Nest and KCP&L’s Award-Winning Partnership Shows What Customer-Centric Demand Response Looks Like

16 May 2017

Today’s energy utilities are tapping cutting-edge technology providers to act as anchors for client engagement. Tech-aided communication improvements make for happier, more engaged customers who are more likely to participate in utilities’ efficiency and demand response (DR) programs. The recent success of Kansas City Power & Light’s (KCP&L) thermostat upgrade and DR programs is a compelling example of this new dynamic in the energy industry.

KCP&L began working with Nest, smart thermostat provider and energy services company, in April 2016 to transition 35,000 DR program participants from legacy technology to Nest Learning Thermostats, while enrolling new participants in the program. The early success of the collaboration earned Nest and KCP&L a 2017 Thought Leader Award from the Peak Load Management Alliance (PLMA).

Before partnering with Nest, KCP&L’s 70 megawatt (MW) direct load control (DLC) thermostat program utilized one-way thermostats that were not compatible with the utility’s customer-centric approach to energy programs. As KCP&L began its smart thermostat replacement initiative, they found it difficult to educate customers on the benefits of learning thermostats and how they work with DR programs. The initiative also proved to be expensive and time-consuming: each thermostat installation appointment required resources for scheduling and delivery of the hardware. 

Through its partnership with Nest, KCP&L leveraged the Nest Learning Thermostat’s intuitive design and easy installation to offer customers a DIY option for thermostat upgrades. The program was designed to make customers feel comfortable enough to enroll through an online portal and self-install their Nest thermostats. KCP&L offered customers a free Nest thermostat with the option for free professional installation or a $50 credit for self-installation when they agreed to participate in the DR program. Customers could also enroll their existing Nest Learning Thermostat in KCP&L’s DR program to receive a $100 enrollment incentive. In addition, KCP&L conducted an email campaign to identify and engage customer segments with the highest propensity to participate in a DR program and successfully self-install their Nest Learning Thermostat. Nest and KCP&L strategically designed email copy to leverage the psychological effect of individualization, which the University of Texas at Austin has documented to have a positive impact on media enjoyment, attitude and behavioral intention. The email campaign successfully reached 5,773 out of 6,180 customers and achieved a conversion rate of 16 percent—a huge improvement over the previous rate of just 1.8 percent. In 2016, the thermostat program reached over 200 percent of the program’s year one installation goal.

High participation in the smart thermostat incentive programs and DR programs delivered KCP&L sizeable energy savings. Through the partnership with Nest, KCP&L gained 7 MW of DR capacity—enough to power about 1,000 homes—and 2.7 gigawatt hours of energy efficiency.

Nest and KCP&L are closely aligned in their visions: customer experience comes first, full stop. This shared vision was essential to not only achieving thermostat installation and DR enrollment goals but also retaining DR program participants. Nest makes it easy for customers to participate in DR events without sacrificing comfort: during an event, the customer’s smart thermostat automatically adjusts the temperature to maximize load reduction while staying within their preset comfort zone. This personalization keeps participants happy and comfortable, minimizing opt-outs.

Nest continues to work with KCP&L and utility partners across North America to make DR and other energy services more consumer-centric. Nest has seen 100 percent year-over-year growth of its utility-partnered DR programs from 2016 to 2017 and anticipates that its DR programs will grow 10x from 2017 to 2019.

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