Segmentation: A Required Tool for Community Energy?

Community Energy, as per the UK Department for Business, Energy and Industrial Strategy (BEIS), is defined as “a group which covers aspects of collective action to reduce, purchase, manage and generate energy” [1]. Thus, grassroots innovations are in its core as the deployment of projects of this nature starts with the will of citizens and are run under their responsibility. When looking at Community Energy, one can find a small yet growing sector in which many different actors come into play – communities, suppliers and local installers, intermediary companies, local authorities, etc.  In the past five years, there has been a big research push on the strengths, weaknesses, opportunities and threats of these groups, especially considering the fact that the Community Energy Strategy was proposed in 2014 as a policy to tackle climate change and foster the transition to a low carbon economy [2]. However, because the sector is niche and immature at this stage, little is known about the scope and potential of such community-lead innovation in the transition to this low carbon energy system. Neither much is known about psychographics and values of the individuals who compose each of the groups in this sector.

Could then a market segmentation strategy be applied and lead to a deeper understanding of Community Energy? Segmentation is the process of dividing a market of potential customers into smaller groups, or segments, based on different characteristics; the individuals who compose these segments share traits such as similar interests, needs or locations. Segmentation models have been widely used in the energy industry not only to craft better messages and communication channels to end-consumers but also to predict certain behaviours towards new services and technologies. However, this activity has focused mainly on residential, small business, large commercial and industrial segments, but no real work has been done to segment within those [3].

Some research has been done so far in specific areas. A study based in The Netherlands in 2015 sought to compare the characteristics of adopters and non-adopters of photovoltaic solar panels in Dutch households to provide insight in the approval of other technologies, using a hybrid segmentation model. This model was divided in four dimensions – demographic, behavioural, geographic and psychographic – paying special attention to the view of citizens on sustainable energy sources and their decision-making process. The study suggest that further psychographic and behavioural research needs to be carried out to better identify the reasons why citizens purchase (or do not purchase) sustainable technology systems, an idea which can be applied in Community Energy to know the perception and potential new systems implement by these grassroots innovation groups. From a pure personality point of view, other studies focused on the personality traits of leaders of successful grassroots innovation groups and the existing values within those. Through interviews and the development of conceptual personality models based on motivational values such as benevolence and self-direction, the authors were able to identify leadership characteristics which are important for niche innovations and transcendent attitudes of its participants. The findings show that there is, surprisingly, little work on the role of values in relation to concepts of socio-technical transition and even more specifically in relation to grassroots innovations as a feature of transitions.

Perhaps, the questions one should be asking are about the true drivers which bring people to citizen-lead renewable energy projects, the kind of personality traits and characters which are attracted to perform in this environment and the types of personalities which make the community energy teams successful. Unlocking and defining these individuals can be key to new business models which help this market to grow and create the conditions to more people join the energy transition revolution.

Author: Rafael Bartolomeu Martins
Copyright © [Segmentation: A Required Tool For Community Energy?][2018]. All rights reserved

 

References:

[1] Guidance: Community Energy, https://www.gov.uk/guidance/community-energy [Last Access: 4th March 2018, 10:50 am]

[2] Community Energy Strategy (2014), British Department of Energy & Climate Change

[3] How Efficiency Is Learning About Market Segmentation from Internet Giants and Political Campaigns (October 2014), Denis Du Bois, https://www.greentechmedia.com/articles/read/how-energy-efficiency-marketers-are-learning-about-market-segmentation-from#gs.8EFovAA [Last Access: 2nd April 2018, 10:41 pm]