Individual Empowerment and the Consumption of Energy

This is a longish lead-in to the first post (of many) on how consumers are growing increasingly empowered in their ability to directly manage their individual energy usage and consumption. As always, I welcome any thoughts/feedback in the comments section.


The tremendous advances of the telecommunications, computing and Internet industries have wrought far-reaching economic, political, societal and behavioral changes, many of which we’re only just beginning to see. To list all of them would take a lifetime and is far beyond the scope and expertise of this blog.

However, there is one development which I believe directly relevant to what I discuss here daily. I’ve long been fascinated by how in many industries (e.g media, retail, communications, entertainment) “the Individual” has been empowered at the expense of the larger corporate entity, but to the benefit of the industry. One recent example I came across yesterday:

People once believed that the Net was going to transform where we shopped—that it was going to make physical stores obsolete. It hasn’t…What it has changed is how we shop…

…The results of this shift are obvious. First, consumers know a lot more about prices than they once did... It’s harder to create a sense of urgency around short-term sales…And the wealth of online product reviews and commentary has made the cues that stores use to shape shoppers’ perception of quality and value far less effective.

This doesn’t mean that consumers are impervious to retailers’ tricks…Still, there’s no disguising the fact that power has shifted from sellers to shoppers.

For other examples, think TiVo, NetFlix, open-source software, blog aggregators, eBay, Wikipedia, etc. Each allows its users to enhance and reshape their consumption experience while increasing the utility and efficacy of the products/services in question. More importantly, consumers, especially younger generations now anticipate and expect this capability to become available in a much broader swath of industries.

I know I’m generalizing excessively, but moving forward, I will be extending this concept of “individual empowerment” to energy generation, distribution and consumption as a key theme of this blog. Ultimately, this idea of individual empowerment is where I believe many of the most important opportunities in renewable energy lie.

To this end, I'm extremely interested in the policy, research and business models that reshape the Individual’s experience with energy – giving people demand-response technology so they can monitor their consumption, providing affordable and effective distributed technologies so they can generate their own power and sell the rest back to the grid via net-metering, powering their hybrid vehicle directly from this distributed generation rather than going to the gas station and recycling their garbage and waste for both power and profit.

Ultimately, the Individual is empowered, actively engaged in their own power consumption and generation, to their profit and the profit of the industry (and society and our environment) as a whole.

Research is beginning to bear this out. Consider this recent report from IBM:

Historically, the relationship between utilities and consumers has been rather lopsided – utilities had the power, both literally and figuratively. But the confluence of climate change concerns, rising energy costs and technology advances leading to greater consumer involvement is now radically redefining that relationship. Our recent surveys of 1,900 energy consumers and nearly 100 industry executives across the globe reveal major changes underway – a more heterogeneous consumer base, evolving industry models and a stark departure from a decades-old value chain. We believe companies need to prepare now for a participatory network that enables customers to choose from a wide variety of suppliers, actively manage their consumption and even sell back surplus power they generate. ..

….We anticipate a steady progression toward a Participatory Network, a technology ecosystem comprising a wide variety of intelligent network-connected devices, distributed generation and consumer energy management tools….

…Within five years…we believe sufficient supplier choice will allow meaningful consumer switching to emerge in most major competitive markets. Also…we expect utility demand management initiatives to expand dramatically and electric power generation by consumers to make tremendous inroads within ten years.

If you buy the concepts underlying this post, then this report is a must read. The accompanying survey is also insightful, although it makes me feel as though I’m putting a little too much faith in the typical energy consumer.

Other surveys point to similar findings. In one recent poll of 1,004 U.S. adults:

49 percent said they plan to make an eco-friendly New Year's resolution. Out of those making green pledges, 75 percent said they would most likely reduce energy use in their homes, 74 percent plan to recycle more, and 66 percent will cut their use of harmful chemicals.

A recent study by SmartPower on how best to motivate consumers to conserve energy draws some very similar conclusions:

Like any typical consumer, the participants in SmartPower’s study want to know what is in it for them. They yearn to be inspired. They do not want to be preached to. They want to feel that they are a part of a “we” approach. They want to understand and feel the real-world ramifications of their actions. They’re busy. They’re over worked. They want quick, simple tasks they can do that will make a difference. They want to feel smart and cool. They want to feel empowered and knowledgeable about saving money and saving energy.

The actual study, although qualitative, is an interesting read.

Moreover, building on this study’s conclusions, there are a number of interesting products and services that I’ve come across recently that directly tie-in to both the study and the concepts underlying this post.

While it’s older than the rest, I was fascinated by an article in this past July’s WIRED Magazine, discussing a very simple way to engage consumers in reducing their energy consumption:

Mark Martinez couldn't get Southern California Edison customers to conserve energy…Then he saw an Ambient Orb. It's a groovy little ball that changes color in sync with incoming data…Martinez realized he could use Orbs to signal changes in electrical rates, programming them to glow green when the grid was underused — and, thus, electricity cheaper — and red during peak hours when customers were paying more for power. He bought 120 of them, handed them out to customers, and sat back to see what would happen. Within weeks, Orb users reduced their peak-period energy use by 40 percent.

The article goes on to cover a number of technologies and ideas that could make energy usage “visible”. Nathanael Greene goes into greater depth on one of them - the Wattson.

I’ve also come across a number of other technologies and ventures pursuing the same objectives (of course, the ones listed here represent a tiny portion of what must be thousands of opportunities):

• Get a Kit, Cut Your Home’s Carbon Footprint. “Earth Aid Enterprises…is offering…customizable Earth Aid Kits come with a variety of products to help you reduce the carbon footprint of your house, apartment or dorm room: appliance timers, oxygenating showerheads, compact fluorescent lightbulbs, LED nightlights that turn on and off automatically, faucet aerators, programmable thermostats, Smart Power strips and more.”
  

• Hooking up a greenhouse gas meter. [previously written about here] “[IBM] has collaborated with Evergreen Energy to create what they call the GreenCert greenhouse gas meter…an Internet-based software program designed to collect real-time emissions data from sensors and other sources. It calculates the volume of greenhouse gases being released into the atmosphere by a company and certifies any reductions as credits that can be traded on carbon markets."

• Kill A WATT – Watts Killing You? "Connect your appliances into the Kill A Watt™, and assess how efficient they are. A large LCD display counts consumption by the Kilowatt-hour just like utility companies. You can figure out your electrical expenses by the hour, day, week, month, even an entire year."

Ultimately, this idea of "empowering" the individual, so that they are cognizant of the impact of their energy usage and the value that they can create, is where I believe many of the most important opportunities in renewable energy and environmental sustainability lie. As I stated above, I plan on making these topics, and the many issues that surround them, a key focus of this blog moving forward.

UPDATE: It's a couple months old, but this is another great example: Gadgets to Spur Energy Conservation, about glowing lamps that manage and inform on energy consumption and conservation.

Environmental markets, measuring emissions, algae and energy legislation

Environmental Exchange Is Planned. CCX has a new US competitor.

New York Mercantile Exchange parent Nymex Holdings Inc. and a group of Wall Street trading houses plan to launch an exchange for trading carbon emissions and other environmental products. Dubbed the Green Exchange, it will offer environmental futures, options and swaps contracts, Nymex will own 25% of the new Green Exchange venture, and its chairman, Richard Schaeffer, will be CEO until a new one is named. Morgan Stanley, J.P. Morgan Chase & Co. and Credit Suisse Group will be among the partners….Evolution Markets has been the designer of the new exchange.

Accurately measuring emissions: Interesting dichotomy presented in these two posts. Oxford Economist Dieter Helm and others have released a new study stating that the UK is significantly underreporting its annual GHG emissions:

…Official figures fail to capture the true picture because they don’t take into account pollution from aviation, shipping, overseas trade and tourism or the carbon footprint of Britons abroad. According to figures filed with the UN, Britain’s emissions are down 15 per cent compared with 1990. But the report says that the figure is actually up by 19 per cent once the missing emissions from shipping and citizens abroad are included.

Meanwhile one new venture is trying to take advantage of these measurement challenges (on the micro-level) via a partnership using IBM technology, to launch “Green Cert” which promises to ease the monitoring and reporting of carbon emissions. Additional information here. The concept of “empowering the individual”, and making them responsible for their energy usage and emission reductions, is especially interesting to me. I’ll post on this concept at a later date.

Once carbon has a non-volatile, transparent price, I imagine measurement accuracy will be less of a concern. Back in 2005, Trucost put emission levels at about 1,100 tons per million pounds sterling of revenue for FTSE 100 companies. So, for example, a company with $10 billion of revenue (almost all of the Fortune 500) would emit somewhere on the order of 5 million tons. If carbon goes at $40 per ton, and you miss your emissions quotient by 10%, you just cost your company $22 million. That’ll get your bosses notice.

That said, having spent time researching the difficulties in quantifying GHG emissions from tropical deforestation, I certainly recognize the immense challenges of cheaply and efficiently quantifying emissions. It won’t be easy. Expect many the launch of many more companies with new technologies and processes seeking to solve the measurement issue.


Algae to Biodiesel: This concept keeps popping up. I heard Martin Tobias (Imperium Renewables) speak at a conference last year and was intrigued by the idea. GreenFuels is another company in this space that’s drawn interest, but has had some recent problems.


New York taxis boosting fuel economy . Older news, but still interesting. New York City taxicabs purchased after Oct. 1, 2008, will be required to get at least 25 miles per gallon, and those purchased after fall 2009 will have to get 30 mpg. Turnover for NYC taxis averages 3-5 years, as this article from July points out, so expect most taxis to be changed over by 2012.


Senate takes up the energy legislation. Apparently the Senate may begin work on the new energy legislation. The 15% RPS has been dropped, but much of the renewable energy tax incentive package is still on the table (although dropping from $21 billion to $13 billion). This interesting post on Daily Kos states that most of the package focuses on solar subsidies, with extension of various renewable energy tax credits and sizable tax credits for hybrids. According to the post, the bill is exactly one senator away from passage. It’s a Kos diarist though so take with a grain of salt.

Harvard Business Review - Business/Climate

I'm at least a month late in this, but finally read a copy of HBR's special report on climate and business. A variety of experts are represented, and each seems to hammer on the same theme (and rightly so) - necessity and opportunity. While it is imperative that business act immediately, there are a plethora of economic and competitive opportunities if those strategies are effective, transparent, measurable, thoughtful and long-term. Among the other highlights from these articles:

- Porter develops a revised SWOT analysis for this new era of climate change, focusing on an "Inside Out" approach (all direct and indirect aspects of a firm's value chain, i.e. strengths and weaknesses) and an "Outside In" approach (various effects of climate change on a firm's business, i.e. opportunities and threats).

- Esty gives his perspective on the importance of environmental transparency, especially carbon reporting and emissions management, for a company:

That capability is seen by many observers, including Wall Street analysts, as a proxy for good environmental management, which studies show correlates with good general management and superior stock market performance over time. Reporting is similarly seen as a measure of corporate trustworthiness and good governance.

- Roosevelt and Llewellyn explain why "green investment" demand is so much greater than supply:

Many of the investors who are most intensely interested in climate change don’t want to dilute their investments by putting money into diversified companies—they want their investments to go directly to green technologies or strategies. On the other hand, the diversified companies that have good green businesses...often do not want to spin them off because they want to experience all the potential gains they see in those businesses.

- Finally, I especially liked this analogy from Forest Reinhardt:

For centuries, the North Atlantic cod fishery fed millions of people, but there were no property rights controlling access to fish in the sea, so fishermen didn’t treat the resource as scarce. In the early 1990s, the fishery collapsed. Governments have since established sensible systems of tradable catch permits that seem likely to prevent the collapse of other species, but it was apparently too late to resurrect the cod fishery.

There are a myriad number of examples of unsustainable natural resource exploitation and eventual collapse. I wonder if early government regulation was successful in staving off the inevitable collapse. I'm sure I'd find the answers here. Yes, yes, it's on the list...

Wired Magazine - the Green Edition

[I started this back in May and never finished...just posting now]

Series of interesting articles in this month's Wired Magazine.

The Next Green Revolution is a call to arms using language only an MBA could love:

Green-minded activists failed to move the broader public not because they were wrong about the problems, but because the solutions they offered were unappealing to most people. They called for tightening belts and curbing appetites, turning down the thermostat and living lower on the food chain. They rejected technology, business, and prosperity in favor of returning to a simpler way of life. No wonder the movement got so little traction.

Technology can be a font of endlessly creative solutions. Business can be a vehicle for
change. Prosperity can help us build the kind of world we want. Scientific exploration, innovative design, and cultural evolution are the most powerful tools we have. Entrepreneurial zeal and market forces, guided by sustainable policies, can propel the world into a bright green future.

You don't change the world by hiding in the woods, wearing a hair shirt, or buying
indulgences in the form of save the earth bumper stickers. You do it by articulating a vision for the future and pursuing it with all the ingenuity humanity can muster.

Somebody might want to tell that to Julia Butterfly Hill.

The article further outlines four interesting strategies to focus on:
1. Developing renewable energies
2. Reducing "waste" (energy, industrial, etc.)
3. Building up cities over suburbs
4. Think quality not quantity.
...and the Author also runs an interesting website

Next article, 8 People and Trends to Watch is pretty self-expanatory. Kind of disappointing that's all they could come up with. 5 people? An author, a married-to-celebrity activist, a real estate builder and a governor. And if those are the four big trends that will save us, I'm stocking up on water wings and sun block now.

Carbon Quiz allows you to measure your carbon footprint and feel smug if you're in the "Deep Green" category. (ahem...I rule)

Interesting article on the power of consumers in spurring change. I suppose we should ignore the fact that consumerism is one of the main reasons we're in this miss.

Sorta sad moment here:

What percentage of our nation's energy currently comes from so-called alternative sources? Officially, 6.1 percent of our 2004 energy consumption came from renewable sources. But half of this energy is provided by hydroelectric power, which environmentalists usually don't regard as "alternative" (rare is the eco-warrior who loves the idea of damming up rivers). Strip away the hydroelectric, then, and you're left with a less impressive figure that encompasses geothermal, solar, wind, and biomass (which includes everything from switchgrass and ethanol to "sludge waste") sources: a piddling 3.4 percent. Solar energy accounted for less than 0.1 percent of our 2004 total consumption.

Grading of some environmental groups

And finally, an incredible Al Gore profile. Leaving aside his excellent PR efforts (capped by an epic SNL performance) and the overwhelming misery I feel when I think about the 2000 election...arghh. The piece is epic, and his company "Generation Investment Management" sounds very interesting.