Innovative Customer Targeting Pilot

Which Californians will benefit the most from electrification, and what kinds of outreach most effectively motivates them to install a heat pump?



Decarbonization of indoor space heating/air conditioning and domestic hot water equipment offers massive potential benefits to utilities and customers alike throughout California. However, at this early stage in the development of the California heat pump market, these potential benefits are distributed neither universally nor equally. California utility customers face the some of the highest energy burdens in the country, but there is not enough empirical data on heat pump performance to reliably predict which people would save money on their utility bills by electrifying their heating and cooling.

The Customer Targeting Pilot seeks to solve this problem by using meter-based customer targeting to identify customers for whom the value of electrification is most compelling, an innovative approach empowered by understanding utility customers’ meter-based electricity and gas consumption.

Market Barriers Addressed

The incremental cost of replacing a gas water heater with a heat pump water heater (HPWH) instead of another gas water heater is often greater than $1000 (E3 2019) and the incremental cost of a heat pump space heater (HP HVAC) is similarly discouraging (NBI 2021). Furthermore, some people who install heat pumps will not save money on their utility bills, and thus will never recover the incremental cost of their equipment. Finally, heat pumps suffer from obscurity among consumers and distrust among installers (BDC 2019). So, even if a heat pump installation program could target only customers guaranteed to reduce their utility bills and had the budget necessary to offset the incremental cost of heat pumps for every customer, many customers may still not to switch to a heat pump because of their obscurity.

This pilot seeks to address two key market barriers hindering adoption of heat pumps in California:

  1. Program implementers and utilities lack large-scale data demonstrating which utility customers are most likely to benefit from upgrading to a heat pump, and how to motivate those customers to buy a heat pump instead of an alternative.
  2. Poor customer outcomes can have an outsized effect on adoption in early-stage technology markets, highlighting the need to avoid recruitment of customers with low potential to save (and conversely, recruiting customers who energy profiles indicate high potential to save).


Prior research by TECH Team partner Recurve shows that targeting incentive program participants based on their past meter-based consumption data (henceforth “meter-based targeting”) can significantly increase overall program energy savings (and customer bill savings) and grid benefits compared to targeting based on demographic features and/or building vintage alone. Note here that “meter” denotes a “smart meter,” part of the Advanced Metering Infrastructure (AMI) system deployed by California utilities. Recent studies (ODC 2014, Evergreen Economics 2016, Scheer 2017) of utility customer meter data from participants of several downstream EE programs reveal consistent patterns:

  1. Metered savings vary widely among program participants.
  2. A small fraction of participants account for a high fraction of total metered savings.
  3. A significant number of program participants consume more energy after the program than before (i.e., contribute negative metered savings).

Furthermore, retroactive analysis of participants in Pacific Gas & Electric Company’s (PG&E) Advanced Home Upgrade program, Residential and Commercial Quality Heating, Ventilation, and Air-Conditioning (HVAC) Maintenance program, and Small and Medium Business (SMB) Direct Install program show that customer targeting has the potential to increase aggregate savings by 1.5 to 2 times the volume achieved without targeting (Scheer 2018). Similarly, the Sacramento Municipal Utility District’s (SMUD) retroactive electrification analysis identified targeting strategies that could have yielded 3.6 times deeper savings for participants if used during program implementation (Scheer 2020).


  1. Energy and Environmental Economics, 2019 Electrification Study - https://www.ethree.com/wpcontent/uploads/2019/04/E3_Residential_Building_Electrification_in_California_April_2019.pdf
  2. New Buildings Institute (NBI), “Building Electrification Technology Roadmap,” 2021. https://newbuildings.org/resource/building-electrification-technology-roadmap/
  3. Opinion Dynamics Corporation. 2014. PG&E Whole House Program: Marketing and Targeting Analysis. CALMAC ID: SCE0383.01
  4. Evergreen Economics. 2016. AMI Billing Regression Study (Phase I). 2016. CALMAC ID: SCE0383.01
  5. Scheer, A. M., Borgeson, S., and Rosendo, K. Customer Targeting for Residential Energy Efficiency Programs. 2017.
  6. Scheer, A. M., Borgeson, S., R. Kasman et al. Customer Targeting via Usage Data Analytics to Enhance Metered Savings. American Council for an Energy-Efficient Economy. 2018.
  7. Scheer, A.M., Sheridan, M., et al. Electrification: Meter Data Analysis of Grid Impacts and the Opportunity for Efficiency. American Council for an Energy-Efficient Economy. 2020.

Pilot Plan

The pilot team is collaborating with Southern California Edison (SCE) to leverage historical customer electricity meter data to identify the high-potential customer types who are highly likely to benefit from installing a heat pump, including:

  1. Those with disproportionately high cooling load, who could use a heat pump to replace an inefficient electric air-conditioning system
  2. Those with rooftop solar arrays that produce more electricity than their house needs, who could install a load-shifting-enabled heat pump water heater and power it entirely with excess on-site solar energy

The pilot will study which direct customer outreach strategies are most successful in motivating customers to engage with outreach material(s) and consider installing a heat pump space and/or water heater.

Research Questions

  1. Of all direct customer outreach strategies that electrical utilities can use, which are most successful in motivating customers to engage with outreach material(s) and consider installing a heat pump space and/or water heater
    1. How is this tested?
      1. Direct decision tracking. For instance, if SCE sends and email to a customer and they click the email, we can see that they navigated to the Switch is On via that email.
      2. Indirect decision tracking. For instance, if we see an increase in the rate of SCE customers using the Switch is On website to request a contractor quote within a short period after receiving an email, we can infer that the email caused an interest in heat pump installations for the SCE customer population at large.
  2. Are customers more likely to engage with heat pump marketing material if they are told by their utility that they are part of a select group with particularly high predicted benefits of home electrification?

Target Audience

  1. Permanent address lies within SCE service territory and SoCalGas service territory
  2. Single-family housing
  3. At least 328 days of meter data available
  4. "Business as usual” model fit error for electricity usage (CVRMSE) < 100%