John Juliano's Energy Panemone
Could a simple billing change make energy efficiency less taxing?

We’re at the height of tax return preparation season here in the US, which means that families across the country are gathering ‘round the fireplace joyfully preparing their IRS Form 8942 (Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program**) and discovering that it’s certifiably therapeutic to use a lot of qualified swear words during the tax preparation process.  

No, actually, we’re all joyously awaiting our tax refunds and making big plans for spending the “windfall”, even though all it really is is the refund of excess money we just sort of gave the government to use for free for the year.  It’s not really any different than if, say, a Kardashian sister asked us for an interest-free $2,000 loan for a year and we unhesitatingly did it (except that a Kardashian sister would probably be a lot more responsible with how she spent the money).

But I digress to a rant (a common affliction this time of year).  The annual ritual of The Miracle of the Tax Refund got me thinking about how we now pay for household energy use, and whether one simple change could give people more incentive to make energy-efficient investments. The “windfall effect,” as one behavioral economist ( has called it, is the triumph of the enormous emotional impact of the day the tax refund arrives over rational economic behavior.  (The fact that today’s savings interest rates in the US are so low they require scientific notation doesn’t help either, but this effect predates that phenomenon.)

Ignoring for a moment the (probably non-trivial) logistics of how it would be done, what if we moved from our current monthly electricity billing to annual billing?  I’m not suggesting we ask people to alter household budgeting from making payments on the familiar monthly basis – being realistic, the bill would have to be split over the twelve months to be manageable for most families.  But getting, reviewing, and truing up a single bill for a large amount each year might have some meaningful benefits for energy efficiency.  The thought process goes somewhat like this:

  • The mental accounting for energy efficiency expenditures becomes a bit stronger.  Take a nominal “net 10% savings after cost” for efficiency improvements given a monthly $150 bill.  Many people who would dismiss $15 a month as irrelevant would give different consideration to a savings of $180 a year, even though they are precisely the same.  The time accounting of the money just isn’t done by most people, and $15 would tend to be dismissed as “not worth the trouble” while $180 would be seen as significant.
  • Similarly, the outlay required to cover big jumps in usage would be more painful – and hence the behaviors that cause those jumps more likely to be avoided.
  • Now, let’s say that the annual bill is based on last year’s usage (and paid in equal monthly installments).  For a family that makes energy efficiency improvements over the year, they use less electricity, and after 12 months get… a refund! (Cue sounds of joyous celebration.) Since it’s 12-month cumulative savings total, the amount would tend to be, in the respect described above, “meaningful” - $15 gets lost in the daily shuffle of Happy Meals and parking tickets, but $180 – now that, the line of reasoning would go, you can do something with.
  • While they’re thinking about what brought on the refund, there in some cases would be a feedback effect – “let’s use this money to buy more of the stuff that gets us these efficiency gains”.  Probably only a small percentage of the refunds would be spent with this explicitly in mind, but even where this isn’t done, the conservation behavior itself is further encouraged.

(As a side note, I know that many providers do have “budget billing” systems that are a lot like this in practice.  However, they are not linked to energy efficiency, and, unfairly or not, a lot of people see them as something that only those who struggle to pay their monthly bills do. This is another irrational storyline, of course, but one that has to be acknowledged. That likely means that this would have to be put in a more attractive light or, alternatively, be an across-the-board new policy for all customers rather than a self-selected “payment option”.)

While the whole thing isn’t quite as simple as I make it here, the joy of the annual refund shouldn’t be overlooked (and comes up in other non-tax contexts in amounts of that size range, like wholesale shopping clubs).  While the capacity to make efficiency gains would - barring a steady stream of technological improvement - likely be exhausted over three to five years, even a small gain made consistently over that time period would go a long way toward meeting system-wide efficiency goals.

This emotional effect already influences us to make questionable “investments”, like sizable annual interest-free loans to Kardashian sisters or the government – why not use the sentiment to drive something with so much more benefit across the board? And, to make it even better, none of that pesky searching for all those receipts for your Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program!

** No, I did not make this form up; you can look it up if you dare.

Is Mom’s message getting more attention than yours on smart grid?

As near as I can tell, the three most powerful words in the English language are not “I love you” or “I’ll do it!” or other frequently cited examples.  They are, “But Mom said…” OK, so maybe that’s just an issue with me and my 6-year-old – when I issue one of my constant stream of “DON’T [do something dangerous or stupid]” pronouncements to him, “But Mom said” usually renders me mute, palm on face. (Mom apparently worries less about the impact of broken bones on life than me.) In these situations, I’ve lost control of the message.

If you’re a utility leader, Figure 6 in our latest consumer survey report (just released and available for download at should be your “But Mom said” wake-up call.  Overnight, your soapbox got swiped, and your microphone broke.  The control of your messaging to your customers has flipped from primarily yours to primarily under the control of others.

The numbers, from our last two Global Utility Consumer Surveys:  In 2009, fifty-four percent of the information on which customers relied as their primary sources of information for energy information were directly controlled by their energy provider – bills and inserts, their own utility’s web site, etc.  Forty-six percent of the information sources were controlled primarily by external parties – other websites, television and other mass media, etc.  In 2011, the control flipped sides.  Fifty-five percent of the sources were not under the control of the consumer’s provider, while only forty-five percent were. 

The timing for this switch in influence could not be worse – right when the need for customer engagement (particularly where smart meters are being rolled out) is highest.  In general, this industry has done a good job of getting consumers, regulators and the media to imagine what possibilities new energy technologies lend to the future and how these might create the greatest value and satisfaction for the vast majority of customers. However, this successful communication of the broad case for smart grid and smart meter technologies may have created an environment in which the long-term possible benefits have come to represent the immediate expectation of benefits which must be constructed over time. This has created an opening for influential parties to paint this gradual build-up of capabilities and benefits as a failure to provide them at all, or to claim that negative aspects (imagined or real) are being suppressed by the touting of benefits.  And we are in fact seeing that in various parts of the world, like California and British Columbia.

With social media so prominent in the news in the past couple of weeks – Facebook’s IPO, Twitter hashtags at the Super Bowl, etc. – some might think the punch line to this tale is “use more social media!”.  But interestingly, the timing isn’t there yet for that approach to be a cure-all to this particular problem; influence is still weighted heavily toward more time-tested ways of communication.  Bills and bill inserts still rank #1 worldwide as communication sources to which customers turn; web sites (those operated by the consumer’s providers as well as those that are not) rank next.  Social media does not yet have nearly as much influence; except for those age 18-24, less than 3% of respondents reported social media as a primary source of information about energy.  Some would argue that that is because utilities have not focused on creating social media content, and undoubtedly there’s some truth to that.  However, seizing control of some small percentage of that 3% influence won’t do a lot immediately to flip the influence control back to the provider side.

As the report explains, the real key right now is simply building more core knowledge about energy, its usage, its cost, and your company over time through the most trusted channels, even if they’re not sexy and headline-worthy – bills, your website, and selected traditional media spots.  That will help increase trust in those sources and work more effectively to seize back control of the messaging in a constructive way.  Almost half of consumers are deficient in even basic knowledge, and retained knowledge drives uptake and approval of new programs and services.  This makes the fact that sources outside the providers’ control (who may or may not provide accurate facts) now have a stronger voice than ever a problem that must be acknowledged. Before someone breaks an arm or something, as I’d say to my son.

Charles Barkley insists you save energy, or Weight Watchers’ lessons for smart grid

This week, at DistribuTECH - and online at - we release our latest IBM Institute for Business Value Energy and Utilities (IBV) report “Knowledge is power: Driving smarter energy usage through consumer education.” I will post a few notes from the report in this blog this week, but I encourage you to download the entire report and have a look at the details. If you have comments or questions, you can find me on LinkedIn, Twitter (, or email (

Our latest IBM IBV report Knowledge is Power (download link in top paragraph) brings home the point that consumer engagement on smart grid and smart meters is never going to be easy. Even though a clear majority of people believe the outcome, in the end, will be positive – lower costs, less impact on the environment, fewer and shorter power outages, and so on – they are coming to realize that those results aren’t going to happen magically by themselves, even once we have the network pieces in place. They’ll take a bit of time – not forever, but probably on the order of months to first see real results – and will require some effort on the part of the individual over a similar period of time to achieve some of the benefits. Sure, there will be claims of magic instant results, but those that buy into them will be disappointed, perhaps frustrated. There will also be counterclaims that it’s not worth it, even (a very small number) of claims that it’s medically harmful. But those that hear the right messages with realistic expectations and react with the changes that bring real benefits will be happier with the way they use energy in the end.

Now having read that, click here:

You get Jennifer Hudson’s radiant smile telling us “Believe, because it works”. Basketball star Charles Barkley telling us, well, for us guys anyway, it doesn’t matter, because cool, Charles Barkley. It tells me how it works! Hey, I can join a community! Success stories! The word FREE five times on just the first screen! All this aimed at getting results that take an initial investment of motivation and time, that will require some effort to get real benefits. Now this is consumer engagement. And maybe it’s a direction energy efficiency and smart grid/smart meter proponents need to go.

Now, as an honest disclaimer, I have no idea if Weight Watchers in particular works. Until my mid-thirties I looked more like an extremely short Manute Bol before gaining sufficient weight to sport a more Barkley-like body mass index (minus the muscles), and have yet to do much about the new body. But Weight Watchers has clearly been a successful business, so the approach we see is working for a lot of people, even against all the naysayers. (Claims of magic instant results for weight loss? Check. Those that have tried it and gotten disappointment and frustrated? Check. Medical scaremongers? Sure, a few.)

So now, reconsider first paragraph. Is what we see on this website the picture of the future of energy efficiency? Maybe it ought to be. In Knowledge is Power, we note that people do “get it” with the end goal of the move toward smart grids and smart meters, but haven’t yet bought into the pathway to get there:

What has been in many ways absent from the picture is the question of how people feel about the paths that would have to be traversed to get to an attractive future state where smart grids and smart meters provide improvements in energy use, environmental impacts and cost management. From our prior surveys, we know that consumers like the idea of having cleaner power options and more control and efficiency at their fingertips. But have they assumed these benefits would be accessible immediately once a smart meter was attached to their homes? Do they have sufficient understanding that, in order to optimize these benefits, changes in energy consumption patterns and more permission to access information about that energy usage might be required?

The Weight Watchers website and overall approach really does address a similar problem: getting people to trade off a focused, medium-term effort to change long-term behavior and thought processes in exchange for attractive future benefits. Look at the initial page of the website itself, and you can imagine all the things we’ll need to drive energy efficiency that parallel these (I’m not sure we’ll need meetings, but the rest seems to apply). Click further in and you see all of the forces to which we allude in Knowledge is Power: Social strategies, simpler messages, enough choice to provide options but not so much choice as to be overwhelming, entire approaches targeted on who you are (age, sex, interests, etc.). And I also noticed that there weren’t constant references to heart attacks, strokes, and other terrifying results of being overweight for decades – the message is relentlessly uplifting. (Translation – maybe it’s time to ditch the “climate change will kill us all” talk and take the energy efficiency discussion in more positive directions.)

Our Knowledge is Power consumer survey identified critical reasons why so many people who have positive views of the outcome of the smart meter/smart grid evolution are balking at the first steps to get there. Poke around the Weight Watchers web site for a little while and see if you don’t see a lot about how we can help people bridge that gap.

For related discussion on Knowledge is Power, see “Smart meter data and the ‘Oceans 11 Effect’ immediately below.

Smart meter data and the “Oceans 11 Effect”

This week, at DistribuTECH - and online at - we release our latest IBM Institute for Business Value Energy and Utilities (IBV) report “Knowledge is power: Driving smarter energy usage through consumer education.” I will post a few notes from the report in this blog this week, but I encourage you to download the entire report and have a look at the details. If you have comments or questions, you can find me on LinkedIn, Twitter (, or email (

Our latest IBV report in Energy and Utilities features the results of a series of surveys we conducted during 2011 on consumer reaction to smart grid, smart meters, and household energy data. The core findings were discussed in a fall 2011 press release ( Here, I want to focus on some of the findings around home energy data and privacy for which the report contains new detail.

About 20% of our overall response pool of over 9000 people were surveyed on understanding about and attitudes toward data collection via smart meters and related concerns (or lack thereof) about privacy and other risks.  The responses indicated what I believe is a healthy dose of wariness about new personal/household data being made externally available, but an equally healthy understanding that protections are (and should be made) available.  For example, nearly 70% would be more comfortable with smart meters and the data transfer processes if the information transfers excluded personally identifiable information.

Where people get lost in the risk view is in the detail of what exactly might happen in the case of a data breach. Our report contains a figure showing the top nine specific risks related to smart meters and energy data that were expressed as concerns by the respondents (each respondent could select three, so the figure - and this post - shows the percentage listing the concern as any of their top three). To me, the #1 concern seems quite reasonable, although it’s true of existing analog meters, too - that measurements will not be done correctly and overcharges will result (49% inclusion in top three concerns). The second highest, at 38%, is the concern that the respondent will not know or be able to easily limit the information that is transferred and stored.  I think this is reasonable, too, as it depends in part on policies and guidelines that are under development and as such have not yet been communicated in any formal way to consumers.

Beyond that point, though, some of the items in the list seem to be driven by the sometimes sensationalized portrayal of smart meters in certain public outlets. Third in the ranking (36% list it in the top three), for example, is the fear that a criminal will track energy usage to determine when the home is unoccupied to target it for crime. When I talk to people and this is brought up, I put it this way: if a burglar of some type wants to get into a house and steal things of value, is he or she more likely to a) gain access to a stream of secured encrypted data, decode it, compute the time and location correlations, track that over time, and then zero in on one home for break-in and theft, or b) walk around houses looking for unlocked doors or noting stacks of daily papers that might indicate who’s away?

I’m not insisting a) will never happen, but it seems to me - and basically everyone with whom I’ve had this conversation - that b) is overwhelmingly more likely. Someone with the equipment and sophistication to pull off a) isn’t going to target a typical household (unless, in my case, the market value of scattered pieces of Transformers toys or empty Diet Coke cans skyrockets). They’re going after far bigger prizes, something like a financial institution. I’ve called the tendency to overstate the probability of a) happening to a typical individual a sort of “Oceans 11” effect (after the first of one of my favorite movie series) - we have been conditioned to see criminals as extremely sophisticated people capable of getting around anything, when in reality, the vast majority are thwarted by the extreme technological complexity of… a deadbolt.

However, I’m also not saying we can scoff at a) and dismiss it with a hand wave, either. If more than 1 in 3 believe it’s a risk, we’d better be very, very ready to document what’s being done to prevent that from happening and explain clearly why it’s so unlikely with such protections. We can control the risks, but we can’t control the perception of risk. For example, science and medicine back us up when we say the radiation or EMF risk from smart meters is basically negligible. And the vast majority of consumers agree - only two of the 1,800 respondents even listed it in the top three concerns. But that 0.1% can make life miserable in a smart meter deployment. It’s best to treat every concern as worth discussing, and be prepared with solid, understandable information about why it’s a risk that has no realistic basis - and when it does have such basis, exactly what we’re doing to mitigate it.

Deck the halls with… 60-watt incandescent bulbs?

My time spent in stores during the holiday season of 2011 will leave me with two lasting memories. One is the sound of my own gentle weeping when presented with the cash register receipts for Transformers and Legos, which is relevant to my general parental suffering but not to this blog; the other is the odd but constant sight of shopping carts filled with boxes and boxes of incandescent light bulbs. The latter still leaves me with the suspicion that in the end, attempts in the US to accelerate the adoption of more energy-efficient lighting in the home may actually postpone it.

First, to frame my observation: I live in the US, where certain provisions of the Energy Independence and Security Act of 2007 became, to many, “the light bulb ban” and meant that no more incandescent light bulbs would be sold after December 31, 2011.  That was never really the case, but popular wisdom doesn’t have to be exactly correct in order to produce powerful results. And before anyone sniffs and says sure, if you do all your shopping in some backwater undereducated reactionary stronghold, you’re going to see crazy things - these observations were made mostly in the suburbs of Washington, DC, with a second set of such observations made in the Boston suburbs. These are areas that would certainly label themselves green-oriented and well-informed.

So I doubt that in the areas where I saw this behavior, it’s not a visceral “when you pry this bulb out of my cold, dead hands” reaction. Then what is it? The extra cost of the bulbs? I’m sure that plays some role in it, along with suspicions about the long-term savings (one friend of mine swears that if something has a calculation displayed on the outside of a box, the manufacturer is trying to get him to do something that isn’t going to benefit him). But if cost is a concern, then why are these people buying what appears to be hundreds of dollars in incandescents? That’s a pretty big initial cost to swallow, too.

Complexity has been raised as a possibility. There was an article in the Wall Street Journal (, for example, that pointed out that the increasing variety of lighting choices and how differences in how their properties and costs are expressed are causing headaches. There’s some truth to this when you start straying into some of the newer lighting options. For some of them, I do sometimes feel like I’m trying to divide lumen-cents by heating-degree-seconds-per-square-acre trying to compare costs and wind up saying “the hell with it”. But the most common choice people make is between incandescents and CFLs. The packagers of the latter have actually done a pretty good job of saying “These are exactly like 60-watt bulbs, but they use 14 watts,” and the messaging has been around long enough to be somewhat familiar.

I’m sure you can come up with other rationales, and I’m sure you can come up with valid reasons to dismiss them. To me, there is one that seems to be the only logical explanation – but one with potential impacts on energy use. When an item becomes scarce – or threatens to become so – a very common response is to hoard that item. This is true even when the item is something as absurd as most years’ hot Christmas toy is. Light bulbs are familiar, comforting, and necessary – so why wouldn’t one be inclined to hoard those? I remember one day seeing an empty pallet of 60-watt incandescents at one store being forlornly watched by shoppers (“THEY’RE GONE! THEY’LL NEVER BE BACK!”).  A few days later, I came back to the same store to the sight of a few more stocked pallets doing what can only be described as a very brisk business (“SOMEONE WENT TO ANOTHER COUNTRY AND GOT MORE! BUT THEY’LL BE GONE AGAIN! I HAVE TO GET ALL I CAN NOW!”). I’m not making this scene up, and I can’t have stumbled randomly onto the only two places in the nation where this was going on.

Why, in the end, does it matter? It becomes an energy efficiency detractor if the law intended to phase in more efficient lighting instead causes use of the old bulbs for a much longer time than the phase-out law envisioned. Each time we hit a new milestone in the law, I’m sure there will be more hoarding as the dates are publicized. So it’s conceivable that the law, in effect, will increase energy consumption (even if only over some fixed time period) instead of decreasing it. How important that is depends on other effects in play over the time of this counter-effect, but it’s definitely not what was intended.

New legislation is usually studied with attention paid to interactions with other laws on the books. It’s rare, however, that similar consideration is given to the one law that will always come back to bite us – the Law of Unintended Consequences.

Should utilities innovate business models - or generate them?

My colleagues at IBM and I have been researching and applying the mechanics of business model innovation over the past few years, both across industries ( and, in my case, specific to the energy and utilities space ( In gearing back up for 2012, two things are starting to crystallize a new view of this for me. On the surface, it’s just a change in terminology, and as a story, that would be about as compelling as an essay on my most recent change of socks. But in the detail – and with the help of a useful reference – it becomes something much stronger.

The one that came to my attention recently was a blog post written by Scott D. Anthony of Innosight entitled “Business Model Innovation the Red Sox Way” ( The truth is that a tie-in of the Red Sox will get me to read just about anything; you could tell me that references to the 2004 season were scattered throughout the US Tax Code and I’d probably wind up reading the entire thing. But this contained an insight that was very relevant to the specific area in which I’m working.

John Henry, the owner of Boston’s storied baseball franchise, the Red Sox, was faced with a large, aging fixed asset that promised limited prospects for more than token revenue growth. This asset did have significant value and was an important symbol of the brand, but it would need more investment in coming years to upgrade and maintain it. Some “pundits” even said the asset was a trite monument to a bygone era, and it was time to move on.

The asset in question, of course, was the home of the Red Sox, Boston’s Fenway Park. But if you’re involved with strategic planning for an electric or gas utility, read everything in the paragraph above after the word “Red Sox”. Could this equally as well be talking about your critical generation, transmission, and distribution assets?

What Henry did was keep the original confines of the ballpark largely intact and innovate around the existing structure – new seats in the most unique part of the ballpark, new ways of exploiting the asset during off-hours (non-game times), new services that were not necessarily directly baseball-related outside of it. It drove revenue up significantly, and helped to more than double the projected value of the franchise in less than a decade.

This immediately brought to mind a framework from a book I’ve started working through, “Business Model Generation” by Alexander Osterwalder and Yves Pigneur ( In the interest of length, I won’t get into the details of its structure and methodologies here – they are too detailed for a short blog post, and it’s a worthwhile read for any business strategist. The important idea I got out of the confluence of the two publications was to review the set of possible moves I had been lumping under a general header of “business model innovation” and separate from them a distinct category of “business model generation” strategies (the name obviously influenced by the book title). This new category then could usefully represent the most game-changing business models for utilities in the coming decade. Admittedly, it’s a bit of an artificial separation, but for ideation purposes, here’s why it helps me.

I’m starting to see the “innovation” side as more along the lines of activities which change the enterprise and revenue models in the existing business. The former is something that many utilities grasp and are already at various stages of tackling. The latter is understood to some degree as well; most of the hurdles that have been laborious and time consuming to overcome are more regulatory or legal than strategic (think unbundling and dynamic pricing). These can provide additional growth, but in some ways it’s like a baseball team revamping ticket plans, or finding new ways to operate more efficiently. They can be positioned to bring better profitability and revenue growth, but by modest percentages, not multiples.

It’s the generation of new business models around the assets in ways never seriously considered before that provides that “leaps and bounds” potential. This is where Osterwalder and Pigneur’s book provides key insights for owners of large, costly fixed assets such as utility providers. The book outlines a “business model canvas” consisting of nine basic building blocks, and it seems a quite comprehensive set. Put in the context of a traditional utility, enterprise model change will likely focus on major shifts in one or two (Cost Structure and, potentially, Key Partners) but require at most some tweaking of the others. Similarly, revenue model innovation usually forces big changes in Revenue Streams and, possibly, Key Partners. But most of the others will undergo little fundamental change in any but the longest planning horizon.

With an isolated concept of business model generation, every one of the nine blocks is a likely candidate for radical change. Not all will ultimately change; in our Red Sox story, the Key Activities and Key Resources are still the team and its players, the ballpark, and the games. But they have made incremental changes at the boundaries there, and radical changes elsewhere. For utilities, the Osterwalder/Pigneur book provides a good framework for understanding how to evaluate each of the blocks in isolation, then in synchronization, to imagine how to drive the business to new heights. I’ve only started down this path, but I’m finding this conceptual separation of “business model generation” from “business model innovation” quite useful. It forces clearer definitions and boundaries that are helpful in identifying the types of new business ventures that might be the best bets to bring growth in an asset-tied industry (as well as those that appear much less promising).

If this concept worked for a 100+ year old baseball franchise, why not a century-old utility franchise?

My off-the-radar 2012 smart grid watch list

I’ve seen quite a few smart grid and renewables “who and what to watch in the New Year” blogs and articles in recent days, most focusing on big companies, big trends, and big issues. However, in a lot of cases, these “big things” are indicative of existing trends that will continue to strengthen or weaken and move the existing industry as a whole.

To me, these are more indicative of inertia than of radical change. Sure, there’s little question that IBM, Comverge, Control4, Opower, EnerNOC, and the like are doing great things, but they’ve been doing great things for some time now and we’re in some respects all watching them. They’re more on my “always keep tabs on” list than any notable “watch in 2012” list. (Full disclosure note: I work for IBM, so it’s a little hard for me not to keep a focus on what they are doing!)

Where I watch for unexpected sources of discontinuous change is the stuff just outside the radar screen, just under the surface, and just outside the normal boundaries. They may not be doing things directly aimed at the industry (yet). They may consciously disengaged with the industry, or even be acting counter to the current desires of the industry. They may even be areas that have nothing to do directly with smart grid, but have the potential for huge second and third-order impacts. But these forces often set a series of industry-changing developments in motion.

Here are just a few:

  • Presenters at the International Consumer Electronics Show energy pavillion, and what they show: The Las Vegas Consumer Electronics Show in 2011 was an eye-opener in energy, not for any particular technology or vendor, but the quantity and quality of products that were presented in the new, high-profile energy pavillion by companies not traditionally focused on this space. For utilities concerned with competing technology, external technology integration, and disintermediation threats from off-grid generation and storage, this was a clear sign that the “future” isn’t something to prepare for - it’s arrived and needs collaborative or defensive moves now. The size and marketing skill of some of these companies could make changes happen virtually overnight.
  • Companies exploring game and behavior-based energy efficiency products: Nest and Opower have received much of the press in this area for their thermostat and Facebook tie-in, respectively, and not without merit, as both products look great. Still, questions remain about specifics. Will the relatively high cost of Nest be a limiting factor? Will energy comparisons among Facebook friends in, say, temperate San Diego and seasonally-intense Chicago measured against an average-standard American home lead to meaningful and constructive behavior change? At least three other companies have good approaches I’m watching as strong competitors in this area: Lowfoot, which has a behavior-based approach to efficiency based on common and localized goal-sharing; Welectricity, which localizes and personalizes energy comparisions and conservation behaviors; and SimpleEnergy, which hopes to simplify comparisons and gaming (for both utilities and consumers) through a point-based system on Facebook. Targeted academic research, like that being done in the University of Pittsburgh’s Innovative Economics Initiative, will also provide important input into how applications engage customers and make changes that benefit the entire ecosystem.
  • Smart meter consumer opponents in California, British Columbia, and Ontario (plus others): They’re small in number, loosely organized, and some of their opposition is based on points that are at best questionable. But they have also raised certain concerns - like data privacy - that do need to be addressed for all consumers, and their intervention has already had some impact (for example, intended concessions to California consumers who want traditional meters). Early impacts will drive more to step up the fight, and this will drive elements of policy, communication, and even technology.
  • Utility public relations and customer communications departments: What they are able to do in the next year will play a major role in setting realistic expectations around smart grid/smart meter capabilities in the short term for their customers - and the world watching as well. We as an industry have introduced the smart grid-driven energy future as one with tremendous energy management and control capabilities, especially with regard to cost and environmental impact. And there is little question that these will emerge in time. But in the short term, as rollouts take place in stages and data sets (and the capacity to analyze them) are built, some time will pass before the full range of capabilities is available. Even then, these capabilities may also require more action by customers than they expect to have to take. (More on this can be found in our 2011 Consumer Survey report, at Failure to manage such expectations, in at least one case globally, was a major part of a smart meter standoff between customers and the deploying utility. Can we avoid repeats of this?
  • The European economic and US political situations: Europe has taken a leadership role in consumer-owned renewable generation, but there have been costs involved for both consumers and governments. We showed in our 2009 consumer survey that there was a steep 20-30% drop-off in willingness to spend more for greener products and services from 2007 to 2009 (with the global economic crisis falling squarely in between); the lower level was maintained in 2011. Continued economic erosion could strongly reduce demand for renewables from all but the most committed. In the US, a Republican-controlled Congress and White House, should it emerge, would likely scale back Federal support for renewables (and possibly smart grid). If both of these happen in the same year, it’s not hard to imagine severe deceleration of advancement of renewables on both sides of the Atlantic (with global ramifications on the sector as a whole).

Have you seen any other off-radar developments you think will shape 2012 and beyond? Feel free to comment here or on twitter (@j3juliano)!

Notes on this blog - read prior to consuming

I consider this the “medication side effects” portion of the blog - you probably won’t read this, but you’ll avoid unintended consequences and get better results if you do. It does, however, have the advantage of not being folded seven times and crammed into a box or attached with a skin-slicing staple, which reduces the potential for injury if you use it.  So, go ‘head, give it a read.

  • Anything I write here is not reflective of the opinion or advice of my employer, my professional associations, my charitable organizations, my family, my pets, or any member of the Boston Red Sox, living or dead. In short, these are my observations and comments and should only be consumed in that context.
  • Due to the nature of this blog, I will mention company or organization names from time to time, particularly when they are doing something noteworthy or cool. Do not interpret this as any sort of official sanction, recommendation, or endorsement of these entities on the part of my employer, my professional associations, etc., and please refrain from any expression of them as such in public statements or documents.
  • Try not to be offended if I put a technology or concept you personally don’t like in a positive light. My background and current work result in me being largely technology-agnostic - I’m pro-renewables, pro-nuclear, pro-fossil, pro-efficiency, and so on, when and where they make sense. I don’t have an agenda on one end of the spectrum or the other; I try to keep a balanced perspective as the world shifts over the years. I’ve been in the industry moving across those domains since the late 1980s, and I’ve found that choosing sides is a dangerous way to stay consistently employed. Thus my opinions are very flexible - though based soundly on technology and economics - and I hope your read of them are as well.
  • Feel free to reuse this material with appropriate attribution back to me (and, conversely, please refrain from copying and reusing the content without attribution). The express written consent of Major League Baseball is not, in this case, required.
  • Unannounced sarcasm or comments with humorous intent may be encountered at random intervals. Awareness is your best defense.

A little about me - I’ve been a management consultant in energy (mostly utilities) for over 12 years, with a decade of experience as a quantitative risk/reliability engineer and technology assessment specialist in the industry prior to that. I’m a licensed professional engineer with a B.S. in Nuclear Engineering from MIT, an M.S. in Applied Mathematics from Johns Hopkins, and an MBA in strategy and finance from the University of Chicago Graduate School of Business (which I still have not gotten used to calling “The Booth School of Business” yet). I live with my wife, six-year-old son, approximately 4.7 billion Transformer pieces (the toy, not the T&D equipment), and thousands of the world’s worst drivers in the DC suburbs of Maryland.

So, go ahead, ask your doctor today if the Energy Panemone is right for you.

New York City consumers talk about their expectations, perceptions, and knowledge about energy and efficiency, and Michael Valocchi, Energy and Utility Industry Lead for IBM Global Business Services, talks about these responses in the context of the 2011 IBM Global Utility Consumer Survey.