SOURCE: The Boston Consulting Group

The Boston Consulting Group

May 19, 2010 00:01 ET

Smart Meters Hold Great Promise for Energy and Cost Savings, but Utilities Need to Improve Customer Education to Reap the Rewards, Says The Boston Consulting Group

BCG Survey Finds That 75 Percent of U.S. Consumers Are Interested in Easy Ways to Conserve Power, Yet Fewer Than Half Have Heard of Smart Meters

DALLAS, TX--(Marketwire - May 19, 2010) -  Smart meters hold much promise for U.S. utilities and their customers, but utilities need to do a better job of educating consumers on their use to reap the benefits, according to a survey of nearly 1,700 U.S. consumers conducted by The Boston Consulting Group (BCG) recently.

Three-quarters of U.S. consumers are interested in easy ways to save power, and two-thirds said that being able to estimate their monthly energy bill on a daily basis would help them better manage their power usage, according to the survey. Yet fewer than half said that they have heard of smart meters, and only 15 percent consider themselves "very aware." These findings hold even for consumers living within zip codes where smart meters are currently being deployed.

"Many consumers aren't aware of smart meters or don't understand them," said Pattabi Seshadri, a Dallas-based partner in BCG's Energy practice. "Our findings clearly show that utilities face a major challenge in raising awareness of these devices and need to step up their customer education efforts to capture the value of smart meters."

Indeed, the BCG survey found that 66 percent of U.S. consumers said that they would like more communication from their utility on smart meters. And less than 30 percent could recall any outreach from their utility beyond the monthly bill.

Smart meters offer greater precision than standard meters and can transmit consumer-usage data to utilities in real time. By doing so, they can lower utilities' cost of operations by reducing the need for meter readers and can improve utilities' response time to outages. At the same time, they can enable utilities to offer flexible pricing schemes (for instance, cheaper rates at night), encouraging customers to better manage their energy expenses. But for the devices to live up to their promise, customers must actively use them and change their energy consumption behavior.

"We estimate that from 20 to 30 percent of a utility's customers will have to reduce their overall consumption or peak demand by 15 to 20 percent to make smart meters a winning proposition," said Seshadri. "Falling short of that threshold will likely prevent the utility from delivering the necessary return on investment."

Utilities are in a good starting position since many consumers are intrigued by the energy-saving capabilities that smart meters would afford. Sixty-two percent agreed that they would actively log onto an Internet site to check their power consumption on at least a weekly basis. And 56 percent agreed that they would set their thermostat by time of day based on consumption and pricing information from smart meters, according to BCG's research.

A majority of consumers also expressed interest in services that would leverage smart meters, such as a detailed monthly comparison of their energy use versus that of their neighbors. What's more, 78 percent said that their power company would be a credible provider of in-home services linked to smart meters, such as time-of-day pricing and remote appliance management. Yet utilities can do even more to enhance their credibility, says BCG.

"Utilities might explore forming partnerships with companies in other industries to jointly introduce products and services," said Seshadri. "Our survey suggests that alliances with consumer-facing businesses like retail and technology can strengthen a utility's brand, clarify the value proposition for consumers, and enhance consumer communication." 

To obtain a summary of the survey findings or to arrange an interview with one of BCG's experts on the topic, please contact Eric Gregoire at +1 617 850 3783 or

About the Smart Meter Survey

The survey was conducted online in December 2009. Seventy-five percent (1,253) of respondents resided in zip codes where smart meters had been deployed or were currently being deployed; 25 percent (425) resided in zip codes in the same states but without smart meter deployment. Respondents were screened to include only household incomes greater than $25,000 and primary or occasional payers of residential power bills.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 69 offices in 40 countries. For more information, please visit