A People Powered Transition – Deloitte Energy Consumer Insights 2023
Decoding the consumer in Australia’s energy transition
As we stand on the precipice of an energy revolution, the voices and thinking of policy makers and industry operators are being heard and (generally) understood.
In the race toward net zero by 2050, Australia's energy transition demands a critical examination of an all-too-often neglected perspective – the retail consumers. The individuals, families and households who pay the bills. What are the needs, concerns and aspirations of homeowners, renters, workers, and retirees?
Just how willing are they to change their energy consumption behaviours and invest in sustainable practices? And what are the barriers that might get in the way of their participation in the transformative journey we need to take?
To find out more about how people are managing and paying for their energy consumption now, and how they might contribute to, and benefit from, our evolving and sustainable energy landscape, Deloitte recently surveyed more than 2000 Australians across age and income groups, home ownership situations and geographies who are responsible for making decisions around their household's energy products and services. We asked them about their energy consumption, their related behaviours, and their views on the
evolving energy landscape everyone is talking about.
At the headline level
In the here and now, it’s all about cost-of-living pressures. Consumers are grappling with the mounting risk of financial hardship due to the increasing cost of many goods and services – and that definitely includes energy.
Alarmingly, two-thirds of consumers experienced a surge in energy prices in the last year, and a third are concerned about affording energy in the next 12 months.
On the positive side, there’s also solid support for our transition to clean energy, people actively making conscious efforts to reduce consumption, and an acknowledgement that the transition is a collective responsibility (albeit one with strong expectations of that responsibility being government-led).
And price sensitivity is, and will be, a significant barrier to promoting energy-saving behaviour. The flip side of this is the need for financial benefits such as grants, incentives and policy to drive consumer interest in renewable solutions.
Ultimately, and based on survey demographic factors such as age and income, the need for tailored strategies to engage diverse customer segments will be critical.
A deeper dive
To eat or to heat
“Power bills are huge these days.”
Many consumers face significant challenges ahead as more Australians are at risk of financial hardship from rising costs that include energy prices. This is driving greater awareness, monitoring, and management of energy costs as consumers increasingly look to reduce consumption and offset higher energy bills.
- 43% of respondents allocate an annual budget exceeding $1,500 to cover their electricity expenses.
- Two-thirds experienced an upswing in their energy costs within the past year.
- 36% are worried about their ability to afford energy in the coming 12 months.
- 95% exhibit a clear understanding of their current energy costs.
On board the transition train
“It’s a joint responsibility to reduce our ecological footprint.”
There is a clear willingness among consumers to transition to clean energy sources, with most Australians supporting the shift to net-zero energy generation. Even financially vulnerable consumers show a high level of responsibility and even a willingness to pay more for sustainable energy solutions, underscoring the broad support for the energy transition.
- 58% support the shift towards net-zero energy generation by 2050.
- 65% acknowledge a personal responsibility for helping Australia meeting its climate ambitions.
- Those facing financial hardship exhibit only a slightly lower likelihood of feeling this personal responsibility (60%) compared to those who do not have concerns about upcoming energy bills (68%).
- In addition, 50% of consumers facing some form of financial hardship are still willing to pay a premium for renewable energy solutions.
- 77% place the highest expectations on governments to play a crucial role.
Two-speed consumer story
“I live in a unit so can’t have solar even if I wanted to.”
Consumers’ preferences for energy solutions vary significantly across age, geographical and income-based demographics, highlighting the need for tailored approaches around energy solutions.
- Respondents with annual household incomes over $100,000 are more likely to have purchased higher-end products such as electric vehicles, solar panels, and electric battery storage systems.
- Those aged 40+ are more likely to have invested in energy-efficient appliances and solar panels.
- Those under the age of 40 are more likely to have purchased electric vehicles, electric battery storage systems, and energy-efficient hot water systems.
Price: the ultimate roadblock
“It would be quite expensive to participate in the energy transition at this time of economic crises.”
With price sensitivity so critical during a cost-of-living crisis, consumers are far less likely to pay a premium for renewable energy solutions. And while energy consumers clearly value alternative energy plan options such as energy efficiency programs and access to renewables, their knowledge about offerings is generally low, indicating a clear need for better customer education.
- 61% of higher income consumers and nearly 63% of lower income consumers still prioritise price as the most crucial component of an energy plan.
- 87% place pricing in the top three most important factors for energy plans, 45% are willing to pay a premium of between 1-10% for energy from renewable sources.
- 45% are unwilling to pay any premium at all.
Forget the silver bullet
“I haven’t yet bought a household battery for solar storage, (as I’m) waiting on a government incentive.”
The good news is consumers are interested in products and solutions oriented around the energy transition, with financial incentives for adopting renewable sources, alongside solutions that enable ongoing monitoring and comparison of energy consumption as the clear favourites.
- 77% are interested in financial benefits and incentives for renewable energy uptake.
- Financially distressed respondents are more interested in experimental cost-cutting technologies.
- Younger respondents are more interested in energy transition solutions such as education programs and sustainable mortgage and loan products.
Embracing the bold
To expedite Australia's energy transition – and respond to consumer demands and pain points – there is plenty for policy makers and energy industry operators to consider.
Governments can strategically deploy initiatives in grants, incentives, and policy that emphasise the financial benefits of change.
At the same time, there’s an ongoing need for educational and marketing campaigns to help raise climate change awareness and knowledge around energy-efficient practices to address the challenges.
Product and technology investments, and particularly real-time monitoring, should be prioritised, and incorporating financial management measures, such as sustainable loan products and economic guidance, will further encourage the widespread adoption of renewable energy solutions.
For now, there’s a significant gap between policy discourse and consumer realities. Bold thinking, and even bolder responses, will help drive an energy transition that is not only sustainable but also resonates with the aspirations and challenges faced by every Australian. Enabling and empowering a fair and equitable transition should be a shared objective for all.
This report was co-authored by Craig Hutchinson, Tim Kreuziger, Tobias Fanger and Matthias Van Kerkhove.
