As a generation, Millennials have been identified by their digital connectivity, affinity for #selfies and social media, and tireless optimism in the face of bleak economic prospects. According to the Pew Research Center, one-third of Millennials have a four-year college degree or more and about 43% identify as non-white — making this generation the most educated and racially diverse group in U.S. history. On the one hand, researchers have described Millennials as noncynical, civic-minded, and politically active, while on the other, additional studies have shown them to be inwardly-focused, apathetic toward politics and social issues, and, perhaps surprisingly, the least environmentally-minded of any previous generation.
Whether this cohort will ultimately be known as “Generation We” or “Generation Me” remains a driving question behind the ever-expanding body of research into the Millennial psyche. Meanwhile, data on the group’s consumer habits is much more straight-forward — providing useful insights for businesses interested in this multi-billion-dollar market, and giving electricity utilities a glimpse at what their future ratepayers value.
Millennials as Consumers and Energy Users:
Of the multiple drivers behind Millennial consumer spending, two stand out the most for this generation: cost-savings and connectivity. While product quality matters to a certain degree, Millennials tend to care most about price — not surprising, considering that they are saddled with staggering student debt in the face of lackluster job prospects. Furthermore, as the first “digital natives”, Millennials embrace technology and expect high-performance and usability from their products and websites.
Being cost-conscious and digitally-connected have led Millennials to develop a unique value-set. Traditional “adult” markers prized by previous generations — homeownership, marriage, retirement savings, etc. — are being delayed or forgone entirely due to changed values and limited economic opportunities. Instead, as shown by the rise of Uber, Airbnb and other “sharing economy” companies, many Millennials value flexibility and experiences — especially when they can be arranged on the go from their smartphones. As summed up by one market strategist, in addition to cost-savings, Millennial consumers value “happiness, passion, diversity, sharing and discovery.”
This new “Millennial value-set” could have profound implications for the electric utility industry. “Consumer energy markets are really posed to be totally upended,” said NRG CEO Steve McBee in a recent interview. He likened the energy sector to other consumer categories like transportation or tourism or retail or entertainment or publishing or media, which have all been disrupted over the past couple decades “in part by the new products and services and technologies that mostly insurgent competitors have brought to market.”
In addition to utilities like NRG, the software-as-service company, Opower, has also taken an interest in Millennial consumers. Those familiar with the “disruptive” forces at work in the utility sector (increasing integration of electric vehicles, rising demand for rooftop solar fueled by reduced solar PV costs, etc.) will agree with Opower that “the traditional utility experience is pretty much over.” Perhaps taking a cue from Millennials, more and more customers want a wider range of energy products and services from their utilities, including personalized information on their energy usage and smart metering capabilities.