For OPower, Cloud, Big Data & Digital Energy Equal Magic

I got a bit of surprise when I opened my recent utility bill. After months of routinely spending $85 a month, I found that my bill had crept up to over $100 per month. When I started looking around, I realized that while my apartment size had remained the same, the number of devices that are sipping electricity has steadily gone up.

Apple TV, Roku, Boxee, a couple of laptops, a big screen television, a DVD player, an iPhone, an iPad, a Blackberry, the Sonos audio system, my Olive music server, my Hi-Fi, and two Time Machines. And that doesn’t include all the white goods — a washing machine, a dryer, a dishwasher, a microwave, a refrigerator, a juicer and on and on. Add to it lamps and heating, and I am surely contributing to climate change.

I do have to admit, I got a little freaked out and mentioned this to my colleague Katie Fehrenbacher, who helped start GigaOM and now writes about cleantech. Given that our next conference, Green:Net is about digital energy, she suggested that I speak to Alex Laskey, co-founder of OPower, a Arlington, Va-based company. (You can hear him speak at our event on April 21 in San Francisco. Om Says subscribers get a special discount for the tickets.)

It turned out to be one of the most exhilarating conversations I’ve had in awhile, as it pointed to the kind of future that is sometimes hard to see in a sea of consumer gadgets and thousands of me-too mobile apps. It is a company that molds terabytes of data into delightful insights, shares them with many of us, hoping that we will do our bit as willing conservationists.

Crazy Ideas Work

Laskey and his co-founder Daniel Yates started the company in 2007. They were not part of the cleantech establishment, and Laskey instead spent much of his life in politics. What they wanted to do: build a viable clean energy business and do good at the same time. The problem was that since average American households spend about 1.7 percent of their income on energy, most of us don’t really worry about it. So how do you make people care?

With little background in the energy sector, they quickly figured out that the best way to have an impact is via data: go to utilities, collect information about people’s energy consumption habits, crunch all the data, analyze it, and then package it in an easy to understand manner and send it to consumers. The analytics would compare how you were doing versus your neighbors and how you ranked in terms of energy consumption in your neighborhood. By showing people what they were doing right (or wrong), the company could start to make some behavior changes, hopefully for the better.

“We wanted people to use the lessons we offered and drive them to take action,” Laskey said. Taking a page out of behavioral scientist and academic Richard H. Thaler’s seminal text, Nudge, they set about building their first offering.

Crazy as it might seem, their idea worked. The company has convinced over 50 utilities to sign-up and now has access to data from 43 million meters, roughly a third of US households. It has saved 200 gigawatt hours of energy since it started — that is enough energy to power the Empire State Building for three-and-a-half years or annual energy consumption of the entire country of Cambodia. Think of it this way — if OPower was working with all the utilities in the US, and had access to all the homes in the US, it could be saving a total of $5 billion a year.

Big Data = Big Opportunities

The company is currently doing about 56 billion meter reads a year, and by end of 2011 it will reading getting over 100 billion readings off the meters. This might not be petabytes, but the company crunches terabytes of data, marries it to all the data it gets from hourly humidity data, housing data and weather information. OPower is like Zillow, except a whole lot bigger.

Laskey said that the problem is only going to get larger as the energy grid becomes smarter and starts to operate more and more real time. “Imagine a future when certain parts of the country are dominated by electric vehicles,” Laskey said. “And it is 6 pm and everyone plugs in at the same time.” Brownouts? Astronomical bills? Load problems? Sure, those are some of the problems, but with these issues also come opportunities.

Now if the company can crunch data and in near-real time send you and I alerts suggesting how we could save money by plugging our electric cars at a different time during the day. How about an alert to let me know that I might have forgotten to turn off certain devices? “People want more than just an EKG for energy data,” said Laskey. “They respond well to suggestions to do something.”

Insights Matter

What excites me about OPower is that it combines three of the major trends we have been talking about for the longest time — marriage of ubiquitous connectivity, cloud computing and the rise of the big data — and personifies a new kind of company, one that uses data as the raw material to build its core product.

It has hired software developers, behavioral scientists and data gurus from companies such as Amazon, eBay, Google and Capital One — but not once does Alex talk about the technology behind OPower, always focusing on his start-up’s core premise — insights.

My good friend (author/tech-investor) Pip Coburn often says that it is not the data, but what you do with it. The future of business is going to come from companies that turn data into insights. OPower is a perfect example of such a company like that.

Special offer: If you are an Om Says subscriber, you can get a special discount for our Green:Net conference scheduled to be held on April 21st in San Francisco. Our focus — digital energy. Click here to get your tickets.

Photo courtesy of Flickr user heyitsopower.

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