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- 1. Stephanie Crump BIS 402 Research Paper May 01, 2015 The Acceptance of the Smart Grid in America: Educating Sustainable Energy and Marketing ABSTRACT The electrical infrastructure of America is dwindling down causing blackouts and loss of billions of dollars across the country. The implementation of a cohesive electrical network, better known as the smart grid, is imminent, yet most Americans cannot fully explain exactly what the system entails or is yet to bring. This misunderstanding causes consumers to push away the bold restructure of our electrical grid, which ultimately, and unfortunately, procrastinates the process. This essay will be looking at this issue through my eyes as a Bachelor of Interdisciplinary Studies student with an emphasis on sustainability, sales, and marketing. Using 7 scholarly articles and a thorough examination of 2 case studies, I will attempt to solve the issue of Americas need for a behavior change towards the smart grid. This essay will go into further detail describing why a technological momentum theory, over technological determinism and social construction of technology, is preferred when looking at sustainable consumer behavior change. INTRODUCTION Americas aging electrical power grid has become more and more of an issue each year. The power lines we currently have can barely supply the
- 2. electricity needed now which is a major problem considering the increasing demand for electricity of the future. In order to mitigate this energy crisis, scientists, environmentalists, and inventors have come together to create the idea of the smart grid. The smart grid uses analog information and communications technology, or ICT, that acts on information gathered about suppliers and consumers, specifically their behavior. One of the issues with this new and improved electrical system is the lack of acceptance and adoption in America. Certain countries, like India and China, have already taken the smart grid into effect and it makes me question; we havent we? Theres a need for the smart grid in America, considering we consume more than the amount of three countries combined. We have always consumed energy in a way thats foreign to the way we purchase everything else. We use what we believe we need and at the end of the month, we are hit with this huge electric bill. This new smart grid system will give consumers the choice of how much energy theyd like to consume and adjust the way they use their energy accordingly. Its a great way to keep track of how much energy their using and the associated costs. Most Americans cant even tell you what a smart grid is. We are complacent with how things are now, with the uncertainty of the price of our electrical bills, dealing with the occasional blackout, and avoiding anything that might be too much of a risk. In order for the smart grid to develop in America, Americans must be accepting of the change. Correctly educating and marketing the smart grid to consumers will eventually lead to the implementation of the
- 3. smart grid and ultimately an overall sustainable behavior change. This includes our values, norms, and beliefs, to understand the value in major technological innovations. Powerful social agents must educate on how the smart grid system works so that they might be less skeptical, but also keep things simple and easy to understand. We must then make the smart grid desirable through specific marketing efforts to specific market segments. Using marketing tactics, such as cause marketing, will increase the acceptance of the smart grid. Eventually, with the help of education of sustainable benefits and marketing, the smart grid can become Americas new electric infrastructure. This smart grid plan is something what I believe to be of technological momentum. Technological momentum relates society and technology and how their relationship alters and connects over time. Thomas P. Hughes, the historian who is believed to have coined the term, believes that the innovation of technology is dependent on society and its values, also known as social determinism, and as time goes on, the society is dependent on innovated technology that has influence on daily life in an irreplaceable way, known as technological determinism, (Hughes, 1994). If the society accepts the smart grid into their lives, the electrical infrastructure of America will forever be changed, and society will then be dependent on the smart grid system. I will now go into the two tactics we can use to accelerate the rate at which the smart grid is accepted by American society, education and marketing. EDUCATE, BUT KEEP IT SIMPLE
- 4. The first part in resolving any issue is to recognize and understand that there is an issue. Americans havent personally been effected by the issues of the current electrical grid, therefore it is hard for them to understand why a newer, more efficient, and in some cases, more expensive smart grid is ultimately better. Many are blind to the environmental issues being brought about by our current electrical infrastructure by the complacency and ease of its process. The education of Americans is the building blocks behind the drive that will push America towards the future of the smart grid. In order for utilities to be incentivized to build the necessary infrastructure and consumer education investments, clear policy, targets, and timeframes must be in place, (Gilligan, 2010). Although the government ultimately makes the decisions about smart grid installation and policies, it is truly the public opinion that will drive them to start making these decisions. This is why it is so important to inform consumers now, before it is too late. When people are well informed, they automatically feel more confident making life-altering decisions. Many people will go to a second or third party when debating making a large purchase like a home or a car. Imagine what it would take to make a smart grid consumer 100% comfortable with their acceptance of the smart grid. Pilot projects have been put in place, mainly in areas like North America, Europe, and Australia that we can learn from. In 2009, one pilot project, Pacific Gas and Electric, were facing a lawsuit in Bakersfield California, where consumers were believed to be overcharged by smart meters. Instead of their normal $200 monthly electric bill, consumers were receiving $500
- 5. - $600 bills. In October 2010, the California Public Utilities Commission asked Pacific Gas and Electric to check out the smart meter issue through testing and validation. This case is one of many where its a consumer-based project and is not doing as well as some of the grid-based smart grid pilot projects. These people were being asked to pay at least $200 more than they are used to without being educated or informed as to why; as if they were manipulated into their position. Consumer issues were being overlooked and this could potentially cause issues with the development stage of a smart grid. A successful case study has taken place with the Salt River Project. From 2003 to 2013, 935,000 residential, commercial, and industrial consumers participated in a smart grid pilot project. There were very few complaints and 88% of consumers said they prefer the M-Power prepaid metering system to a monthly bill and 93% said to have used energy more wisely. The differences between the two case studies is that SRP added measurements of consumer education to its smart grid pilot. SRPs website included a reading tutorial for the smart meters, FAQ, and a guide that informs consumers on what to expect during the installation process. This usually includes the receiving of a postcard before installation, an informative door hanger prior to installation, and a print out of their first bill that includes smart meter/grid benefits. Customers were also able to access the TOU data through email notifications or through a web portal, (EIA, 2011). MARKETING THE SMART GRID
- 6. Market classification and segmentation play a major role in marketing. Market classification is the marketing of a service or good, in this case the smart grid, focuses more so on demographics like residential, industrial, or commercial consumers. Advocates have been great at market classification and marketing to those specific groups. However, market segmentation, which is the marketing of a service or good to a type of customer, a make-it-yourself or a do-whats-easiest mindset for example, should be what marketers for the smart grid should be focusing on. Tailoring a message to a specific segment requires a lot of thought. Marketers must tell a story with heir narrative to engage the consumer. Different areas of America will react to the smart grid differently. This all depends on what renewable resource is the most available and the demand of these resources. For example, Chinas winds are heavily supplied therefore wind power is taken advantage of, (Chan, Xu, Wang, Wu, 2010). These resources will have a heavy effect on what types of stories and marketing efforts should be used. Psychology is also a major backbone of marketing. There are 5 stages of consumer decision making that can be applied to the way society accepts the smart grid; 1) Need Recognition, 2) Information Search, 3) Alternative Evaluation, 4) Purchase Decision, and 5) Post-Purchase Behavior, (Perreau, 2014). Need recognition goes hand in hand with education. Educating society about the need for a new electrical infrastructure and the environmental benefits of switching will help them recognize the need for change. Information Search and Alternative Evaluation involve the research of smart grid options and whether or not it is
- 7. something the customer is interested in. This is where marketing will play a major role. Having positive and influential content out on the market that tells a story that the consumer can connect with, especially emotionally, can increase the acceptance rate. Purchase Decision all boils down to whether the consumer likes, trusts, and wants the product offered. This entire decision can be swayed with cause-based marketing, or marketing that focuses on a greater good, and messages tailored to the customers segments. America is a very skeptical country and unless there is a well-defined and obvious need for something, change is rare. In developing countries, it is apparent that a change must be made in order for their country to succeed. Different types of government are also a factor in the application of smart grids in other countries. Some societies dont have a choice on whether or not to have a smart grid. This is why some countries like China or India and so willing to implement the smart grid infrastructure. LASTING CHANGE FOR AMERICA When looking at the sociology of the smart grid in America, its clear to see that society and technology are constantly intertwined. Technological momentum is how I would view the smart grid coming to America. At first society must understand the smart grid and that it is a better option for our future. Sierra Coughlin, another Interdisciplinary Studies student who is a member of ISEEs Society on Social Implications of Technology group, said it best when said, Given this understanding, it is accurate to argue that despite the economic downturn of the United States, investing in and promoting Smart Grid
- 8. technologies is a fiscally and ethically responsible decision for the American people. Furthermore, Smart Grid technologies contribute a significant role in the preservation and sustainable health of future generations, (Coughlin, Smart Grid). Once society has accepted the smart grid and it has become an important part and the singular electrical system in the United States, it will become a part of who we are, how me live, and how we innovate from then on. Society will then become dependent on technology. This transformation from social determinism to technological determinism is how the smart grid system will take over America. It can be argued that a social construction of technology, SCOT, theory can be used when looking at the smart grid. This theory states that human action is the main driver for technological innovation, (Bijker, Pinch, 1987). However, I think that over time, technology does drive how society acts. Technological determinism can also be argued, that technology is the soul factor in society changes. I dont believe this is true because we must incorporate other changes in time, for example, environmental changes like global warming, Heilbroner, 1994). CONCLUSION In conclusion, I believe that with the right education system for consumers and future prospects and a tailored marketing message for market segments, I think that the smart grid will be accepted at a faster rate and applied throughout America to make a lasting change in the electrical infrastructure. Education tactics like those of SRP, continuously keeping consumers involved, and education programs to inform about the benefits, like the reduction of
- 9. greenhouse gases and energy savings, should be used so that consumers dont feel like their being taken advantage of. Customers should feel a sense of trust and likeability to smart grid utility brands through cause-based marketing strategies that influence good behavior, or in this case, closely watching how they consume energy. Consumers might have to spend more money on bills, but they will feel a sense of doing good and will be more inclined to do so with the right marketing story. Based on the technological momentum theory, society will bring in the smart grid, apply it, then it will forever change the way we use electricity, innovate America, and live our lives.
- 10. Work Cited: Accenture. (2010). Accelerating Successful Smart Grid Pilots. World Economic Forum. Bijker, W. E., Hughes, T. P., & Pinch, T. (1987). The Social Construction of Technological Systems. The MIT Press. Chan, K., Xu, D., Wang, M., Wu, C. (2010). Evolution of the Smart Grid in China. McKinsey on Smart Grid. Gilligan, B. (2010). How To Drive The Smart Grid Forward: Connect With Consumers. Green Biz. Heilbroner, R. (1994). Technological Determinism Revisited. The MIT Press.
- 11. Hughes, T. P. (1994). Technological Momentum. In Smith, M. R. and Marx, L., Does Technology Drive History: The Dilemma of Technological Determinism. The MIT Press Perreau, F. (2014). The 5 Stages of Consumer Buying Decision Process. The Consumer Factor. SAIC. (2011). U.S. Smart Grid Case Studies.