How Data And Social Pressure Can Reduce Home Energy Use

Editor’s Note: EarthTechling is proud to repost this article courtesy of Yale Environment 360. Author credit goes to Dave Levitan.

Visit the website of Opower and your eye will be drawn to a counter in the corner, its digits ticking ever higher. The counter represents energy that the company says its customers have saved after it provided them data on electricity usage and employed behavioral science to change their consumption patterns. As of this writing, the counter is climbing past 1.62 billion kilowatt-hours.

Virginia-based Opower is just one of a growing number of so-called electricity consumer engagement companies around the U.S. that have sprung up in recent years with the aim of helping customers reduce their electricity use, primarily by analyzing their current consumption and finding the easy fixes. These companies are mixing in data from the rapid deployment of smart meters with behavioral science to try and answer a key question: How can we get people to care? The central idea is that by showing people how much electricity they use, when they use it, and what their neighbors and peers use, consumers can be driven to change.

“The buzzwords around the utility industry today, it’s all about consumer engagement,” says Dean Chuang, a senior research analyst with consulting firm IDC Energy Insights near Boston.

These companies, which also include firms such as Colorado-based Tendril and St. Louis-based Aclara, are partnering with utilities nationally and internationally to reduce both utility and consumer costs, and hopefully to plug an efficiency hole that many people don’t even know is there.

Opower, energy consumption, Big Data, energy conservation

Image via Opower

The potential, by some accounts, is substantial. Opower’s kilowatt-hour counter may look big, but U.S. residential customers used 1.4 trillion kilowatt-hours in 2011 alone. (Opower’s counter represents its customers’ electricity savings over the firm’s five-year lifetime.) Studies have suggested that a big chunk of energy — as much as 20 percent— that enters a house ends up wasted. The companies involved in these new efforts say customers who pay attention to their data and use their software products save from one to ten percent on their electricity bills. With millions of customers already reached through utility partnerships, and tens of millions more as potential customers, such efforts could substantially reduce electricity consumption in the U.S.

It isn’t just energy savings driving the push for consumer engagement and data use in the electricity market. The fundamental nature of our electricity system is shifting in ways that are making it necessary for utilities to engage with customers, says Emma Ritch, a senior smart grid analyst at Greentech Media. These changes include the move by consumers to produce electricity for the grid with household solar power.

The U.S. government has gotten on board, with the launch in early 2012 of the Green Button initiative from the Department of Energy. Utilities that sign on to Green Button provide a simple way for customers to download personalized energy usage data from the utility web site. The first two waves of utility partners will cover 27 million customers, with more on the way.

Green Button is a generalized example of the trend toward providing consumers with far more detailed and informative electricity bills. When utilities around the country partner with companies such as Opower or Tendril, they can send consumers home energy use reports or audits that give a far clearer picture than a standard bill. These home energy reports can compare usage amounts to other households nearby and, if smart meters have been deployed in a given area, can offer detailed opportunities for improvement — when to use appliances, better control of thermostats, and so on.

Deployment of smart meters — which monitor detailed usage of electricity and allow two-way communication with a utility — is continuing around the country, bringing those opportunities to more and more customers. Chuang says his firm’s latest forecast puts smart meter penetration at 32 percent of U.S. households by the end of this year, and approaching 55 percent by 2016. Another forecast, by Greentech Media, sees even deeper penetration, to 62 million smart meters out of 145 million U.S. meters by the end of 2012.

Smart meters can let homeowners see a remarkably detailed picture of home energy use, from which appliances are using a lot of power to what times of day are the most expensive to use electricity. Smart appliances, much fewer of which are yet in homes, can also connect to these systems and allow, say, a dishwasher to run at 3 a.m., when power demand and prices are low.

But even without smart meter data, companies such as Opower have learned that comparing a customer’s electricity use with neighbors is an effective way to spur action.

“Here’s the really interesting thing that we found: the behavioral and social motivators are stronger than data,” says Ivo Steklac, the chief sales and strategy officer at Tendril. “What we’ve discovered is that while its great to have smart metering and be able to provide real-time data to you and your home, that is not necessary.”

Instead, what’s necessary is persuading people that there is a crowd to join. Noted psychologist Robert Cialdini, who works with Opower on behavioral science, once ran a famous experiment with hotel towels. Telling guests that reusing towels was good for the environment did almost nothing, but when a placard in the bathroom suggested that most of the hotel visitors reused them, such usage went up 30 percent. It works basically the same way with electricity: If your bill suggests that everyone on your block is using less than you, you will strive to catch up.

Yale Environment 360 is an online magazine offering opinion, analysis, reporting and debate on global environmental issues. We feature original articles by scientists, journalists, environmentalists, academics, policy makers, and business people, as well as multimedia content and a daily digest of major environmental news. Yale Environment 360 is published by the Yale School of Forestry & Environmental Studies and Yale University. We are funded in part by the Gordon and Betty Moore Foundation and by the John D. and Catherine T. MacArthur Foundation.