Consumers, Businesses Expect Massive Energy Transition in Next Decade
Users of energy in America expect significant transformation in the way they use energy over the next 10 years, according to a new survey conducted by Ernst & Young LLP: Fuels of the future: what is powering the US energy transition? While concerns around the environment and climate change are key factors to this transition, the 1,500 consumers and more than 100 corporate executives surveyed said affordability and reliability are still the highest priority for energy decisions.
“Across the US, energy consumers are caught between two desires: protecting the environment while keeping energy costs in check,” said Mitch Fane, US Energy Market Leader, Ernst & Young LLP. “These competing dynamics have also perplexed energy companies as they try to deliver the profitability that shareholders demand and meet evolving customer needs.”
Pressure around environmental issues isn’t just consumer-based; 91% of corporate respondents feel pressure from shareholders to reduce their company’s environmental impact. Further, 76% agreed their enterprise has been adversely affected by climate change. Consumers, too, are prioritizing climate change. When asked about the issues most important in the 2020 elections, climate change ranked second (15%) behind immigration (22%), but ahead of issues like taxes, gun control and lowering prescription drug prices.
Consumers are willing to make energy change, but hurdles remain.
The survey also took a close look at the future of mobility — while many consumers hope they would own an electric vehicle in the future, they believe it would be just over 10 years before they can make the switch. While this timeline was driven primarily by cost, with 68% saying electric vehicles are too expensive, the view that there is a lack of infrastructure is also a factor, with 52% citing a lack of charging stations as a big factor in waiting on an electric vehicle.
Conversely, consumers see gasoline as a temporary necessity. In the survey, nearly two-thirds of respondents said they hope their descendants wouldn’t know what gasoline is. At the same time, most participants across all age ranges agreed gasoline is a dirty fuel — with over 70% of Gen Z and millennial respondents taking a negative view of the product. In fact, most respondents indicated a willingness to pay more for low-carbon fuel sources.
However, most consumers report their use of gasoline-powered vehicles would likely continue, with 36% of respondents planning to drive a gasoline-powered car in the future — as opposed to 23% opting for an electric vehicle.
Consumers’ interest in adopting independent power generation (IPG) illuminates a similar theme. Despite many respondents’ unfamiliarity with IPG, 83% are interested in their home generating its own electricity — primarily due to a desire to save money. Asked when they believe it would be technologically and financially feasible for them to have their home generate its own electricity, respondents estimated an average of nine years.
“Energy technology, from renewable options and battery storage to hydraulic fracturing, is constantly evolving — possibly at time frames even quicker than consumers realize,” Fane explained. “With potentially cheaper, more accessible energy options around the corner, Americans’ willingness to consider new ways of fueling their vehicles or powering their homes — as those options are technologically and financially feasible — points to the potential for massive disruption in the sector.”
Energy users are satisfied with but not loyal to their utilities.
With utility-choice ballot measures popping up around the country, the survey also asked about the issue. An overwhelming majority of consumers (86%) are satisfied with their electric utility, and 90% are satisfied with their natural gas utility. However, 68% of respondents in markets without choice said they would prefer to choose providers, primarily to save money but also to have access to renewable options. When the conversation shifted to corporate energy needs, 90% of executive respondents indicated having a choice in their utility provider would benefit them.
“While utility customers are generally satisfied with their services, there’s a call to action for companies to innovate their business models, strategies and customer interactions in a way that enables them to turn satisfaction into loyalty,” said Fane. “In order to meet customers’ current and future expectations and increasing options, companies need flexibility and agility, paired with a deep understanding of energy users and the disruption facing the dynamic energy sector.”
About the Fuels of the future survey
To illuminate Americans’ priorities and expectations on energy, EY conducted a nationwide poll of 1,500 electricity consumers and 102 executives in charge of energy decisions for their businesses, in the US in the second quarter of 2019. The consumer survey has a margin of error of 2.5%. Study findings, illustrations and methodology can be found at ey.com. Additional analysis on study findings is forthcoming.
