ability to shift power demand when supply is high or low will ease problems with network capacity and smooth the integration of distributed renewable sources. Likewise in water, driving demand reduction will be critical to maintaining sustainable supplies for a growing population which is reliant on a diminishing life-giving resource delivered via infrastructure which is in sore need of renewal.

Moreover, mastering the art of consumer influence could help utilities do more than increase resilience in service delivery. The ability to understand and influence consumer behaviour also plays into the sector’s fight for legitimacy at a time when it’s under increasing scrutiny. And in a linked challenge, it will play a key role in their quest to provide better support for vulnerable customers, including those hit by the affordability crisis and widening fuel poverty gap.

But deriving benefits from behaviour change relies on the ability to tap into consumer motivators and create a willingness in people change habits and shift consumption to different times. With public responses to the above challenges ranging from enthusiasm to outright objection, energy and water companies are rethinking commercial models and ways of engaging with consumers to achieve their varied objectives. Initiatives being spearheaded include a drive to better engage people with flexibility through competition, disaggregated energy statements for smart meters and a plan to open up data on vulnerable customers to improve support.

“Organisations in the water sector really need to work together to understand what motivates people to change the way they do things,” explains Ana-Maria Millan, policy manager at consumer group the Consumer Council for Water (CCW). “There’s a role for messaging, and changing social norms so that people are not blamed for negative behaviours. Instead we should emphasise positive behaviours – if the majority of people are doing something good, we should use that to push the ones who are not to do better.”

Ana-Maria Millan will speak about the science of behaviour change on the Customers and Teams Challenge stage at Utility Week Live on 17 May. Full programme details can be found here.

Playing catchup

The science of behaviour change remains a fledgling field for utilities, and according to Toby Park, head of energy & sustainability The Behavioural Insights Team – a former UK government unit turned social purpose company – energy companies are currently “a step or two ahead” of water companies in terms of exploring behavioural interventions.

Nevertheless, he says energy companies still typically lack in-house behavioural science expertise and those that have “customer insights teams” typically take a less than scientific approach. “The technical knowledge to run behavioural trials, rigorously, is not always available in-house, although I suspect that may change,” says Park.

Toby Park will speak about the science of behaviour change on the Customers and Teams Challenge stage at Utility Week Live on 17 May. Full programme details can be found here

Growing public awareness of the impacts of climate change, resource scarcity and the rising cost of energy have helped push the debate around changing consumer habits forward and in recent months.

National Grid ESO hailed the success of its Demand Flexibility Service, implemented over the winter to incentivise consumers and suppliers to industrial and commercial users, to voluntarily switch consumption away from peak times. Adopted by providers including Octopus Energy, British Gas, EDF, Ovo Energy, it delivered a reduction of almost 800 megawatt hours throughout events up to the end of January.

James Kerr, consumer strategy lead at National Grid ESO says the system operator was “pleasantly surprised” that over 1.6 million households and businesses signed up to the DFS, adding that anecdotal evidence also showed the range of different types of consumers getting involved was equally pleasing. “We’re exploring this in more depth through an evaluation of the Demand Flexibility Service from a consumer lens and we’ll be sharing some early insights at Utility Week Live,” he says.

In water meanwhile. research conducted by South West Water in 2022 found that, after drought was declared across the region earlier that year, some 79% of its customers said they planned to make long-term changes to reduce their water consumption.

A precursor to encouraging water conservation is understanding water usage, but this is complicated by the fact that many consumer behaviours remain hidden (little is known about water use in bathrooms), habitual, or subconscious.

Recent research by CCW found a significant difference between consumers’ reports about their kitchen sink habits and what they actually do. The study quizzed 15 different households across England and Wales about their habits and compared the comments with real life observations of behaviour recorded on motion-sensitive cameras.

It revealed that consumers often have difficulty accurately reporting their own behaviour, by trying to put a positive spin on it, and lack awareness of the link between water usage and the environment.

Millan tells UW: “Sometimes there’s a disconnect, people perceive the UK as a wet country, so they think water is available all the time, or they don’t connect their own actions with an effect on the environment.”

Consumer messaging is also important to understand, she adds, messages need to be targeted at the right audience and “any changes that you want to promote need to be small and not burdensome, or require people to invest money.”

To this end, Millan points to the success of recent consumer incentive schemes, including the Help Stop The Drop campaign run by South West Water to help restore reservoir reserves. With storage levels within Colliford Reservoir in Cornwall falling to their lowest recorded levels in 2022, the utility offered customers a £30 bill credit if the reservoir reached 30% storage capacity by the end of the year.

Proving grounds

Escalating energy prices, though painful for many consumers and businesses, have created arguably the ideal circumstances for the government and suppliers to encourage more energy efficient behaviour.

According to official feedback from National Grid ESO on its Demand Flexibility Service, the scheme motivated consumer engagement in “previously unseen and active ways beyond being passive energy end-users.” It also helped people “understand the value they play in the energy system and ‘feel’ what a huge impact their small behavioural changes can have.”

The success of the initiative has inspired suppliers to experiment with new approaches to getting customers involved. Utilita Energy is testing how different ways of communicating with customers could affect their “strength of response” beyond the basic message that it will save them money.

“One approach is baselining, telling customers the energy we expect them to use during a certain time of day and setting them a target to reduce it by,” says Archie Lasseter, head of sustainability at Utilita Energy. “We also want to test out comparing customers’ energy saving to other similar users to see if that kind of peer-to-peer competition engenders any significant change in behaviour in terms of whether they’re more or less inclined to reduce consumption.”

Evidence has shown that making material changes to an individual’s “choice environment”, for example introducing new incentives or norms, or altering the friction/ease of different options, is more effective at changing behaviours than a focus on communications alone.

Nevertheless, according to Park, the sheer range of possible behaviours and audiences underlines the need for organisations to carry out careful analysis of barriers to adoption and develop interventions to suit.

For example, in a scenario where an energy supplier wants to encourage heat pump adoption they “should absolutely be focusing on upfront costs, bringing forward long-term cost savings, making the adoption journey easier and de-risking the decision for consumers,” says Parks.

Very different solutions are required to encourage consumers to save energy at home, he adds: “Information provision can be worthwhile here, for example our data shows that people routinely overestimate the energy savings associated with turning off lights, and they don’t know how much energy they could save by reducing their boiler flow temperatures.”

Smart meters give customers insights into any wasteful energy consumption habits, and innovative technologies that drill deeper into usage data could help amplify the benefits in the longer term.

Utilita offers a service to customers with internet-connected smart meters that disaggregates consumption data to give a breakdown on the amount of power used by individual appliances, such as the fridge freezer, games console, the cooker, or the washing machine. “These insights are delivered via an increasing variety of channels, including in-home displays, emails and our app,” says Lasseter. The service is currently available to “a few thousand” customers, but the intention is to roll it out to hundreds of thousands of customers over the next 12 months.

“With the majority of our customers in lower income households, we look at multiple models such as education deficit, nudge and peer to peer to ensure customers have all the tools and information they need to hand to understand where their energy is going,” Lasseter adds.

Archie Lasseter will speak about the science of behaviour change on the Customers and Teams Challenge stage at Utility Week Live on 17 May. Full programme details can be found here

The concept of “gamification”, which involves applying game mechanics and principles to non-game contexts is a proven way to motivate and engage users. Utilita has integrated this feature into the My Utilita smartphone app to rate users, from one to five stars, on how well they save energy compared to a benchmark for the type of property they live in. It then provides hints and tips on how to improve their rating.

Support network

At a time when the pool of people considered vulnerable is increasing – a 2022 study by the Financial Conduct Authority found that 15% of the population identified themselves as having at least one characteristic of vulnerability – utilities have an even greater responsibility to identify customers who are struggling and ensure they provide services to meet those needs.

Recent research highlights the scale of the challenge at hand. A survey by not-for-profit Vulnerability Registration Service (VRS) found that some 82% of vulnerable people had not been proactively asked by their utility provider if they are vulnerable. In addition, analysis by Ofgem last year, of how energy suppliers manage customers in vulnerable situations, identified the need for clearer policies and procedures to identify customers in a vulnerable situation and to ensure that customer-facing staff are trained to identify and support them.

National Grid ESO’s Kerr is hopeful that that deeper exploration of consumer experiences of participating in the DFS this winter should help shape a fairer energy system in the future. “Understanding different energy consumers, their needs, ability, and willingness to participate in a flexible energy system will help us understand how they will respond to different propositions from providers and inform how we – as an energy industry – design inclusive markets,” he states.

Increasing the volume and utilisation of data on a wide range of consumer experiences and how different forms of vulnerability impact these is a must for Carolyn Delehanty, vulnerable customer experience coach at Delehanty Consulting. To support meaningful progress on the improvement of services for vulnerable people, she is keen to see data being opened up and shared fluidly between interested parties. She also suggests that utilities need to start viewing vulnerability data through different lenses to get a rounded view of vulnerability.

To date, she suggests, data sharing has been focused on physical need, for example, if a person requires an oxygen machine, the energy company needs to know this to provide a generator in the event of an outage. But there are “huge gaps” around financial vulnerability, mental health, people with extra cognitive needs or with low reading ability. “Utilities need to know who these people are so that they can better serve their needs,” she says.

Carolyn Delahunty will speak about supporting customers through times of crisis on the Customers and Teams Challenge stage at Utility Week Live on 17 May. Full programme details can be found here

The utilities sector has talked for several years about the need for a shared priority services register containing details on vulnerable customers from organisations ranging from utilities to government departments, councils, health services and charities. But progress has been held up by concerns over consent to share data and the interoperability of information, and according to Delehanty, PSR data doesn’t go far or deep enough to enable firms to respond to customers’ needs.

Keen to overcome these barriers, she recently teamed up with several CEOs of large water and energy firms to call for the creation of a new, or enhanced, register for shared data, similar in scope to the Vulnerability Registration Service.

In a joint letter, sent to the Cabinet Office and the Department for Digital, Culture, Media & Sport they asked the Government to give energy, water and financial services firms and local authorities “absolute confidence” in what they are permitted to do under data-sharing rules and to Instruct local authorities to share their data on vulnerable people.

A more joined up approach to understanding the vulnerable customers is another important strand in the sector’s efforts to better engage with the public, and modify behaviours at a time of unprecedented transformation and change.

The science of behaviour change will be examined in a dedicated session on the Customer & Teams Challenge stage at Utility Week Live on 16-17 May. Register now to attend.