A year ago, we wrote about Opower’s finding that peer pressure was highly effective in persuading people to use energy more efficiently.
….the real key is one last box: a grade assessing your energy consumption. You receive two smiley faces for great conservation (that is, using less than 80 percent of what your neighbors do), one for good (using less than most of your neighbors do), none for bad (using more than most of your neighbors). As soon as customers recived their first reports and saw the smiley face box, they began increasing their energy efficiency.
To encourage people to consume less water and energy, conservationists often turn to taxes, rebates, or advertising. But there may be a more cost-effective tool out there: peer pressure. A public utility in drought-stricken California is getting people to conserve water with some good old neighborly competition.
Giri Seshagiri is proud of his new low-flow showerhead, because it uses far less water than the old one. He installed it after his local utility, East Bay Mud, started sending him reports that compared his monthly water usage to that of his neighbors. He saw that some similar-sized households were using less water, so he began taking steps to cut back.
The water reports Seshagiri receives come with simple bar graphs and “empathetic gauges,” a fancy name for these emoticons shaped like big water droplets. Do better than most neighbors each billing period, and your water droplet is happy and smiling. Do worse, and your water face is anxious and concerned. At the bottom, the report has simple recommendations on how to conserve water and improve the mood of your emoticon.
Peter Yolles is the CEO of WaterSmart Software, the start-up that generates the reports. He says the easy-to-understand bar graphs and emoticons compel customers to change their behaviors. “In a way,” he says, “it’s like looking at a mirror of yourself.” And that reflection can have powerful effects.
It’s fascinating how simple things can be sometimes, like tapping into people’s natural competitiveness, their desire to receive positive feedback (and avoid negative feedback), etc. Yet despite being simple and effective, these approaches are often overlooked. Which is where companies like Opower and WaterSmart Software come in!
Clearly, energy efficiency provides enormous “bang for the buck.” To date, though, while it’s been extremely successful in keeping U.S. energy consumption relatively flat for several decades now, even as the economy has grown tremendously, it’s been somewhat of the “Rodney Dangerfield” of energy, getting little if “no respect.” Now, that situation appears to be changing in a big way, as some of the largest corporations in the world jump into the energy efficiency field in a big way. For instance, check out this excellent piece by Clean Edge’s Senior Analyst James Belcher, which focuses on Google’s acquisition of Nest – maker of “an electronic, programmable, and self-learning Wi-Fi-enabled thermostat that optimizes heating and cooling of homes and businesses to conserve electricity.” Here’s Belcher’s take on what this signifies:
When Google bought Nest last week for $3.2 billion, I was a bit surprised. I had figured the learning thermostat maker was on the IPO track. Google had also retired its own PowerMeter energy monitoring project in 2011. There were more than a few PowerMeter postmortems which stressed that “Google isn’t an energy company.” That’s still true, but it is a big data company, and its planet-serving data centers give it a strong ongoing interest in promoting energy efficiency. So its swoop back into the space makes plenty of sense. At Clean Edge we’re also hearing that there are similar conversations happening between other major technology providers and energy firms.
The Nest acquisition is a milestone for behavioral change and energy use. Everyone involved in producing electricity, and most of the people using it, understand that cutting end use is easier than creating new solar panels or drilling for more oil. Opower estimates that behavioral energy efficiency programs alone could save the U.S. over 18 million megawatt-hours (MWh) of electricity per year. So a growing number of electric utilities now have such programs—both homegrown and in partnership with firms like Opower and Tendril…
On the utility side, the market for behavioral energy efficiency is reaching a tipping point, as the majority considers joining early progressive adopters of its techniques and technology. Tendril CEO Adrian Tuck says that about 20 percent of U.S. electric utilities are now prepping seriously for energy efficiency, grid intelligence, and distributed generation—and that the other 80 percent are just watching. “That’s a very precarious place to be,” he notes.
We agree: it’s time to get serious about energy efficiency (as well as the smart grid and distributed power), if for no other reason than ignoring these things could be disastrous for one’s business. Google certainly understands that, and is acting accordingly.
My latest interview from our “Scaling Green on the Scene” booth at the CleanTech OC 2013 Conference and Expo is with Greg Trimarche, who has served as the President and Chairman of the Board of CleanTech OC since its inception in 2010. According to his bio, Trimarche is also an attorney with “vast experience dealing with federal and state energy and environmental regulatory programs relating to renewable energy and clean technologies.”
My first question to Trimarche was about his vision for CleanTech OC.
According to Trimarche:
…We started CleanTech OC because we recognized that we had really a very vibrant cleantech industry here in Orange County, but it was very fragmented. There wasn’t a lot of interplay between government and the private sector…between academia and the private sector…so one of the things that we initially sought to accomplish was essentially to be the glue or the vehicle that brought together those three sectors: public, private and academia. And it’s been remarkably successful…the formation of the new Orange County Sustainability Council…[will allow us to] really reach out beyond the clean technology sector and reach into all of the big businesses here in Orange County, because all of corporate America is now focused on sustainability.
Next, I asked Trimarche about converting “brownfields” into solar fields.
Trimarche said that this makes sense, but he also added a cautionary note:
…In the last year or two, there’s been a little bit of a movement away from the big, centrally-located solar projects…to more projects but at a lower concentration, so you lower the environmental impact and you take up less land…If you look around, what I think we’re seeing is more distributed generation and smaller projects spread around, and that opens up a whole host of opportunities as far as where we would locate these projects.”
What are the biggest barriers to growth for Orange County’s cleantech industry?
In Trimarche’s view:
Far and away the biggest challenge we’ve faced over the last two years is just not as much private capital going into the cleantech sector…I think we got a bit of a black eye over the past couple years with some very high-profile failures like Solyndra, I think it became a bit of a political football in the election last year…For a whole host of reasons, pension funds and other institutional investors haven’t been putting as much money into this sector as we had been seeing prior to maybe 2011.
According to Trimarche, “corporate strategic investment” in cleantech is now helping to “pick up that slack.” Which is fortunate, because “that’s really the biggest hurdle we’ve got: getting these early-stage technology companies the capital they need to grow their business.”
In which area of cleantech, both in Orange County and nationally, does Trimarche see the most potential for growth?
Trimarche’s answer was clear:
I think the smart grid is maybe the biggest opportunity right now. Our electric grid is ancient in terms of its operational history and the technology…We’re in the process of modernizing the entire electrical grid for this country and really worldwide. If I remember the numbers…they say we’re going to spend $2 trillion modernizing the electrical grid worldwide and about $480 billion in the U.S. alone…staggering amounts of money, so there is tremendous opportunity in that technology sector, and you see early-stage companies in that sector doing a better job than most of the others in raising venture capital…
Why is this the case? In Trimarche’s view:
It’s a convergence of a number of factors…utilities have antiquated IT systems and so they need to completely replace all of that…equipment and software and hardware with modern stuff; same thing with their communications equipment…The opportunity to turn what is now a very primitive electrical grid into this so-called smart grid where we incorporate digital technology and communications technology and turn the grid into a communications device as much as an electrical transmission device is just an incredible opportunity.
Finally, Trimarche commented on the importance of social media in the growth of cleantech.
According to Trimarche, “what we have now is an entire generation of human beings who expect to be able to communicate and actually do business…with their hand-held devices…control the appliances and electrical uses in your home…That technology already exists; there are smart homes, smart thermostats, smart appliances. And I think what we’re going to see over the next 5 or 10 years is that revolution take place in terms of the consumer side of it.
In sum, as we’ve now heard from several cleantech leaders like Greg Trimarche who we interviewed at the CleanTech OC conference, these are exciting times for clean technology in Orange County, California and beyond. At Tigercomm, we are very happy to be a part of the rapid growth of this sector.
My first question to Varga was about how PhoenixET has managed to become one of the fastest growing companies in America. According to Varga, “It’s really understanding your customer and knowing what the market need is, and being nimble enough to answer those needs or their pain; that’s what’s made us successful.”
One of those customers is Office Depot. On its website, PhoenixET offers Office Depot as a case study of how, by providing a “complete energy management solution, Office Depot gained enterprise visibility, actionable information and improved performance for their building portfolio of 1,100 locations.” Office Depot also achieved an impressive 61% Return on Investment, with annual energy savings of $2.2 million. In our interview, Varga elaborated on how all that was accomplished:
[Office Depot was] one of our early adopters. We work collaboratively with each client and better understand their business….The base project of what we do is tie everything together… “data is the currency of the future,” and it truly is for these clients, because they’re spread out across the country, and unlike a campus, it’s very hard to integrate that information, very costly as well… So, we were able to accomplish that with software and then work collaboratively with the client to see how they do business today and where we can take them in the future once we have that data all in one area. From that, once you get that data together, you start looking at a proactive management solution of what’s going bump in the night, other than just this room is hot or this room is cold…Things are functioning on the rooftops that they don’t even see. So, it may be a month of two down the road that they’re hemorrhaging expenses in energy that they don’t see until their comfort is affected. So, we look at that real time and go into a proactive mode with them.
Finally, I asked Varga about a topic I discussed earlier this year with Paul De Martini of the Newport Consulting Group – namely, the importance of achieving “a deeper level of engagement with customers, as well as tying into social business as a way to approach that engagement.” Varga agreed that customer engagement and communication is crucial.
We have an interesting dynamic because our customers are who we face with, but they actually have the consumer who they face with. So, anything we do on our end is a trickle-down effect to the building. Their ultimate goal is “don’t affect sales.” …So constant collaboration…we collaborate, but how can we push that out to their consumers walking into that building [so that consumer] know what they’re doing from a sustainability or demand response effort? So, we’re actually looking at some technologies as well to figure out when [consumers] walk in, is there a smart phone application that [says] this building is in demand response, or is there a kiosk that shows on a screen that [the retail outlet is] going through some effort to save energy and obviously to impact us all financially. [One phrase is] “We’re saving energy and curtailing our load so your home can be comfortable.” And that really resonates with the customers, so they’re willing to take that little extra discomfort if the temperature’s warmer than they would like it. So, collaboration has been the key to our success at Phoenix.
The bottom line is that no matter how good your cleantech product or service, the key is still always going to be communicating effectively with clients/customers, and even positioning them to communicate successfully with their customers.
From 2005 to 2010, efficiency measures saved the energy equivalent of USD 420 billion worth of oil in a group of 11 IEA member countries.
Had it not been for energy efficiency measures implemented in past years, consumers in those 11 IEA member countries would now be consuming – and thus paying for – about two-thirds more energy than they currently use.
In 2010 in those countries, the energy savings from efficiency measures exceeded the output from any other single fuel source. That year, the 11 IEA economies avoided burning 1.5 billion tonnes of oil equivalent thanks to efficiency improvements developed since 1974. By comparison, in 2010 those same economies consumed about 1 billion tonnes of oil equivalent from assets developed over the same period.
Yet, despite all of energy efficiency’s successes, the IEA notes that “the absence of dynamic pricing in energy markets together with subsidies, high transaction costs, information failures and a lack of institutional capacity can sometimes impede efficiency improvements.” The IEA further argues that energy efficiency is a “huge opportunity going unrealised,” with “investments in energy efficiency…still less than two‐thirds of the level of fossil fuel subsidies.” Clearly, the IEA believes – as do we – that this situation needs to change, and quickly. Let’s hope that policymakers in the U.S. and elsewhere get the message.