Articles / Peer Power: Conserving Energy by Keeping Up With the Joneses

 

Credit: OPower

Every morning, shortly after waking up, Bill Rowan checks to see how much electricity he used the night before.

“I really want to cut my energy bills as much as I can and I’ll do whatever it takes,” says Rowan. “I don’t think anyone enjoys paying electric bills.”

In 2007, Rowan, a risk manager from Massachusetts, began to systematically identify ways to reduce his energy use. Over the next three years, he would install a more efficient heating system, purchase an Energy Star freezer, replace his windows, put in compact fluorescent light bulbs and insulate his floors and walls. Even with an 800-square foot addition to his 1400-square foot home, he cut his energy bill in half.

Rowan is a rare example of a highly self-motivated energy saver, but a growing number of companies are attempting to sway more people to adopt similar energy conscious habits, using a combination of behavioral science, technology and online interactivity.

Indeed, Rowan, who on his own decided to tighten his energy waistline, is getting an assist from a handful of such companies. Earlier this year, Rowan started tracking his energy consumption using an online service developed by GroundedPower, a Massachusetts-based company combining “real-time energy consumption feedback” with “customer engagement” tools. GroundedPower sends participating customers daily reports comparing their actual electric usage to their target usage. Customers can also learn energy saving ideas, ask questions of experts and connect with others to share advice or engage in a little friendly competition.

After noticing his overall electricity use was particularly high this past summer, Rowan investigated his appliances using a $20 device called the Kill A Watt manufactured by P3 International. Plug any appliance into a Kill A Watt, and it displays the appliance’s consumption by Kilowatt-hour; the device can also calculate and forecast electricity expenses on a daily, weekly, monthly and yearly basis. 

Using the Kill A Watt, Rowan identified the source of waste: an old refrigerator freezer. “I ended up purchasing an Energy Star freezer,” says Rowan. “I was going from being 10 to 12% over my target to consistently 40-45% under target, which means that I’ll pay for the [new] freezer in about a year, just with the electricity savings.”

In addition to using the GroundedPower and Kill A Watt tools, Rowan happened to be randomly selected to join in the Home Energy Reports pilot program launched by his utility company, Massachusetts-based National Grid in October 2009.  Participants in the pilot receive monthly reports that allow customers to compare their current and past energy usage and to see how they stack up against approximately 100 of their neighbors—as well as against a subset of their most efficient neighbors—with homes of a similar size. Additionally, participating customers can utilize National Grid’s Energy Insider website to find incentives and rebates, and view energy-saving tips deemed most popular by other visitors to the site.

Keeping Up With the Joneses

The company providing the platform for National Grid’s Home Energy Reporting pilot is OPOWER, a Virginia-based company that developed the Home Energy Report as well as its online incarnation, the OPOWER Energy Efficiency Portal.

The clean, visually appealing OPOWER reports and portal use attention-grabbing graphs and bar charts to demonstrate customer performance and can be customized to suit the needs of the utility company and its customers. One of the most important features of the OPOWER products is the use of normative messages such as, “You used 29% more electricity than your efficient neighbors. This costs you about $177 extra per year.” OPOWER operates on the idea that social comparison—the good, old-fashioned tradition of keeping up with the Joneses—is more potent than information alone.

Along those lines, National Grid worked with OPOWER to develop a module called “Community Savings Goal”—based on the utility company’s 3% Less Initiative—for its customized reports. The module includes a message stating, “National Grid is working with committed customers like you to use 3% less electricity this year.”  Initially, National Grid automatically enrolled a subset of its Home Energy Report customers into the Community Savings Goal; after discovering that this subset of customers saved 60% more than customers who never received information about the goal, the company now automatically enrolls all of its Home Energy Report customers into the program.

A three-year study conducted by OPOWER’s Chief Scientist Dr. Robert Cialdini (author of Influence: The Psychology of Persuasion) and Scientific Advisor Dr. Wesley Schultz indicated that messages about social norms influence belief and behavior about energy conservation more than messages about the environment, social responsibility or even self-interest. During the study, conservation messages printed on doorhangers were left at 1,207 households north of San Diego. The information was presented in one of 5 different ways: normative (“most people are finding ways to conserve energy at home”); self-interest (“save money by conserving energy”); environment (“protect the environment by conserving energy”); social responsibility (“conserve energy for future generations”); and the recommended change itself with no additional information.

At a later date, the researchers came back to conduct interviews with the households and take readings of their electricity meters. The results revealed that normative messages produced the biggest impact on behavior. Despite the fact that many people surveyed for the studied denied being influenced by social norms, the customers who read the normative messages reduced their energy consumption the most.

The combination of social comparison, regular feedback on performance, and actionable information seem to be a winning formula for OPOWER, recently selected by the World Economic Forum as a 2011 Technology Pioneer, one of a group of companies “ whose innovations will have a critical impact on the future of business and society.”

The Power of Community

The Washington DC-based SmartPower, a marketing organization that promotes energy efficiency and clean energy technology, also leverages social influence, primarily by engaging communities, such as towns and college campuses, in contests and challenges to reduce their energy consumption.

“When it comes to changing behavior,” says Lyn Rosoff, Deputy Director and Director of Marketing for SmartPower, “you need a 3-legged stool.” First, organize and mobilize people by tapping into existing community networks and working with local leaders and activists. Providing information is simply not enough, Rosoff emphasizes; you need to do the hard work of organizing communities around a common goal. Second, engage people online where they’re spending more time. An online platform can deliver useful information, make it easy for people to stay involved and is cost-effective. Third, provide incentives and rewards – give people something to shoot for so they sustain their actions over time.

SmartPower believes that these three steps, if executed well, put people on what Rosoff refers to as a “food chain of sustainability:” they start small, with simple behavioral changes and purchases of, for example, compact fluorescent bulbs and eventually work their way up to more complicated, often more expensive steps, such as a home retrofit.

Along the way, SmartPower helps people surmount the obstacles that keep them from taking the bigger steps. After receiving energy audits, for example, homeowners are often reluctant to retrofit their houses. Rosoff says it’s important here to make it easy for people and provide advice on financing. Utility companies, often viewed as the bad guys, can help by partnering with banks to provide low-interest loans. With their significant marketing dollars and a captive audience in their customers, utility companies make good partners for companies like SmartPower in reaching and motivating consumers to save energy, says Rosoff.

SmartPower, in collaboration with nine public, private, academic and non-profit groups, is now rolling out a pilot program in fourteen Connecticut towns called the “Neighbor to Neighbor Energy Challenge.” The goal of the challenge is to engage 10% of households within the selected towns to achieve 20% in energy savings.

The Neighbor to Neighbor Challenge will connect with the selected communities through social media marketing strategies, an online Personal Energy Advisor, incentives and, importantly, through recruitment of individuals within the community to act as spokespeople for the campaign. Research conducted at MIT, one of SmartPower’s partnering organizations in the Neighbor to Neighbor program, has demonstrated that “the best messengers come from within one’s own community.” One of the ultimate goals for the project is to recruit local organizations and activists to continue working on community energy goals after the funding is gone.

Smarter Cities: Technology

With its Smarter Cities program, IBM is taking a community-based focus, but with an emphasis on technology. In 2009, the company announced a partnership with Dubuque, Iowa, describing the Midwestern city of 60,000 as a “living lab” where IBM could test its smart technology on city infrastructure. The goal: to make Dubuque one of the first municipal models of sustainability in America.

Before IBM entered the picture, Dubuque had already decided to make sustainability a priority, recognizing its importance for long-term economic resilience. “When IBM research started working with the City of Dubuque,” says Milind Naphade, Program Director of IBM’s Smarter Cities services in IBM Research, “Dubuque had already planned on installing smart water meters in all the houses, all the businesses in Dubuque.” IBM asked to explore a partnership with the city “where we could develop more insights and more value for the citizens by looking at the same data that they would use for the billing,” says Naphade.

IBM began with the water pilot program in September 2009, and is currently working with more than 300 volunteer households. In May 2010, IBM started its energy pilot with approximately 1,000 households.

The data collected from the water and electric meters is sent to IBM, anonymously, so that IBM never receives identification information. IBM processes the data and shares insights gleaned with customers online. “The new system will allow households to identify waste and consider corrective measures,” says Naphade. Dubuque will be the first American city where citizens will be able to look at how they are using natural resources—in this case, water and electricity—in one, consolidated online space.

To encourage participation in the program, IBM is partnering with Dubuque 2.0, a local organization that builds community engagement around sustainability. Similar to the SmartPower Neighbor to Neighbor program, competitions and team events will be organized to help motivate people save energy and water.

IBM is currently experimenting with the level of detail provided in the data. By looking at patterns and trends, for example, they can assess whether consumption appears normal or is perhaps caused by a leak. The company is also looking into ways to bring specificity in terms of energy used by individual appliances.

In the future, IBM may expand its project to include transportation. “We know that public transit is not optimized, whether in small or large cities,” says Naphade. “We believe that increasing the occupancy of vehicles is one of the low-hanging fruit if the city wants to arrest carbon emissions or get around the problem of congestion – that is an area we are very keen to work on.”

Motivating Change

In their book Nudge, Improving Decisions About Health, Wealth and Happiness, authors Richard Thaler and Cass Sunstein propose that a “nudge” is anything that influences our choices. Such nudges, they argue, can be consciously designed to encourage people to make decisions more beneficial to themselves and the larger community.

In a section on environmental decision-making, the authors focus primarily on two useful nudges: incentives and feedback. In the realm of energy, feedback may be particularly pertinent since energy use is largely invisible—most people are simply unaware of how much energy they use in any given moment.

Indeed, feedback was a key motivational factor for Bill Rowan, the risk manager from Massachusetts. “I think the main thing with the [energy] reports is you become aware,” says Rowan. “It’s not just, ‘well, I’ll pay the bill.’ You can compare yourself against yourself, to see if you’re improving your efficiency. By being more aware, all of a sudden you start shutting lights off or shutting computers down or shutting down things you might otherwise leave on.”

A third nudge, social comparison, is used by companies like SmartPower, OPOWER and the IBM Smarter Cities in combination with first two, incentives and feedback. “Sometimes massive social changes,” write Thaler and Sunstein, “start with a small social nudge.”

The truth, the authors argue, is that most people like to conform. Sometimes all it takes is information about what other people are doing to nudge someone to change.  OPOWER, SmartPower and IBM all leverage this tactic to reduce energy use, whether it’s informing people how they stack up against their neighbors or letting them know that they are part of a community of people saving energy. Thaler and Sunstein point out one potential pitfall in the use of social norms, however, termed the “boomerang effect.” If you know, for example, that you use less energy than a neighbor, you may actually increase your consumption. The key, the authors argue, is to provide a small sign of approval to those who perform better than the norm. OPOWER does just that, by giving happy “emoticons” (smiley faces) to its customers who perform better than the average customer. While OPOWER does not signal disapproval to customers who perform worse than their neighbors, Thaler and Sunstein argue that such signals are also effective.

In light of the failed attempt to pass climate legislation this past summer, changing consumer behavior may be one of our best bets for combating climate change, pollution and dependency on non-renewable fuels for years to come. Luckily, the field of companies getting into business of clean energy, energy conservation, and energy efficiency is growing. Technology, combined with behavioral science, may be one path to a more resilient, sustainable energy future.