PLANNING AND LEADERSHIP FOR A BETTER WORLD
PLANNING AND LEADERSHIP FOR A BETTER WORLD The old adage “you can lead a horse to water,” seems to apply to utility customers with respect to their use of smart meter information and their actions to more prudently use energy.
Simply making energy usage and potential costs savings information available to customers is not enough these days. Utilities are finding they must take additional steps including providing better customer education, making the information available in easier-to-understand formats and leveraging customers’ social nature to help modify energy usage patterns.
As an earlier Smarter Technology article noted, if utilities think they can just put in smart meters and customers will automatically change the way they use energy, the findings of the 2011 IBM Global Utility Consumer Survey provide eye-opening evidence to the contrary. In total, 10,000 people in 17 countries were surveyed, and IBM found a startling lack of knowledge. “Thirty percent didn't understand the basics of their energy bill,” said Michael Valocchi, vice president, Global Energy & Utilities Industry Leader for IBM Global Business Services.
The report on the study’s results contends that this lack of understanding leads to decision-making processes that depend on the evaluations of trusted advisers, rather than on understanding the clear choices available to a customer by the smart grid and smart meters.
Certainly, some customers do take advantage of smart meter information and, given incentives, make usage changes that are helpful to them and the utility. But the IBM survey highlights the point that there is a need for a more nuanced approach that complements the traditional cost savings angle associated with customers’ use of smart meter information. Specifically, the survey found that customers, in general, and younger customers, in particular, were much more inclined to change usage based on the consensual decisions of their social circle of friends rather than on the traditional financial motivations being offered by energy providers. So utilities must find ways to take tap into that social aspect of customer decision making.
One company that seems to have a jump on the field in this area is Opower. Opower has teamed with roughly 60 utilities, including eight of the ten largest in the United States. It has access to data from more than 40 million (smart and traditional) meters, and delivers information to more than 10 million customers in North America.
The reason utilities engage with Opower is that the company brings a value-added service that is needed in timely manner. Specifically, Opower can quickly deliver customized information (via a customized Website, for example) to engage customers in a manner that is different than the traditional monthly electric bill.
A more exotic aspect of Opower’s offerings is to marry smart meter data with other information and then use advanced analytics to develop customized messages for consumers. For example, Opower combines publically available information with location information and power usage to generate neighborhood comparisons that show a customer’s power consumption compared to similar sized homes in the same area.
Opower also identifies heating and cooling patterns without the use of in-house monitoring devices. Using statistical algorithms and multi-variable regression analysis that combines energy usage, housing, and weather data, Opower estimates the amount of heating and cooling energy used by each household.
So instead of learning that a household used 10 percent more energy overall than the neighbors, customers can discover that they specifically used 30 percent more energy on heating, and therefore may need furnace maintenance, new insulation, or to set their thermostats to a lower temperature.
Leveraging the analytic results, the company then applies behavior modification principles to produce energy usage changes. “The traditional approach has been to present the [customer] with an argument that if you’re more energy efficient, you can save money.” said Ogi Kavazovic, Vice President of Corporate Marketing and Strategy at Opower.
But he noted that while saving a few dollars a month is not meaningless, it is not enough to motivate a large part of the customer base. “However, telling people what is the norm, can be a motivator for change,” said Kavazovic.
These points tie back to the findings in the IBM survey where customers were found to be more inclined to change usage based on the actions of their neighbors and those members of their social circle. Opower claims its technology has produced a reduction in power usage of about 400 gigawatt-hours and saved customers $50 million.
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