A few summers back, researchers went door to door in a Southern California neighborhood to see what it would take to get folks to turn off their air conditioning and prevent power blackouts. They tried appealing to greed (“You’ll save money”) and guilt (“It’s better for the Earth”). Neither message made a dent. But when residents were told that most of their neighbors were cutting back on the AC, energy use finally plummeted. Nobody, it seems, wants to be the biggest energy hog on the block.
Utilities across the country are starting to use neighborly comparisons to convince consumers to curb energy use. Helping utilities apply this notso- subtle peer pressure is a start-up called OPOWER (previously known as Positive Energy). Privately held, for-profit OPOWER uses analytic software, demographic research, and social psychology insights to generate monthly energy report cards for utility customers. The centerpiece of each report is a simple bar graph, showing at a glance how a household’s energy consumption stacks up against 100 neighbors.
“It works like clockwork,” says Ogi Kavazovic, senior director of marketing and strategy for OPOWER. Energy savings typically kick in about three months after customers start receiving reports, growing to a steady but impressive 2 percent to 3 percent savings within a year. “People wonder if it’s a novelty that will wear off ,” Kavazovic says, “but our results seem to get better over time.”
California’s Sacramento Municipal Utility District (SMUD) has the longest track record with the innovative program. In a large-scale pilot, 35,000 SMUD customers saved 9.5 gigawatts of electricity in 16 months—the equivalent of taking 1,000 households off the grid. “And everybody saved,” says Ali Crawford, project manager for SMUD. Already efficient households got even more so, and those whose reports cards read “room to improve” also made gains. Customers who out-green their neighbors earn smiley faces on their reports.
Along with the bar graphs and smiley faces, customers also get a few energy-saving tips calibrated to match their household profile. “These are Amazon.com-like recommendations,” Kavazovic explains, with suggestions based on “what customers like you are doing. We’re talking about people who live within a few blocks of you, who live in a similar size home and experience the same weather and local economy.”
This is a new way to talk about conservation. “Utilities typically hit customers with the kitchen sink” when it comes to energy-saving ideas, Kavazovic says. OPOWER fine-tunes those suggestions by creating customer profiles. To create the profiles, analysts look at property tax assessments, third-party demographic research, and other data to help them determine neighborhood income and energy use patterns. “We wouldn’t suggest that a low-income family buy an expensive, energy-efficient refrigerator,” Kavazovic says. Instead, that family might get pointers about no-cost behavioral changes, such as turning off lights or lowering the thermostat at night.
OPOWER’s customer base is growing, with 18 utilities in several states signed on and others in the talking stages. Online tools are in development to complement the reports that currently go out by old-fashioned mail. Cost for the basic program varies, but averages about $10 per household annually. On the energy-savings side of the equation, that works out to 3 cents per kilowatt-hour abated. “That’s about it good as it gets for an energy-efficiency program,” Kavazovic says.
Read more stories by Suzie Boss.