Google, Nest, and Getting Energy Consumers To Behave


January 21, 2014

 

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. Tendril has more than five million customers. Opower’s energy reports reach more than 20 million. Other players include Comverge, Pulse, and Silver Spring Networks. The hardware side isn’t just about Nest, either. Honeywell has partnered with PG&E and other utilities. Alarm.com, Vivint, and ADT all have more than a million customers each.

 

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. 

 

Nest and the rest have put a simple face on energy savings, and it’s easy to forget what’s driving this market trend: behavioral science. In a TED Talk last year, Opower CEO Ted Laskey nailed the importance of this component of energy savings by describing a behavioral experiment with electricity consumers. Grad students put hangers on doors with different messages promoting energy savings: “You can save $54 this month!”; “You can save the planet!”; and “You can be a good citizen.” Energy use didn’t budge. But when they changed the message to “Your neighbors are doing better,” and pointed out that 77 percent of their neighbors had turned down their air conditioning, there was a marked decrease in energy use. 

 

Behavioral science doesn’t just tell us what works best to produce energy savings. It tells us what doesn’t: extrinsic motivators like rebates, fees, and taxes. The gains made with these methods are short-lived and don’t have much traction. They also depend on repeated customer pinging and prodding, which no one likes.

 

Brand Cool Director of Insight Renee Lertzman researches behavioral change. It might seem counterintuitive, but she thinks energy efficiency programs are gaining popularity as a reaction to technology: many consumers have already done what they can to save energy with product choices. Once you’ve installed the energy-efficient appliances and changed your light bulbs, then what? “There’s finally a recognition that technology is not enough. The missing piece is the human dimension,” she says. This can sound a bit fuzzy for a science that thrives on hard data, but she has a point. Energy usage is a fundamental part of our modern identity, and keeping your house warm in winter, for instance, has a powerful psychological pull. Suggesting that people change that behavior can be construed as messing with their identity. That can contribute to backlash—something familiar to a lot of smart meter installers. 

 

As more consumers install learning thermostats in their homes, track energy usage provided by their utility, and use their smartphones to turn down the heat, the industry needs to keep the human dimension in mind. In a world that can seem more out of our control all the time, empowering people to do the right thing is a tiny, welcome blessing. If they can one-up their neighbors at the same time, all the better. 

 

 

Clean Edge’s Senior Analyst James Belcher covers clean-tech markets, contributing research and writing to the firm’s reports and consulting projects. Email him at belcher@cleanedge.com and follow him on Twitter at @JamesLBelcher.

© Clean Edge, Inc.

http://www.cleanedge.com/content/google-nest-and-getting-energy-consumers-behave