How a little envy is causing households to cut energy use

The biggest motivator for getting households to reduce energy consumption isn’t cost, the environment or good citizenship – it’s competing with the neighbours.

So says Adam Welsch, the Singapore-based head of regulatory affairs Asia-Pacific for utility software provider Opower, who predicts that Australian households will see significant energy savings as customer engagement software infiltrates our homes.

Mr Welsch, who was at the recent National Energy Efficiency Conference in Melbourne, said Victorian utilities were ideally placed to implement energy efficiency programs with the smart-meter infrastructure already in place.

“The fact you have the infrastructure means you should 100 per cent capitalise on it,” he said. “The fact that it is not being used for energy efficiency or demand response or to give customers better service, I think that’s the real shame. That’s where we’d like to see things move to.”

Founded in the US in 2007, Opower partners with 98 utilities in 10 countries to provide customer engagement platforms to curb energy usage and increase efficiency in 50 million households. Its software platform has saved more than eight terawatt hours of electricity, equating to more than US$1 billion (AU$1.37 billion) in savings.

It was named on Fortune magazine’s 2015 “Change the World” list of companies, which have made an impact on major global social or environmental problems.

Since its inception, the company has progressed from behavioural energy efficiency programs for residential customers, to thermostat apps, to demand response around peak events.

“We took behavioural science – the science of what motivates people to change their behaviours and do things differently – and combined it with big data analytics, which allowed us to engage with millions of households very cost effectively,” Mr Welsch said.

Opower’s programs show households how they compare to both efficient and average households of the same size in the same climate zone and offers tips to cut energy use.

“That is how we end up generating 1.5 to 3 per cent savings per household in a cost-effective way,” Mr Welsch said.

Keeping up with the Joneses

Inspiration comes from research by Robert Cialdini, now chief scientist at Opower, undertaken during the southern Californian energy crisis. He discovered the biggest motivator for getting households to use less energy was not saving money, the environment or good citizenship, but keeping up with the neighbours.

“Sixty-six per cent of your neighbours are using less energy than you this summer, so turn off your AC and turn on your fan – that led to a six per cent drop in consumption,” Mr Welsch said. “If you tell people that their neighbours are doing better than them, they’ll use less energy.”

The company is currently working with Mercury Energy in New Zealand (and is in discussion with Australian utilities), utilising smart meters to provide usage information to customers.

“What we started doing was sending people alerts halfway through the billing cycle letting them know that they were headed for a higher than normal bill,” Mr Welsch said. “And what that does is takes the sting out of the bill.” Householders are offered tips on how to bring their usage back down to trend.

Opower can inform residential customers what is chewing up the energy in their homes by running algorithms on interval data from smart meters in combination with weather and other data.

“We can tell you whether it’s heating or cooling or what appliances are driving your energy use,” Mr Welsch said. “And that is obviously a much more nuanced picture for you as a householder.”

Behavioural demand response technology

The most interesting development is the capacity for behavioural demand response for the residential market, which the company is now providing to four US utilities during peak weather events.

“Twenty-four hours in advance we can send out an email, SMS or automated voice call to all their customer base who have smart meters, ‘We would like to see you reduce your consumption between the hours of 3pm and 6pm’,” Adam said.

“With no financial incentive we were able to reduce demand by three per cent, but when we did it with a financial incentive… it was about $9 an event, we were able to reduce that by about five per cent.

“So that is pretty exciting because you are talking about value to the overall network and to the utility that is worth millions of dollars.”

This story was published with permission from The Fifth Estate.

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