Cash is king, but does it motivate energy conservation?

By Carl Gustin, Founder and President, GroundedPower

With smart grid deployments on the rise, there has been a lot of talk concerning the best way to engage consumers in energy savings and how to motivate participation.

When looking at what motivates consumers to conserve energy, economists typically have focused on price signals as the primary motivator. But not all consumers respond to the same motivations.

The economists might be wrong; price might not have as much impact on energy savings as other factors that affect consumer behavior.

This is not to suggest that providing consumers information about energy prices and energy consumption is not helpful, only that by itself such information might not be enough to produce the deep, sustainable savings many utilities will need to meet regulatory and legislative mandates now and years later.

For many consumers, other household expenses including those related to communications and entertainment overshadow the price of electricity.

Information, especially in real time, is important, and valuable social marketing tools can help tailor information based on demographic and other segmentations.

The challenge is to actively engage consumers in energy savings, making them partners and building relationships around common efficiency goals. Part of the challenge is to achieve a level of engagement in efficiency that is productive and so easy that it becomes a habit.

Results of a Cape Cod, Mass., pilot provide insights to achieve that outcome. The pilot suggests that factors such as environmental concerns, competition, community well-being and rewards might be as powerful motivators as price signals. It also suggests that achieving significant savings can be a natural extension of many consumers’ daily lives.

The pilot was sponsored by the Cape Light Compact, a municipal aggregator that runs energy efficiency programs and buys electricity for consumers in 21 Cape Cod and Martha’s Vineyard communities. It has produced significant energy savings without the benefit of time-differentiated price signals.

Pilot participants on average reduced energy use nearly 10 percent per month by setting goals, building their own energy-savings plans, getting regular feedback and receiving rewards points for participating and reaching their goals.

None of the traditional tools such as in-home displays, plug level monitors and load control devices were part of the pilot. Results are based entirely on user behavior.

According to the American Council for an Energy-Efficient Economy, behavior change is a largely untapped resource, and not enough is being done to leverage it. ACEEE suggests in reports that the energy-savings potential from behavior changes alone could approach 25 percent. 

The Cape Light Compact pilot was designed and implemented in 2009 to evaluate potential energy savings from in-home energy monitoring systems, to gain insight to behavioral aspects of energy use, and to inform future residential smart grid projects.

Pilot participants use a Web-based Interactive Customer Engagement System (iCES) that includes a wireless in-home monitor developed by GroundedPower Inc. of Newton Lower Falls, Mass.

With an online dashboard, participants received real-time feedback on their energy consumption and their savings in kilowatt-hours, dollars and carbon dioxide emissions, and they were able to learn about and sign up for energy-saving activities.

Participants were also part of a community network and could view similar households’ electricity usage in the pilot and communicate with other pilot members through a Web-based social networking system.

A key to the GroundedPower iCES system is its ability to allow consumers to tap into their own motivations and design energy-savings programs based on their needs. The pilot results are encouraging, said Briana Kane, residential program coordinator for Cape Light Compact.

“It proves that customers who have the tools to monitor their real-time energy use on a daily basis learn to change their behavior and effectively reduce their electricity consumption,” Kane said.

Pilot participants saved an average of 9.3 percent compared with control groups, according to the independent evaluation by PA Consulting Group. And 90 percent of participants expressed satisfaction and would continue using the system after the pilot.

PA Consulting Group also found that sharing information through the social network was an important component of the pilot. It also found that most participants valued the information and were willing to pay a monthly fee to use the system.

The system appears to have other advantages. For example, it is likely that engaged customers will be more accepting of time-based rates, more willing to participate in load control programs, more likely to purchase energy-efficient appliances and in general have a more favorable view of their utility.

If that is the case, then interactive customer engagement and relationship tools should and will become an integral part of every smart meter deployment and provide energy savings to customers and communities while allowing utilities to better serve their customers.

Author: Carl Gustin is the founder and president of GroundedPower.

 

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Cash is king, but does it motivate energy conservation?

By Carl Gustin, Founder and President, GroundedPower

With smart grid deployments on the rise, there has been a lot of talk concerning the best way to engage consumers in energy savings and how to motivate participation.

When looking at what motivates consumers to conserve energy, economists typically have focused on price signals as the primary motivator. But not all consumers respond to the same motivations.

The economists might be wrong; price might not have as much impact on energy savings as other factors that affect consumer behavior.

This is not to suggest that providing consumers information about energy prices and energy consumption is not helpful, only that by itself such information might not be enough to produce the deep, sustainable savings many utilities will need to meet regulatory and legislative mandates now and years later.

For many consumers, other household expenses including those related to communications and entertainment overshadow the price of electricity.

Information, especially in real time, is important, and valuable social marketing tools can help tailor information based on demographic and other segmentations.

The challenge is to actively engage consumers in energy savings, making them partners and building relationships around common efficiency goals. Part of the challenge is to achieve a level of engagement in efficiency that is productive and so easy that it becomes a habit.

Results of a Cape Cod, Mass., pilot provide insights to achieve that outcome. The pilot suggests that factors such as environmental concerns, competition, community well-being and rewards might be as powerful motivators as price signals. It also suggests that achieving significant savings can be a natural extension of many consumers’ daily lives.

The pilot was sponsored by the Cape Light Compact, a municipal aggregator that runs energy efficiency programs and buys electricity for consumers in 21 Cape Cod and Martha’s Vineyard communities. It has produced significant energy savings without the benefit of time-differentiated price signals.

Pilot participants on average reduced energy use nearly 10 percent per month by setting goals, building their own energy-savings plans, getting regular feedback and receiving rewards points for participating and reaching their goals.

None of the traditional tools such as in-home displays, plug level monitors and load control devices were part of the pilot. Results are based entirely on user behavior.

According to the American Council for an Energy-Efficient Economy, behavior change is a largely untapped resource, and not enough is being done to leverage it. ACEEE suggests in reports that the energy-savings potential from behavior changes alone could approach 25 percent. 

The Cape Light Compact pilot was designed and implemented in 2009 to evaluate potential energy savings from in-home energy monitoring systems, to gain insight to behavioral aspects of energy use, and to inform future residential smart grid projects.

Pilot participants use a Web-based Interactive Customer Engagement System (iCES) that includes a wireless in-home monitor developed by GroundedPower Inc. of Newton Lower Falls, Mass.

With an online dashboard, participants received real-time feedback on their energy consumption and their savings in kilowatt-hours, dollars and carbon dioxide emissions, and they were able to learn about and sign up for energy-saving activities.

Participants were also part of a community network and could view similar households’ electricity usage in the pilot and communicate with other pilot members through a Web-based social networking system.

A key to the GroundedPower iCES system is its ability to allow consumers to tap into their own motivations and design energy-savings programs based on their needs. The pilot results are encouraging, said Briana Kane, residential program coordinator for Cape Light Compact.

“It proves that customers who have the tools to monitor their real-time energy use on a daily basis learn to change their behavior and effectively reduce their electricity consumption,” Kane said.

Pilot participants saved an average of 9.3 percent compared with control groups, according to the independent evaluation by PA Consulting Group. And 90 percent of participants expressed satisfaction and would continue using the system after the pilot.

PA Consulting Group also found that sharing information through the social network was an important component of the pilot. It also found that most participants valued the information and were willing to pay a monthly fee to use the system.

The system appears to have other advantages. For example, it is likely that engaged customers will be more accepting of time-based rates, more willing to participate in load control programs, more likely to purchase energy-efficient appliances and in general have a more favorable view of their utility.

If that is the case, then interactive customer engagement and relationship tools should and will become an integral part of every smart meter deployment and provide energy savings to customers and communities while allowing utilities to better serve their customers.

Author: Carl Gustin is the founder and president of GroundedPower.