Empowering Consumers to Manage Energy

By Niraj Bhargava, Energate

Anyone who listens to the news knows that we’re in the midst of a global energy crisis. Demand is outpacing supply. As recently stated in the June 21-27 issue of The Economist, today’s global population consumes about 15 terawatts of power, but by 2050, power consumption is likely to rise to 30 terawatts. This situation is spurring change: new sources of energy are being developed, new conservation efforts are being undertaken and new technologies are being introduced.

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In North America, utilities are using demand response programs to help reduce energy consumption, especially during peak periods of usage. Some are doing it solely for peak reduction–and thus avoid major investments in supply. Other utilities view the situation as an opportunity to encourage conservation and, at the same time, build stronger relationships with their customers.

In the short term, both objectives are driving change. Utilities are rolling out demand response projects that give homeowners new technology and more information in an effort to encourage them to change their consumption habits. However, a key requirement for success is not only to have the utility push for change, but to engage homeowners by meeting their needs–to create critical consumer pull.

Preliminary and theoretical studies show that this methodology is working. We’re learning that by passing on the real costs of energy while, in parallel, providing the tools to manage and control use, change can be created. For example, the pilots cited in the Brattle Group discussion paper, “The Power of Experimentation: New evidence on residential demand response, May 2008,” say that when homeowners are given the means in which to monitor and adjust their electricity usage, they will.

The paper states, “We observe that, on average, treatment customers with TOU [time-of-use] rates reduce their peak period consumption by approximately 5 percent. When TOU rates are paired with enabling technologies, peak load reductions reach to 25 percent on average.”

It continues, “Complementing a TOU rate design with a critical peak price component increases the program effectiveness and leads to peak load reductions in the order of 20 percent on CPP (critical peak pricing) event days. Finally, the largest peak load reductions can be attributed to the CPP programs with enabling technologies. Under these programs, treatment customers reduce their peak period consumption on CPP days by approximately 30 percent, on average.”

But, to reach a sustainable model, where the majority of homeowners embrace demand response programs and conservation in general, we need to deploy technology that the majority of consumers (not just early adopters) will accept and use. We need to go beyond the theory to deal with human behavior and consumer lifestyle realities.

As witnessed in California, not all proposed programs and technologies are effective. Taking control away from the homeowner can be a provocative notion, especially where personal comfort is concerned. State officials announced in mid-January 2008 that they would abandon their plan to install remote-controlled thermostats in homes and commercial buildings. An article (“State abandons plan to allow utilities to control home thermostats,” Charles Burress, January 17, 2008) published by The San Francisco Chronicle reports that “new building-efficiency standards” would have required new buildings to include remote-controlled thermostats that could allow utilities to control a building’s air-conditioning or heating during power emergencies.”

It continues, “After a public outcry, commission officials last week said the regulation would be revised so that the devices would still be required, but configured so that customers could override outside control by utilities.

“But, the agency backed off even more this week by announcing that the proposed remote-controlled thermostats would be dropped entirely from the 2008 edition of the building-efficiency standards.”

Accounting for Consumer Comfort

Consumers are aware of the forces driving energy efficiency. A majority is driven by cost management and many are motivated to do their part in carbon reduction. Yet, even with these drivers, consumers wish to maintain control over their personal environment. This personal management of comfort, for themselves and their families, is non-negotiable for most.

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How can we preserve personal comfort control while still tapping into potential savings? The real need for consumers is to be comfortable in their homes, and part of this will depend on their activities or lifestyle. For instance, we can look to realize savings by controlling only those rooms or areas which are in use. Ideas such as this are not new, but it will take a new generation of technology, with intuitive, adaptive capabilities, to allow consumers to seize the opportunity.

Fitting Consumers’ Lifestyles

For widespread consumer adoption, technology that homeowners feel comfortable with and want is needed–balancing engineering technology and consumer behavior. We need only to look at the consumer electronics industry to see how homeowners can dictate the success of a technology. The wild success of the iPod over other portable music players rests in the fact that Apple gives consumers what they want, in a format that’s easy to use.

Writers and researchers on the topic of simplicity often point to the flashing VCR-clock phenomenon. As with any technology, there is a segment of the population that is technology savvy, and will always read a manual or learn the necessary details for operation. However, beyond the self-selected volunteers, there is the majority group that knows what it wants, but does not have the time or inclination to learn or manage the details of a new technology implementation. Many consumer electronics manufacturers are pointing to user-friendly interfaces, and for good reason. But why stop at the user interface?

Energy use permeates every aspect of our lives. This challenge for us as an industry is not about one tool or technology, but finding ways to weave energy use actions and decisions into the everyday lives of consumers. To do this, we need to look to provide tools to consumers that are not simply “user interface” easy to use but, more importantly, “this fits into my daily routine” easy to use.

Imagine a smart thermostat or energy gateway that is intelligent enough to respond to a homeowner’s lifestyle. Take water heaters for example; If consumers were given a choice, would they keep their water heater on around the clock? Imagine the potential savings if a system knew that a family took showers in the morning, turned the dishwasher on after the evening meal, and did laundry on Saturday afternoons. Consider the possibilities if the system was so easy to use, that a person only had to feed basic information into the system, and it adjusted itself accordingly.

Donald Norman, the Breed Senior Professor in design in the school of engineering at Northwestern University and former vice president of the advanced technology group at Apple Computer, uses the term “human-centered products.” He said, “Focusing upon people, we create products and services that enhance customer satisfaction, that maintain relationships, and increase sales.”Success in human-centered design requires giving equal weight to user experience, marketing and technology. The major barriers to success are not technological: they are social, political and organizational.”

Striking the Right Balance

For utilities, selecting the right in-home technology to deploy today can create engaged, actively participating consumers. We need to provide technology that inspires a “that was easy; what more can I do?” reaction, encouraging consumers to progressively take control of their energy use in ways that fit their lifestyle.

Of course, the interests of consumers have to be balanced against those of the utilities’. Providers need to ensure that their businesses can thrive and that consumer needs are met in a realistic and sustainable way.

Part of this requires utilities to have the means to interact with their customers’ energy usage. Today, utilities have a greater ability to do so than ever before. Many have already begun to deploy advanced metering infrastructure (AMI). These afford the technological means to conduct two-way data communication between the consumer home and the energy provider. Utilities also have the opportunity to partner with companies who understand consumer needs and are looking at comfort and convenience as well as conservation.

Niraj Bhargava is a founder, chairman and CEO of Energate Inc. A former dean of the faculty of management at Royal Roads University and a past corporate center director at the Queens University School of Business, Niraj has extensive experience in the technology sector. He served as president and CEO of Enerstat Ltd. and has held leadership positions at General Electric and Bell Northern Research. More information on Energate can be found at www.energateinc.com.

TXU Energy Unveils iThermostat

TXU Energy has introduced its new energy conservation product, the TXU Energy iThermostat. It replaces a customer’s old thermostat with one designed to manage home energy use, save money and help the environment from any device connected to the Internet. It also allows TXU Energy to manage electric use during periods of peak energy demand.

“Our focus is on helping customers control their energy use so they can save money,” said Jim Burke, chief executive officer, TXU Energy. “Combined with the TXU Energy Conservation program, this new tool will help accomplish that and help the environment at the same time.”

The iThermostat is free to eligible customers in the Oncor Electric Delivery service area who sign up for the TXU Energy Conservation Program. This program allows TXU Energy to cycle on and off a customer’s heating and air conditioning system during periods of peak energy demand.

The iThermostat, in conjunction with the TXU Energy Conservation Program, represents one of the nation’s first Internet-based electricity demand response programs, according to TXU. It uses broadband Internet service and ZigBee technology. iThermostat was developed in partnership with Comverge, Inc. and Digi International.

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