Opower, Inc. v. Efficiency 2.0, LLC

Filing 5

APPENDIX/EXHIBIT by Opower, Inc.. (Attachments: # 1 Appendix 1, # 2 Appendix 2, # 3 Appendix 3, # 4 Appendix 4, # 5 Appendix 5, # 6 Appendix 6, # 7 Appendix 7, # 8 Appendix 8, # 9 Appendix 9, # 10 Appendix 10, # 11 Appendix 11, # 12 Appendix 12, # 13 Appendix 13, # 14 Appendix 14, # 15 Appendix 15, # 16 Appendix 16, # 17 Appendix 17, # 18 Appendix 18, # 19 Appendix 19, # 20 Appendix 20, # 21 Appendix 21, # 22 Appendix 22)(Karol, Peter)

APPENDIX EXHIBIT 17

Residential Energy Efficiency: This Is How We Do It (Part 2) | Demand Response | End-Use | Energy Central

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Reference

Residential Energy Efficiency: This Is How We Do It (Part 2)
06.09.09

Andy Frank, Executive Vice President, Efficiency 2.0

Article Viewed 5421 Times
8 Comments

So what do behavior campaigns actually look like in practice? Like anything else, there are
many marketing channels and technologies that can be employed, but it all comes down to
execution. Running a good behavior campaign relies on careful understanding of your
customers, a clear set of priorities and a capable team. Most important, however, is a
strong commitment to try something new. While behavior strategies have been used in
some form for many years, it takes focused leadership to properly execute a program that
fully leverages the insights garnered over the years from behavioral science and consumer
marketing.
The first research on behavior approaches occurred during the first energy crisis in the
1970s. For example, a study done by Lawrence Becker in 1978 found significant effects
from combining energy saving goals and feedback. Households were asked to commit to
goals of 2 percent or 20 percent energy savings and then some from each group were given
feedback three times a week on how well they were doing. Becker found that the group that
received the higher goal and feedback reduced their actual usage by an average of 15
percent, while the groups that received either the higher goal or feedback reduced energy
use by about 5 percent. So the effects of behavior strategies are more than simply the sum
of parts, but actively reinforce each other.

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Similarly, a 1999 study by Vollink and Meertens combined information, feedback, and goal-setting to produce very
significant savings: 23 percent natural gas reductions, 15 percent electricity reductions and 18 percent less water. And
these savings will actually persist, and may even increase over time. A 2002 study by Staats et al. found that electricity
reductions went from about 5 percent to about 7.5 percent after two years when they combined information, social
pressure and feedback.
Starting in this decade, new technologies have allowed ever more dynamic feedback to be communicated to
households. New "smart meters" can deliver near-real time feedback on actual energy use directly to the customer.
This information is usually communicated via some sort of home energy display, but can also be shown through the
Internet. Not surprisingly, reductions from smart meter feedback can vary; a review in 2006 by Darby, for example,
found that savings ranged from 5 percent to 15 percent, depending on the manner in which information was displayed
as well as the social context of participants (whether information was shared with friends, etc.). She also found that
there were significant synergies between feedback and other types of information, a confirmation of previous studies.
And as consumers now receive information through a variety of electronic media, new software tools have been
developed that display real-time energy information on the internet and cell phones. Some companies, such as Energy

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In Part I, we discussed why behavior strategies should be an important component of any
energy efficiency program. The "behavior resource" can be a more cost-effective solution
than traditional rebate programs. By approaching energy efficiency from a consumer
marketing perspective, utilities and others can take advantage of a few key principles to
maximize energy efficiency investments while creating a positive, engaging experience with
their customers. Personalized information, general and specific commitments, social
pressure and constant feedback are all elements of a successful energy efficiency behavior
campaign.

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Hub and Tendril, combine home displays, networking hardware, and online software that allow a homeowner to control
energy use with the push of a button. Others like Greenbox and Google's PowerMeter utilize existing advanced
metering hardware to display real-time energy use in a variety of graphical interfaces. All of these technologies rely on
the simple premise that households will be more likely to save energy if they know how much they're using and how
much it costs at any moment in time.
When creating a behavior change program, utilities and others must therefore consider a variety of strategies and
technologies. The challenge, of course, is to design a program that will maximize energy goals while minimizing costs.
Every program manager should therefore ask themselves the following questions:

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What marketing strategies are most effective?
What technologies have the ability to cost-effectively influence energy behavior?
How do you effectively combine marketing strategies with technology?

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(1) What Marketing Strategies are Most Effective?
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There is a variety of marketing channels that can be employed to effectively communicate energy efficiency messages
to households. Diffuse advertising campaigns (television and radio ads, billboards, posters, etc.) can reach a wide
audience. Utilities and others have historically invested significant resources in spreading various energy efficiency
messages across their service territory. The downside of this strategy, however, is that messages cannot be
personalized, effects cannot be easily measured, and conventional advertising is very expensive.
Direct mail is another traditional marketing channel with which utilities are very familiar. Mailers can deliver messages
and information directly to the home and customers can be segmented by energy usage, demographics and
psychographics. The company Positive Energy, for example, tells households how their energy use compares to similar
homes in their area, with smiley faces providing an easy visual cue. Savings are then measured by comparing
households that receive the mailer with a control group that does not receive anything. But direct mail is also fairly
expensive, does not allow two-way communication, and is often thrown out with other junk mail.
Community marketing campaigns are another strategy that can be employed, one that emphasizes peer-to-peer
interactions, led by trusted local leaders. Southern California Edison, for example, has embraced community marketing
strategies in their energy efficiency campaigns, with incentives and resources predicated on community commitments.
Community marketing can be much more cost-effective than traditional strategies, as messages can be passed on at
no cost through local media and word of mouth. The Clean Energy Communities program in Connecticut, for example,
relied on local energy task forces, and has proven to be about three times more cost-effective than traditional
marketing strategies. The challenge of this marketing strategy, however, is to gain the buy-in of local leaders and create
the proper "buzz" needed to grab people's attention. But, similar to diffuse advertising campaigns, it can be difficult to
measure actual effects.
(2) What technologies have the ability to cost-effectively influence energy behavior?
As discussed above, there are a variety of technologies that can be considered for behavior programs. Traditionally,
energy efficiency providers have relied on in-home audit technologies to provide detailed information and investment
recommendations to homeowners. Local contractors as well as larger companies such as Conservation Services Group
and GreenHomes America employ a variety of tests to estimate current energy breakdown and reduction opportunities.
These audits can be very accurate, but are generally most effective with customers who are already very serious about
making an investment in energy efficiency. In-home audits are expensive, not including the actual costs of energy
upgrades.

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For more casual customers who enjoy their gadgets, in-home energy displays can effectively increase the awareness
of energy costs. A pilot project by NSTAR, for example, found that more than 60 percent of participants have made
changes in their electricity use as a result of using the energy display. In a similar vein, a variety of "energy orbs" have
been developed that give visual cues based on the amount of energy you're using. But displays are also an expensive
investment by either the utility or the homeowner, and so savings must be sufficient to justify the cost.
Software technologies can also play a significant role in behavior programs. Online energy audit tools have been used
for many years to help households understand their energy use. Most utility websites combine audit software with
energy "tips" that recommend energy reduction actions. The accuracy of these audits is based on the sophistication of
the energy algorithms, the number of customer inputs, and the amount (if any) of actual usage data that is integrated.

http://www.energycentral.com/enduse/demandresponse/articles/2064/Residential-Energy-Efficiency-This-Is-How-We-Do-It-Part-2-/[10/20/2011 9:10:24 AM]

Residential Energy Efficiency: This Is How We Do It (Part 2) | Demand Response | End-Use | Energy Central
Software is, of course, cheap compared to hardware, and can scale very easily. On the other hand, customers must
make an active decision to utilize the software. Therefore, the software must be fun and easy to use, and effectively
break down information, legitimacy, and social barriers while providing relevant feedback. Long surveys and generic tips
are not enough in this day and age.
(3) How do you effectively combine marketing strategies with technology?
In many ways, this last question is the most important. As we've seen, each marketing strategy and technology has its
advantages and disadvantages. To design an effective behavior campaign, program managers must choose the proper
tools.
For example, campaigns combining community marketing with advanced online software mean consumers can then
use the software to set savings goals and receive personalized information on how they can meet those goals (think
Amazon.com product recommendation system) based on advanced energy algorithms. They can then commit to
specific actions to reach their goals and share these commitments with friends. Participants will also see how they
compare to their neighbors and community and receive regular reminders and feedback. A robust community
marketing campaign complements the online platform, leveraging local groups that have an interest in energy
efficiency. A community competition, which is reflected in an online leader board, adds additional excitement and
"buzz" to the program. The offline community is therefore reflected in a dynamic online community. If successful, these
programs will be cost-effective, scalable, and verifiable.
But of course, there is no one "right" approach. The answers to these questions are not necessarily straightforward, but
they will help frame any internal discussions. Program developers must also take into account other factors that may be
specific to a given service territory. If there are large concerns over peak power, then the demand response lens must
be taken into consideration. This may increase the return on investment from smart meters, for example. If carbon is a
factor, then conversions must be made between the local fuel mix and greenhouse gas emissions. And you might
therefore focus all of your marketing on carbon reductions rather than energy costs.
But no matter the specific strategies and technologies, it all comes down to bridging the gap between intentions and
actions. The most important thing to keep in mind is that a behavior program must always have a relentless focus on
the consumer. As any marketing manager will tell you, this is no easy task. It requires significant planning, investment
and flexibility. But changing consumer behavior can also deliver large rewards. The utilities that gain a head start on
behavior strategies will have a significant advantage as the regulatory landscape continues to shift.

For information on purchasing reprints of this article, contact Tim Tobeck [e-mail].
Copyright 2011 CyberTech, Inc.

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Reader's Comments
Date

Comment

Bob
Amorosi
6.9.09

This article is a nice overview of the benefits and challenges for utility companies to engage residential
consumers in efficiency programs. A key problem for utility companies is how to fund the hardware and
software that is required to provide consumer feedback in real time or near real time to all their
customers.
The benefits to consumers of real-time feedback have also been studied for years by Ontario's largest
utility company Hydro One. They learned a long time ago that large numbers of consumers equipped with
simply a real-time power and energy display will voluntarily reduce their consumption by nearly 10% on
average across hundreds of consumers in study groups. More affluent consumers who don’t care about
efficiency have zero reductions, but some are as high as 20%.
Utility companies can usually easily justify spending some money on pilot studies for limited groups of
customers. But to implement new technology to all customers requires an effective way to pay for it.
Increasing billing rates to all customers is the last thing they want to do though since not only does it
require regulatory approval, any disinterested customers are unwilling to pay extra for it. So without
government handouts, the only alternative left is to get government regulators to allow them to change
their business models.

http://www.energycentral.com/enduse/demandresponse/articles/2064/Residential-Energy-Efficiency-This-Is-How-We-Do-It-Part-2-/[10/20/2011 9:10:24 AM]