How engaging consumers can accelerate Australia’s energy transition

Australian consumers are growing tired of the clean energy journey. Energy companies can inspire confidence through action in three areas.

In brief:

• Australian consumers are excited about the potential of clean energy but the majority say they won’t spend or do more to be sustainable.
• Consumers are losing confidence in the affordability, value and equity of the energy experience.
• Focused action to boost the appeal, affordability and accessibility of clean energy can engage consumers and accelerate Australia’s energy transition.

Will Australia’s energy transition ambitions be undone by consumer fatigue? Our state and federal governments have strengthened efforts to achieve net zero by 2050 but new EY research reveals Australians are struggling to see the payoff for their sustainability efforts so far. Seventy percent of emissions reductions depend on consumers and businesses changing their energy consumption, behaviours, and lifestyles. However, only 30% of Australian consumers surveyed said they would spend or do more to be sustainable. Unless energy providers can activate a surge in consumer energy solution investment, we’ll miss our opportunity to build a more sustainable, efficient, and cost-effective energy system.

Why building trust influences Australia's transition to renewable energy

We found Australians’ confidence in the energy sector has slumped more than 10 points since the survey a year ago – one of the largest drops seen across the 21 countries surveyed. With energy prices rising amid broader cost of living pressures, it’s perhaps not surprising that confidence was particularly low around issues of affordability, value, and equity. Australians are losing faith in the ability of energy companies to meet their most basic energy needs. And, according to the Energy Consumer Sentiment Survey (ECSS)¹, their trust in the energy sector has hit a five-year low.

Crumbling confidence and eroding trust are a problem because confidence is a key driver of consumer investment and behaviour. Even though Australians told us they were still interested in clean energy solutions – mostly energy-efficient appliances, electric vehicles (EVs) and electric hot water systems – only one-third said they would actually invest in them over the next three years.

How can energy providers close the gap between interest and action? EY results reveal a potential opportunity. We found that confidence in clean energy was higher among those Australians who already had rooftop solar and batteries installed. It seems that once people experience clean energy, they see the value of these solutions. Energy providers that offer more tangible support to help consumers purchase, install, and run new energy solutions, positioning themselves as advisers on the energy transition journey, can build confidence, accelerate change and find new avenues for revenue growth.

Three actions to bridge the gap between ambition and action

To date, investment in Australia’s energy transition has been largely focused around the supply side – building infrastructure, assets and technology to enable an energy system dominated by renewables. But we’ve missed the human side of the story. Consumers will ultimately determine the success of the energy transition, but so far, investment has lagged in building an energy system that delivers what people need and value. Instead, consumers have been left to shoulder much of the burden of change by themselves, navigating painful processes to adopt new technologies, making sense of confusing incentive programs, and deciphering complex energy tariffs — often while absorbing rising energy prices. It’s no wonder that consumers are reporting poor energy experiences and disengaging from playing their part in the energy transition.

Embed data-driven solutions into product development. Mastering data and digital tools will be critical if providers are to effectively derive and respond to behavioural insights and develop products that add more value. Managing and monitoring how people interact with a provider’s different touchpoints can help identify opportunities to personalise service offerings. For example, some people only want to receive a bill in the post, while others regularly interact with their online account, chatting with bots and are keen to take more control of their energy experience. EY survey found that 88% of Australian consumers would change their energy usage to save money, if supported by notifications sent by their provider.

2. Access

Less than a quarter of Australian consumers – just 22% - believe the energy transition is fair and equitable, according to EY research. People on low incomes and those who rent their homes are particularly at risk of being left behind on Australia’s energy transition journey, with these consumers 2-3x less likely to be considering or able to invest in sustainable energy options. Ensuring everyone can access the energy they need requires consideration of factors including choice, education, awareness, and data.

Boost consumer awareness to build trust: More than one-third of Australians (37%) say they don’t know the actions or investments required to be more sustainable. Building awareness of clean energy options is the first step to improving access to these options. Energy companies are in a prime position to do so, with Australian consumers ranking their providers as the second most trusted source of energy and sustainability information (after government). Providers can start by ensuring they deliver the right information to the right consumers via the right channels, which may be their website, social media or, through collaboration with community groups. Transparency around options and pricing is key to this. It’s also important energy companies are transparent in reporting their own sustainability performance and commitments, to build trust and confidence in the energy system.

Create an interactive, interconnected ecosystem: Today’s energy consumers are driven by multiple needs and values, interacting with multiple providers across multiple devices in multiple places. Success within this complex ecosystem requires providers to redefine business models, develop new technologies and nurture a range of partnerships. Understanding what appeals to different customer groups can help. For example, some people want a ‘one-stop shop’ for energy solutions such as rooftop solar, where they can effortlessly research, buy, install, and claim rebates in one place. Appealing to customers that seek a more active role and sophisticated, personalised energy options will call on providers to adopt emerging technologies and exchange information securely. Even those providers that want to stick to the basics will need to consider how automation, process simplification, quality data and digital channels can unlock value – more than 50% of Australian consumers told us they prefer digital interactions in most circumstances.