Recession creates new attitude towards reducing energy use amongst US consumers and businesses

May 24th, 2011 by Deloitte LLP

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A study from Deloitte shows the emergence of a diligent new attitude toward energy consumption in the United States.

According to the study, 52 percent of companies are working to reduce their energy costs by 25 percent on average over the next two to three years.

Concurrently, an increasingly sophisticated consumer demographic is looking for household savings in a tight economy. According to the study, 68 percent of consumers are taking extra steps to cut their electric bills because of the recession.

The study, “reSources 2011,” conducted by Deloitte with strategy and market research firm, The Harrison Group, polled 3,200 household decision-makers and more than 400 business decision-makers responsible for their company’s energy decisions or energy policy.

According to the data, American businesses and consumers are in the midst of “the birth of the resourceful energy user,” said Greg Aliff, vice chairman and U.S. energy & resources leader, Deloitte LLP. “We are seeing a profound and, in many ways, grassroots movement toward energy conscientiousness among businesses and consumers.”

The Deloitte study shows that about 45 percent of Americans have directly felt the pain of the recession, due to factors such as a job loss or income reduction. It also shows that in addition to the almost 70 percent of consumers who said they reduced their electricity bills during the recession, 95 percent said they do not intend to increase their electricity use even as the economy improves.

Aliff noted that a similar light bulb has turned on when it comes to energy use at businesses, with 90 percent of companies setting specific goals regarding electricity and energy management practices. Furthermore, about three-quarters of businesses now have goals related to reducing electricity cost and consumption and improving the efficiency of the buildings in which they operate. More than half (56 percent) have goals aimed at improving profitability through electricity reduction. And nearly one-third of companies have goals to self-generate electricity through measures like installing solar panels.

The Deloitte survey also shows that cost consciousness and social awareness are the twin drivers behind corporate energy management, with 70 percent of companies reporting the desire to cut costs as a driver behind their energy management goals, and more than half (53 percent) saying that their companies have set energy-related goals at least in part because it is “the right thing to do.”

“Clearly,” concludes Aliff, “our study indicates that a domestic energy roadmap is emerging and it is coming from an increasingly motivated and aggressive commercial base that sees being resourceful with energy as being good for business. When it comes to smarter energy decisions, our study leads us to surmise that chief executives are listening intently to their management teams, not to mention their customers and their children.”

Marlene Motyka, U.S. alternative energy leader at Deloitte, points out that the implications of this shift are dramatic for energy companies. “If you are a producer or distributor of electricity, you are looking at real changes in your customer base, be it consumers or businesses. Most dramatically, you may see as much as a 25 percent energy-cost reduction among your business customers and increased frugality at the household level,” said Motyka.

In reaction to such changes, power companies need to look at their customer strategies and the cost saving programs they offer, according to Motyka, citing as an example the need for power companies to consider the optimization of the smart grid investments. “Such planning decisions may prove to be crucial to how energy players service a set of customers that has a new attitude about energy and a new set of needs and wants,” said Motyka.

Likewise, Motyka stresses the need for commercial businesses that are not yet rethinking their energy usage strategies to look at their options now if they are going to stay competitive.

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