Who’s Saving Electricity in Your Neighborhood?
March 10, 2012
Software company Opower thinks it can get consumers to use less electricity by instigating some friendly neighborhood competition.
It was late afternoon at Opower headquarters in Arlington, Virginia, but the energy start-up’s hive mind was thrumming steadily.
“Let’s take a walk,” said Marc Laitin, senior director of consumer marketing. “I think best when I’m moving.”
Laitin is a typical Opower manager — Harvard educated, safely under 40, animated like a street theater puppet, and dressed like he was going to a Decemberists’ concert. He set off down the hall on a talking jag, punctuating his ideas with wild arms. He wanted to make an idea about turning down the heat in winter go viral. People forward funny emails all the time, he posited. Could his idea work by word of mouth?
We came to a bare conference room — its floor still raw concrete — that looked out over the Potomac. “How do we get people talking about conserving energy?” Laitin wondered aloud. “How do we generate hype?”
He began to build a meme. Winter meant the holidays, and the holidays meant ugly sweaters. What if Opower sent every homeowner an ugly sweater? Too expensive, and Midwesterners might not get the joke. What if the company instead sent tiny ugly sweaters, designed to be worn by the home’s thermostat? Tiny things are cute, and cheap. If done right, it would make the neighborhood chatter mill go bonkers.
Opower- an information software company founded in 2007 as Positive Energy — is a young group of computer engineers, social scientists, and Silicon Valley vets. Thanks to an infusion of $50 million in venture capital in late 2010, the company was in the midst of a massive build-out during my visit last summer, doubling its team with 100 new employees. Around the office, yoga balls and standing desks took the place of cubicles. A glassy kitchen was stocked with Odwalla juices, craft beers, and an espresso maker. A running ticker on the wall showed kilowatt-hours saved nationwide — 300 million and climbing. Everywhere, the intensity hovered between hungry and frenetic, all trying to solve a single problem: How do you convince homeowners to use less electricity?
The answer proves to be remarkably old-school.
Getting people to use less electricity is a quandary that has plagued utilities and environmentalists alike for decades, and previous attempts to crack it have resulted in some costly failures. The Age of Smart Meters, which provide up-to-the-minute data on energy use, has brought little revolution; the technology is expensive and — let’s be honest — you don’t have the free time to log on to your utility’s website and parse graphs detailing of your monthly kilowatt-hours. Psychologists have long understood that humans are miserable at opting in, which is why gee-whiz iPad apps showing every circuit in your house have been slow to gain traction. Utilities running small pilot programs for in-home monitors — which provide real-time feedback on energy use and retail for around $120 — have found that use of the device can lead to significant reductions, but only in some homes. And persistence is fragile, too; the novelty of the gadget wears off or the batteries run out, and replacing them is a hassle. In one study, nearly one-third of the participants never bothered to set up their monitors. In another, 35 percent said they planned to discontinue use after the trial.
Last summer presented a stark reminder that some technologies arrive ahead of their time: on June 24, Google announced that it was mothballing PowerMeter, a tool designed to give users with smart meters the ability to monitor their energy use online. Growth had been sluggish, and utilities were reluctant to allow Google access to their data streams, making it impossible to scale. Six days later, Microsoft announced that its energy management portal, Hohm, would likewise be scrapped.
To fill the void — and to make a tidy profit — Opower has married high-tech number crunching to low-tech behavioral psychology to produce “home energy reports” that are sent directly (yes, snail) to your mailbox with your electricity bill. Opower algorithms sift through data streams provided by your energy company and compare your monthly electricity use to that of 100 hypothetical “neighbors” — houses similar to yours in size, age, and location.
The highly stylized report, simple and colorful, includes your monthly “Neighbor Rank,” from 1 to 100: a graph shows your consumption in relation to the average, with language that affirms downward trends and warns against upward ones.
In essence, Opower has made energy conservation a matter of keeping up with the Joneses.
Behavioral psychologists call this kind of tactic “normative messaging.” It works because, as highly social creatures, humans are both attuned to how others act and sensitive to what others approve — even when we claim not to be.
Robert Cialdini, a regent’s professor emeritus of psychology and marketing at Arizona State University, and author of the 1983 business cult-classic,Influence: The Psychology of Persuasion, demonstrated this with a series of “door hanger” experiments in San Marcos, California. Researchers first identified four ways to conserve energy: take shorter showers, turn off unnecessary lights, use fans instead of air conditioning, and turn off the AC at night. They then drafted appeals for each action, according to one of five conditions: environmental protection (“protect the environment by conserving energy”); social responsibility (“do your part to conserve energy for future generations”); self-interest (“save money by conserving energy”); information only (“use a fan to conserve energy”); and descriptive norms (“join your neighbors in conserving energy”). Every week for a month, researchers hung new messages on doors of several hundred randomly selected homes and checked the homes’ electrical meters. At the end of the trial, they calculated whether energy use had risen or fallen and interviewed 371 homeowners about their experiences.
Homes that received messages that appealed to the environment, social responsibility, and financial self-interest, as well as the information-only control group, all used more electricity after receiving the door hangers than they had previously. The only homes that used less were the ones bombarded with descriptive norms: “77 percent of San Marcos residents often use fans instead of AC in the summer. Fans are your community’s popular choice!”…