Saving energy in a New Normal world

OPOWER

“Doing more with less” is one of the key themes for future profit.  The end of the SuperCycle means credit is hard to obtain, whilst ageing populations have less money to spend.  The winners in the next decades will be those who focus on affordability.

One great example of successful New Normal thinking is US firm OPOWER, which is leading the way towards greater energy efficiency.  As described in a new Case Study by IMD professor Stuart Reid, it works with energy companies to cut power usage, and it succeeds:

“What OPOWER produces is customised data reports that let people know how much energy they’re using compared to their neighbours and follows up with suggestions for a course of action.”

This year, it is on target to save 2 terawatt hours (TWh) of electricity – equivalent to half the total output of the US solar industry.

The business model is simple.  It partners with utilities to provide consumers with a clear picture of how much energy they are using, compared to their neighbours.  This then motivates them to switch off lights, and turn down the heating or air conditioning.

The model works because it recognises that people are social beings, and respond to peer pressure.   In one experiment, for example, residents were asked to use fans instead of air conditioning, but offered 4 alternative motives:

  • You can save $54/month
  • You will reduce greenhouse gases by 262 pounds (119kg)
  • You will be a good citizen
  • 77% of residents already do this

People who responded to the first 3 messages saved, at best, 3% of their usage.  Those receiving the “everyone’s doing it” message saved 10%.

OPWER’s energy efficiency success is just one example of New Normal thinking in action.  The key is to understand the user, and to respond to their needs, by using technology to provide the data they need to make informed decisions.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.