Does direct feedback on energy use change consumer behavior?

Phil Carson | Apr 06, 2010

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I've yammered on about "synchronicity" - intuitive links between seemingly disparate events - but I've concluded, as the Twilight Zone theme song faded, that the smart grid is simply in land grab mode and there's just lots going on.

My new paradigm for intuitive links between seemingly disparate events is juxtaposition, which to me implies contrasts.

On Monday, a diverse lot of dozens upon dozens of vendors, environmental organizations, telecommunications firms, appliance makers, venture capitalists and retailers, under the imprimatur of The Climate Group and Google, sent a letter to President Barack Obama concerning one key driver for demand management.

(Sampling of the "undersigned": AT&T, Best Buy, Dow, eMeter, Environmental Defense Fund, General Electric, Google, Intel, Itron, Nokia, U.S. Green Building Council, Whirlpool, etc. I take this as proof that demand management is worth billions to many, disparate parties.)

"We are writing to ask that your Administration adopt the goal of giving every household and business access to timely, useful and actionable information on their energy use," the letter read, in part. "Studies and experience show that when people have access to direct feedback on their electricity use, they can achieve significant savings through simple behavioral changes."

Hold two pieces of that last statement in mind for a moment and we'll return to them: "studies and experience show" and "[consumers] can achieve significant savings."

The letter suggested that if all U.S. households saved 15 percent on their energy use by 2020, the greenhouse gas savings would be equivalent to taking 35 million cars off the road and would save consumers $46 billion on energy bills, or $360 per customer per year.

The letter suggested that consumers should have real-time data on the sources and causes of electricity consumption, pricing and pricing plans and information on generation sources. The letter also suggested how this might be achieved.

That was Monday. Yesterday, The Climate Group and Google convened a forum in Washington, D.C., titled "Power in Numbers: Unleashing Innovation in Home Energy Use," involving a number of heavy hitters, including a keynote by Carol Browner, assistant to the president for energy and climate change (and former U.S. Environmental Protection Agency administrator). Though the forum could only be attended in person, there was an online question-and-answer component.

But I had to run.

A webinar was starting, titled, "Effects of In-Home Displays On Energy Consumption: A Summary of Pilot Results," delivered by two Ph.D. economists working for The Brattle Group and sponsored by the Peak Load Management Alliance, a nonprofit focused demand response and its role in creating efficient electricity markets.

The webinar's thesis question: does direct feedback from an in-home display affect consumer behavior?

Stated differently by the principal presenter, Ahmad Faruqui: "You cannot manage what you cannot measure."

Faruqui's basic answer was that a dozen pilot programs indicated the answer is "yes," and the average savings was 7 percent. But his colleague, Sanem Sergici, pointed out major caveats to the results of each pilot, such that many if not most did not rise to the scientific standard of reproducible results. 

Going forward, utilities conducting "pilots" must determine whether they are determining proof of concept, staging a showcase or, for instance, demonstrating a new rate structure, Faruqui said. If the purpose of a pilot is, in fact, to determine whether consumers will use direct feedback on energy use by in-home displays to modify their behavior, that requires "scientifically designed experiments to yield reliable results," Faruqui intoned.

(Yes, it's a fact that consumers can achieve significant savings, but is "direct feedback on electricity use" the driver? Or are in-home displays simply physical reminders to curb energy use?)

Faruqui's conclusion: Utilities may "borrow" disparate industry data to make a point, but if they are mulling expensive programs and major capital decisions, they'd better spend the time and money in their own service areas to research the rationale for those decisions. Research is expensive, Faruqui added, but that cost is a tiny fraction of the cost of an ill-informed, major decision.

The phrase "studies show." helps make a convincing letter to the president. But it behooves us all to ensure that the data really is there to support the statement.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757 

   

 

 

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Comments

Feedback Helps?

Feedback and timely access to consumption data may be helpful.  A client of mine believes proposed "dynamic pricing" tariffs might drive this more than existing rates.  Well designed studies would help answer the question definitively.

However, I hope these studies will not be used to help justify utility investments on the customer side of the meter.  Customers have to be convinced that in-home displays and devices that can respond to prices provide an economic benefit that large enough to be worth spending their own money.  Otherwise, simply giving the stuff away will guarantee that it gathers dust.

Any customer-facing technology has to be owned by the customer and completely under the customer's control.  Some publicly owned utilities may be able to get away with gathering data and exercising control at the device level.  IOUs most certainly will not.

"Studies show" just doesn't cut it anymore.

Thank you, Mr. Carson, for calling out Google and others for vague references to "studies show".

As I explained on my blog, Evidence Soup, it's unacceptable for well-funded advocates such as these to refer to "studies" without providing specifics - they know better. Government agencies, energy producers, and technology firms all must set the bar higher, so public debate can be informed by actual evidence.

All too often, these kinds of statements are accepted without challenge. Such claims are poorly disguised as evidence-based management, when in fact they are the enemy.

Tracy Allison Altman

EvidenceSoup.com

Conflict of Interest

Do I read the long commentary on conflicts of interest among those proposing smart grid technologies to imply that there are no such conflicts of interest among the forces that support the continued status quo?  In reality, the structure and regulation of our current generation, transmission, distribution and consumption of electricity are all the product of government intervention driven by forces motivated by their own potential to benefit from the resulting market that was created for their products and services.  Why should the smart grid be held to any different standard?

Different Standard

Surely conflicts of interest exist everywhere and particularly when public money is being thrown about by the truckload. I don't think standards should be different. Good stewardship is good stewardship. Looking backward may teach some lessons but I'm far more concerned about the stewardship going forward.

Thanks for your measured comment.

Clarify

I'm sorry. I don't follow your point.

When you write: "In reality, the structure and regulation of our current generation, transmission, distribution and consumption of electricity are all the product of government intervention driven by forces motivated by their own potential to benefit from the resulting market that was created for their products and services."

Who do you mean by "they"? 

Phil Carson   

AGREED....and more

I couldn't agree more with Mr. Faruqui....but I would go further.

Right now, Green enthusiasts seem to believe they can secure public buy-in for almost any environmentally connected program on the basis of "saving the planet". I submit that "saving the planet" is an illegitimate basis.

In fact, there is no science that definitively shows the planet needs "saving" nor is there any science that definitively shows human activity can mitigate the effects of global warming, now cleverly recast as "climate change" to avoid inconvenient data. To be clear, climate change science is at best incomplete and at worst, something less than science. That statement holds true for every side of the argument. The jury is out.

Green enthusiasts argue that by the time solid science can be developed, the planet will already be doomed (betraying their intended conclusion). They go on to argue that "consensus" amongst scientists is sufficient justification for immediately spending truckloads of real money in the war against climate change. Is this what passes for critical thought in 2010?  I guess so because money is flowing.

Reduce all this down to the Smart Grid (SG) subject and the same issues of legitimacy persist. Curiously, "regular folks" have reached their own pointed conclusions without the benefit of professional guidance. They instinctively sense an expensive unjustified cram down.

Solving the problem of buy-in requires, shazaam, justification. Can that be done even while commercial-sized Smart Meter "demonstration projects" are being funded by DOE stimulus money? Perhaps. But to do so, a lot of dreamy Green movement stakeholders are going to have to get serious.

Questions about the SG are straight forward,:

  • Why is the current grid deficient?

  • What inefficiencies can be economically reduced or eliminated?

  • What cause-effect relationships can be definitively qualified and quantified?

  • What is the monetized value of improved reliability?

  • Which stakeholders will benefit and by how much?

  • Who bears the cost?

All of these questions (and many more) are answerable through judicious science, application engineering and economic analysis. Unfortunately, SG enthusiasts are driven to stipulation: "Smart Meters are good!"; "Consumers will save money!"; "We need a sustainable grid!"; "Demand response is good for everyone!".

Perhaps all the stipulations are true but absent the underlying data, stipulation is but propaganda.

So why can't we get past the fluff? Three reasons:

  • ·Religious fanaticism·        

  • Conflicts-of-interest      

  • Fear....that the numbers don't work

With respect to religious fanaticism, Green enthusiasts have largely failed to win the hearts of "regular folk" because "the cause" has taken the characteristics of a pagan religion. That's not a throw-away line nor is it intended to be an insult. The fact is, many "believers" are driven to all-things-green-at-any-cost by a perverse combination of irrational fear and undying faith....parallels to aboriginal religious practices. They simply do not care about science or data. They smell engine exhaust and call it proof. For them, that's all the legitimacy required to spend wads of other people's money. In short, they see no reason to provide indisputable proof because they sincerely believe proof is self-evident. Faith like a child. The problem is that sustainability can't ride the back of unsustainable economics.

The conflict-of-interest problem is one that deserves its own lengthy essay. Suffice it to say that literally everyone promoting SG technology stands to benefit directly or indirectly. Scientists get grants, vendors sell equipment, engineers and contractors get contracts, utilities enjoy both rate and operational benefits and politicians get to claim credit (often resulting in campaign graft contributions). As a practical matter, the conflict-of-interest cesspool is bottomless. The result? Data collection is seen by enthusiasts as a troublesome hurdle that could, on critical analysis, derail the free-money train to happy town. Recognize that when the conflict-of-interest crowd joins with the religious fanatics, critical mass is achieved for a self-sustaining movement. We're there dude.

The final leg of the data-suppression trilogy is this: fear that the numbers won't work. This, actually, is the big, fat, stinky elephant in the room.

Let's suppose that the average monthly residential electrical bill is $200 and let's further accept the notion that an average savings of 15% is achievable without undue effort or discomfort. Gross savings to the average consumer would then be $30/month. I suspect this is generous to a fault but let's go with it. The question then follows, can this savings be attractively squared against the costs of new hardware, new software, a new communications infrastructure and all the attendant soft costs? I don't know but I suspect not if returns-on-investment are calculated for the sum of every private and public dollar spent, including rate-based increases.

See now the temptation to use "saving the planet" as justification? By raising the "problem" to an order of magnitude that's "too big to fail" an awful lot of pesky questions can be easily deflected. As it turns out, fluff can be practically impenetrable.

Apart from the fluff, at the opposite end of the scale, there's another quite evident Smart Grid problem: how to pass along the high cost of renewable energy in a world that is thick with cheap coal and fresh discoveries of clean, economical natural gas. No worries. That problem has a two-pronged solution:

  • ·make fossil fuels artificially expensive and;

  • impose rate structure changes to mask increases

The cost of fossil fuel has been manipulated for decades. From the machinations of OPEC to Wall Street market speculation, who knows the actual price of delivering a British thermal unit (Btu). Environmental drilling restrictions since the 1970's have marginally helped to reduce the US supply but this effort still hasn't pushed the cost of fossil fuels to parity with renewables. Thus, cap & trade legislation. By adding a new layer of tax, energy costs of the fossil fuel variety will "necessarily skyrocket" (in the words of our President). This, I submit, is the holy grail of Green enthusiasts everywhere, secondary consequences be damned.

It goes without saying that "regular folks" will do their own post-legislation cap & trade cost analysis by subtraction, no professional help required. Clearly, the results will be "revealing", less noticeable if the tax is phased in, worse if the hammer falls all at once. Guess which.

Ultimately the hammer will come down. To synthetically soften the blow, how about a new rate? One that will theoretically allow you to save the cap & trade cost increase. For that, I give you Time-of-Use (TOU) magic: high costs to match circadian rhythms, lower costs when.....you'd rather be sleeping. Meals at midnight, clothes washing at 4AM. Why not? With a little discipline, you'll pay little more (inflation adjusted) than today AND you'll be "saving the planet"!

Here's the deal Greenies....American's distrust central planning and they can sense cram down a decade away. Americans also have a track record of doing hard things, repeatedly, where there are long-term legitimate benefits. Setting aside political overtones, we need to work together toward worthy, affordable, verifiable goals.

Here! Here! - what he said!

thanks for an alternative view based in logic... cheers,

A brief response

Your post borders on the abusive and clearly you've got some concision issues. However, your diatribe is easily answered.

Unfortunately, you've used a quite base rhetorical device to conflate many things into some sort of "smart grid = save the planet" nonsense.

Smart grid is, in fact, about wringing efficiencies out of the grid for high utility value. You have to look at individual utilities to see which of those are considered in rate cases and which are simple business-as-usual from a budgeting perspective. Some of those grid improvements, for ex., fall under reliability, and those are not easily cached in terms of return-on-investment. Granted, as discussed here, smart meters have known utility advantages and on the consumer side, there's intelligent debate without resorting to the overly emotional screed you posted.

On the consumer side, I personally have used simple energy efficiency practices in my home and seen the bill fall by $30/month. That's not inconsiderable, as it's about 25% of my bill. No, I didn't need fancy hardware to get there. But having more sophisticated means to track my usage would be welcome.

Carbon emissions have well-established, negative consequences for human health and none of the smart grid rationales above is dependent on the logic of global warming or its mitigation.

In the future, we will delete screeds like this, because they don't measure up to our standards for civil discourse and informative contributions. Today is an exception so that you may benefit from a response and, perhaps, join the ranks of our level-headed participants. 

Phil Carson

Really? Really? You just showed your fear of numbers...

"In the future, we will delete screeds like this, because they don't measure up to our standards for civil discourse and informative contributions"

wow, Phil, you showed how an alternative view threatens your world-view...

What are you afraid of?  He didn't use any foul language, he didn't threaten you with violence...

The Hammer of Truth subdued you so much your only response is to Ban the Opposition

Like a true Pagan Priest - the heretic must be crucified for blasphemy...

Why don't you answer the simple questions about the SG?

By answering the questions surely you can help alleviate the great unwashed cycincism...

 

Politically Correct?

By level headed, I'm pretty sure you mean politically correct.

I provoke for a reason: to move the needle. Perhaps you missed it, but I'm not against conservation, energy management, demand response, renewable energy or any of the fundamentals that support energy independence. I am against stupidity and broad "save the earth" as, I believe, are a lot of Americans. It's a point of view, it's valid and there's no reason to hide from it.

My point, perhaps missed in an admittedly too-long post, is that the blow back is real, there are reasons for it and not facing them squarely means either a) no smart grid in our lifetime or b) cram down based on thin evidence and consensus.

You're welcome to delete, ban or otherwise censor: you own the site. That's the price I pay for being provocative. I welcome reasoned rebuttal. That's how good solutions are rendered out of slush.

You're missing the boat

I'm sorry, this type of post stops here and now. Characterizing our readers and forum participants as merely "politically correct" is an abuse of your privilege to post. You've missed the boat.

Phil Carson

Why the harsh treatment?

Mr. Carson -- I've been reading your comments with great interest over the past few months and always look forward to your views on what's going on in our industry. I agree with most of what you have to say and often gain insight from your observations. However, your harsh treatment of the reader who responded to your "Feedback on Energy Change" commentary was disappointing to me.

I agree with much of the writer's skepticism over man-made global warming and don't necessarily think that the Smart Grid is irrelevant simply because one has doubts about climate change. I'm personally convinced that there will be many benefits derived from upgrading the grid -- not the least of which will be improved energy efficiency.

You always ask questions of the "experts" and demand that all angles be fully examined before accepting the validity of a position. Why the smack down of one of your readers when he/she simply stated an opinion? The writer wasn't abusive or disrespectful. I appreciate hearing all sides in a cical debate/discussion.

Keep up good work and thought-provoking commentaries. 

Steve Rhodes

 

Apologies

I misread the last line of your post. Somehow I interpreted a challenge directed at me that was not there. A very bad miss on my part. Beyond that, we will disagree...on the substance, the tone and the evidence at hand.

An economist weighs in...

Phil,

I enjoy your commentary, thanks!  As an economist I sincerely appreciate that a lack of information causes “market failure.”

Perhaps the question might be better put, “does the cost of providing, receiving, and acting on real-time cost information outweigh the benefits?”  Another question might be: “Does the price signal and suggested load-shifting response really result in net carbon savings?”

I don’t know the answers, but in a world where “Smart Grid” seems to be the answer for everything, we should be asking the questions carefully.  And, as Ahmad Faruqui suggests, results should be carefully measured.

Michael J. Volker

Midwest Energy, Inc.