Will 'smart' electric meters lead to smarter consumers?

SAN FRANCISCO -- In conjunction with utilities, tech companies and state and federal agencies, Stanford University is doing a number of experiments to see how psychology affects people's energy consumption.

Researchers say that when it comes to demand-side management, the field of psychology has been lying fallow for far too long, particularly in the residential sector.

"California has huge amounts of money to put toward marketing campaigns, and they spend it all on media marketing campaigns that we know don't work," said Carrie Armel, a research associate at Stanford University's Precourt Institute for Energy Efficiency. "Tens, hundreds of billions of dollars are going to be spent on installing smart meter technology. How much is being spent on behavioral research? Nothing. That's mind-blowing."

Economists and policymakers have long advocated real-time pricing as a way to reduce consumption and smooth demand at peak times. California's 2001 energy crisis might have been avoided had customers had a direct incentive to conserve power; the state Public Utilities Commission has experimented with at least three different pricing mechanisms since 2003, and is currently aiming to install smart meters in the majority of consumers' homes by 2011.

Stanford researchers are working on a dozen different studies on how behavioral patterns can create barriers to adopting new technologies and practices. The projects target four categories -- policy, technology, community and media -- with the aim of creating tools to tap into people's natural proclivities.

"Traditional interventions to help people change their behavior, at least in the energy domain, have tended to derive from standard media approaches like public service announcements," Armel said. "Especially in the environmental domain, it seems like giving people information catered to their situation is very helpful."

The studies have been running for about a year. Researchers expect to finish in the next two to three years.


Stimulating the itch to compete

"I could imagine a regular interface that could open up markets where people could opt in if they want to participate," Armel said. "They would agree have a certain cap on energy use. Then they could compete with other people, or set goals as a community."

Separately, Stanford is helping Pacific Gas & Electric and the city of San Jose with a project to see how people respond to real-time information on their energy use. PG&E recently applied for $42.5 million in funding from the American Recovery and Reinvestment Act to install in-home energy displays in 75,000 Bay Area homes and businesses, to see how well ratepayers can understand and control their energy usage (ClimateWire, Sept. 17).

Stanford is also trying to appeal to gamers and type A personalities alike with a little friendly competition.

"The whole idea is to use all the powerful psychology of gaming, especially sophisticated, collaborative games, to change behavior in the world of energy," said Stanford communications professor Byron Reeves, who posted a "Sims"-style demonstration game on YouTube earlier this year. Reeves, the co-director of Stanford's Human Sciences and Technologies Advanced Research Institute, last month also published a book, "Total Engagement," that advocates using multiplayer games in the workplace to stimulate collaboration, creativity and productivity.

The games would be accessible from a variety of platforms: Facebook, smartphones, and desktop computer programs.

"The competition is light, fun and no one gets hurt, but it's public -- social," Reeves said. "My reputation, even if it's just in the context of the game, is on the line, and I care just a little more than otherwise whether I do all right."

Will another smiley face prevent 'backslide'?

Armel says appealing to peoples' adrenal glands can be paired with monetary incentives to maximize the bang for policymakers' bucks. "We're playing around with different ways of developing incentives that would give the same amount of money, but leverage psychological principles to make it more motivating," she said. She cited a study done in India that found giving away one large lump sum in a lottery attracted more participants than when the money was spread out over time and people.

Reeves concurred: "If one works, then there needs to be 100," he said. "There could be different skins, different demographics, regional targets. Different ways to play the same game. There'd be a lot of people who'd want to pay people to play."

Competition is already under way at 21 utilities that are working with a Virginia-based startup that sends energy usage statistics to customers' homes. OPOWER is monitoring 38,000 homes in the Sacramento area and has just signed a contract with the Sacramento Municipal Utility District to monitor as many as 12,000 more.

OPOWER is using psychological techniques pioneered by Arizona State University psychology and marketing professor Bob Cialdini, who has researched the optimal phrasing to use on hotel room signs asking guests to reuse their towels. Instead of appealing to guests' sense of environmental stewardship, hotels can get a higher rate of participation by invoking the behavior of other guests: "The majority of guests that stay in our hotel do reuse their towels."

OPOWER has adopted Cialbini's method of positive reinforcement: printing smiley faces on the reports it sends to utility customers who use less energy than average. The reports compare each customer's usage to 100 nearby homes of similar size and heating type, and reward them with smiley faces if they perform better than average. About 80 percent of customers who receive the reports reduce their energy usage. About 1 percent opt out.

"He found that giving people a sense of how they were doing compared to their neighbors was by far the most effective context, but people who were doing well had a tendency to regress to the mean," said Michael Sachse, director of government affairs and general counsel for OPOWER, of Cialbini's research. "He did it again, and gave smiley faces as positive reinforcement. That prevented the backslide."

Sachse said OPOWER's service has the potential to help customers see the benefit of smart meters.

"They're not necessarily great for consumers without analysis; people aren't going to sit in front of their smart meters and watch the numbers tick up and tick down," Sachse said. "They're clearly a great investment for utilities, but to make them a good investment for customers, they need to be shown their value."

Understanding your kitchen lights

Stanford's also working with Google on ways to mold behavior, although they're not ready to release details. Google, in turn, is working with utilities to help them bring information to individuals.

Michael Terrell, policy counsel for Google's philanthropic arm,, says he has found competition to be an effective stimulant, even when competing against himself. He says Google envisions a market for home energy games and monitoring tools similar to Apple's App Store for the iPhone.

Google is partnering with 10 utilities, and in October opened its PowerMeter application to any customers whose utilities allow them to sign up and purchase an in-home energy monitor called the TED 5000. The device, made by Energy Inc., measures energy use in real time and can supplant the smart meters that are being installed by utilities around the country.

"I've been using it for six months, and it's really cool," Terrell said. "I've learned things that I had no idea of. When I run my dishwasher, I can have lights on everywhere, but it triples my power consumption. My kitchen lights double my consumption because they're halogen. Our view is, everyone should have access to this data."

Google has also filed comments with the Energy Department and the California Public Utilities Commission on their smart grid policymaking plans, asking them to make it easier for consumers to buy smart grid devices themselves and to clarify how third parties can access consumers' information, among other objectives.

Some consumer watchdog groups say the concept of reducing energy use on a minute-to-minute level is tailored to a small subset of people who enjoy and can afford expensive devices and fast Internet connections.

"I just don't know where people are going to get this extra time of day to do these things," said Mark Toney, executive director of the California-based consumer advocacy group Utility Reform Network. "That would require people to on a day-to-day basis pay attention to their pricing and monitor it in the middle of life. We just think that's unrealistic and not going to happen. A small part of the population will get into it, of course, but for the vast majority, it's a waste of time, resources and money."

Toney said he preferred one-time, structural fixes like appliance energy standards and building weatherization programs. "Painting roofs white to be more reflective is something that people don't have to do every day; you do it once," he said. "You make a decision once, but it's not an everyday behavioral change."

But Terrell countered that the potential benefits are worth the cost of the devices and infrastructure. "Five to 15 percent savings, when you aggregate that over millions of homes, could be very substantial," he said. "If you got every home in the U.S. to save 10 percent of their energy, that's a very substantial cost and energy savings."

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