By Julia DeIuliis
What if energy consumption could be reduced by ~2% without developing new technology, adding regulations, installing new equipment, or disrupting communities- and with minimal investment? If 2% sounds insignificant, remember that it would save households over $3 billion on electricity.
This is the promise of data visualization. Energy reports can display the absolute level of energy usage, as well as comparisons with historical usage and peers. For example:
Exhibit 1: OPower report
Exhibit 2: OPower Energy Report (detail)
Exhibit 3: Nest* Energy Report (detail)
According to the Environment Defense Fund, these visualizations can reduce usage by 1.8% on average- and if targeted at households most likely to show reductions, average reduction rises to 6.5%. A comprehensive review of 20 studies on energy usage feedback between 1987 and 2008 showed average savings between 5-12%. OPower claims their reports are one of the most cost effective energy interventions:
Built on decades of behavioral psychology research, data visualization works by both showing the potential financial savings from demand reduction and introducing social pressure with peer comparisons. While granular usage feedback requires smart meters, which have received some customer backlash over privacy concerns, all standard utility bills have the potential to show customers these basic metrics: their bill versus the average community and past bills, and the potential savings from small reductions.
Moreover, this information can be delivered via mobile apps or through SMS, indicating the potential to work in emerging markets. Of course, data visualization would work best in relatively developed emerging markets, such as Bogota, that have a somewhat established energy grid, as opposed to urban slums.
While this approach holds promise, I have two key concerns:
1. Impact may reach a “ceiling” as customers with above average usage reach the community norm, and then feel less pressure to lower their energy consumption. As opposed to sensor-based systems, which can dramatically lower consumption of even contentious customers, data visualization only brings people towards the middle and enables small changes.
For example, one report estimates that nearly 5% of electricity in residential homes is “leaked” by powering devices in “standby” mode, such as TVs turned off. Yet, few consumers will bother to unplug appliances, even when aware of the potential savings. Smart outlets provide a much better solution to tackle this issue.
2. Who is going to pay? Customers seem unlikely to pay upfront for an energy report. While upfront costs are low, a cost is still implied. If utility companies pay for the report, they must assume that they’ll be able to serve more customers with the same assets. For this incentive, governments must hold utilities to high levels of efficiency, before greenlighting the development of more energy plants.
*Full disclosure, I worked for Nest over the summer, and plan to return after business school.