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OPower Ponders an Energy Device

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OPower, the startup that says it doesn’t need high-tech dashboards to get homeowners to cut their energy use, is now considering adding a home energy automation device to its portfolio. That bit of information underscores the fact that home energy gadgets, while lacking a market today, could some day be needed to do tasks that even the best-informed and motivated humans aren’t capable of — like turning off their lights when they’re not home.

Ogi Kavazovic, OPower’s vice president of marketing and strategy, mentioned the possibility of an automation device to me at the DistribuTECH conference in San Diego last week. “Perhaps using a device to help change behavior, as a natural extension of what we already do, as long as it works, and the customer doesn’t need to be aware of it,” is how he described the idea, though he wouldn’t say if the company was actively working on testing such a device, or when it might come to market.

It’s an interesting possible next move for OPower, which has gotten millions of homeowners to shave 2 to 4 percent from their energy use by delivering mailed energy bill reports, as well as using web sites and text messages to get people to take energy-saving action on their own. That’s because OPower has broken from the home energy management pack in a couple key ways.

Mainly, Kavazovic said, OPower doesn’t see in-home energy dashboards and controls catching on with the vast majority of utility customers any time soon. The pool of people who want to do hands-on home energy management will never grow much past 5 percent of people, he predicts. That is a proposition that device makers don’t accept.

Kavazovic also thinks that OPower’s strategy of connecting with a broad variety of utility customers, will be more successful than aggressively targeting messaging to different classes of customers (like, technology early-adopters, penny-pinchers, green activists, etc.), which some of OPower’s competitors focus on. “One of the great things about the behavioral science behind [OPower] is that it’s universally appealing,” he told me. To support the claim, he told me that OPower’s efficiency gains are spread fairly evenly across the majority of its customers, rather than a few big savers balancing out a lot of people who do nothing, he said.

The View From the Gadgeteers

Those views seem to conflict with those from the startups and corporate giants making in-home energy sensors and controls. Take Tendril Networks, the Boulder, Colo.-based startup that has devices and software in some 50 utility pilot projects.

Adrian Tuck, CEO of Tendril, says that the company’s research has broken customers into different camps, such as those who want to compete against neighbors versus those that want to compete against goals they set for themselves. Delivering the wrong message to the wrong customer can actually reduce adoption, as people turn off to pitches that don’t meet their psychological makeup, he said.

It’s very dangerous to presuppose what people want,” Tuck told me in an interview last week at DistribuTECH. “We give people choice on how they’re measured.”

In a project with utility NStar in Boston, for example, Tendril delivered marketing targeted at customers segmented into technology adopters, environmentally conscious individuals or financially motivated energy savers, and managed to fill up the program within a day, versus the weeks that it usually takes via traditional utility marketing channels.

The Smart Grid Consumer Collaborative, a multi-utility and vendor partnership, released an in-depth report (DOC) last week that agreed that targeted marketing would be key to spreading home energy management devices beyond the early adopter market.

Behavioral Science to the Forefront

Tendril hasn’t ignored the behavioral science that has helped OPower gain its prominence in the home energy field over the last year. In October, Tendril bought Grounded Power, a startup founded by behavioral scientists who developed programs to help people quit smoking before it turned to energy efficiency, and last week launched its Energize platform based on the company’s technology.

There’s no doubt that behavioral science is the new buzzword in the home energy field. DistribuTECH was full of companies touting their behavior-based approaches. Startups like EcoFactor and AlertMe, for example, are pulling energy use information from their household sensors to come up with power-saving schedules that customers can sign up for with the click of a button, rather than plan on their own. The term of art for that process is called “choice architecture,” by the way, and plays a role in the home energy plans of Intel and other IT giants getting into the field.

Another example comes from New York-based startup and Honeywell (s HON) partner EnergyHub. CEO Seth Frader-Thompson told me at DistribuTECH that the company is using its home energy dashboards now in utility pilots to send customers different messages to encourage energy-saving behavior, and then tracking which customers react to which sales pitches to better target future messaging — all in close to real time, he added.

Automation Needs Devices

The issue of real-time, two-way communications leads naturally to the one key function that paper mail, text and email message and Web interface-based programs like OPower’s can’t do: automate energy use. OPower has gotten homeowners to deliver reliable, 2 to 4 percent energy use reductions, to be sure. But simple home energy displays have yielded 10 to 15 percent reductions in energy use in pilot projects, and that’s with no automation included  — although it’s too early to tell if homeowners will persist in saving energy once the novelty of the pilot project wears off.

Adding simple automated “at home vs. away” and “awake vs. asleep” type power use presets could go even further, potentially shaving about 28 percent from a typical household’s bill and saving the average U.S. household about $415 per year, according to a 2009 research paper from Intel (s INTC), which is testing its own home energy device with utilities. Of course, systems that can actually control air conditioners, dryers, hot water heaters, pool pumps, lights and other household energy-sucking devices are going to cost a lot more to build and install.

The question is, will utilities decide it’s worth their while to subsidize such systems via rebates, incentives and efficiency programs? Kavazovic doesn’t think so.

“We said nobody’s going to buy $200 energy displays a year ago, and now we’re seeing everyone saying it,” he told me. Indeed, Tendril recently discontinued its high-end Vision touch screen energy dashboard, saying that the customers likely to be able to afford such a high-end energy device would probably already have an iPad or smart phone to deliver the same functionality.

Demand Response Through Widespread Behavior Change?

Still, automation does offer utilities one other key perk, which is the ability to remotely turn down power at homes at moments of peak power demand — in other words, demand response.

More advanced home energy automation systems could allow more fine-grained control of household loads, which could overcome consumer resistance to giving control of their air conditioners or washer-dryer units over to the utility. That would appear to be the kind of automation OPower is thinking about as it studies the idea of adding devices to its menu of services.

On the other hand, Kavazovic noted, behavior-based energy use changes can add up to reliable peak power reductions, if they’re spread across a wide enough customer base. That’s the experience OPower had in a recent pilot project with an unnamed Illinois utility, where it got customers to make energy reductions that actually increased during peak power times — all without using devices or raising peak power prices, he said.

“We can do it without the rate [increases], because we can focus on giving them tips that correlate with peak rate usage,” he said. Those include tips aimed at getting lots of people to turn their thermostats up just a few degrees during hot summer afternoons, lessening the load from hundreds of thousands of air conditioners in ways that add up to broad-based peak reductions. “When you do very large numbers, it’s very reliable and very predictable,” he insisted.

Customer Base is Key

So why even consider adding automated devices to the portfolio? Well, “If we come up with a sensible device, and it’s sophisticated and useful to the customer, we’ve got a marketing channel” to drive it into millions of homes, Kavazovic noted.

Perhaps market share, rather than different technological and behavioral approaches, will end up being the factor that determines just where the most energy savings lie. Tendril’s Tuck noted that the company’s 50-plus utility customers could give it access to more energy-specific data there than is available to most marketing companies.

Likewise, there’s little doubt that the giants like General Electric (s GE), Cisco (s CSCO), Google (s GOOG) and Microsoft (s MSFT) now competing in the home energy fray are hungry for a growing base of customers to draw more and more value out of the data they’ll be collecting. Indeed, many of the startups in the space might be attractive acquisition targets based on customer penetration alone. Whether they get there via devices, or via OPower’s light touch method, remains to be seen.

For more research on home energy management, check out GigaOM Pro (subscription required):

Image courtesy of Slappy427 via Creative Commons license.

3 Responses to “OPower Ponders an Energy Device”

  1. Like any broad social change, energy efficiency will require a variety of approaches to motivate people. Here’s one: independently ranks the MOST energy-efficient consumer electronics, appliances, and vehicles.