Behavior Modification or Technology Best for Residential Energy Efficiency?

Residential energy consumers are a notably tricky segment to engage with utility conservation programs as their smaller consumption loads pale to larger, more sophisticated commercial users.  Economic incentives exist for these customers, but it's become clear that utilities cannot make everyone an energy analyst of their home and this has caused DSM programs to return spotty success for some utilities.  In general, no one wants to study their utility bills.  I recently found a video online (link lost) parodying the "Thing No One Says" Internet meme with a video titled "Things No One Says About Their Energy Use."  One-liners such as, "Hey, do you want to hang out tonight with me and weather normalize my energy bills over the past 12 months" comedically strike the heart of every program manager.  The silly video illustrates my point well in that it actually satirizes home residential energy analysis as being mundane, complex, and boring.  It is for this reason that utility DSM programs must go beyond the traditional light-bulb replacement campaigns, smart-meter installations, Energy Star ratings, and the like to engage customers on more innovative fronts and not shun the boring stuff like behavior awareness.

While the importance of traditional conservation programs has continued to grow to peak levels over the recent years, so too should the interest in new engagement methods.  In a great report published by the American Council for an Energy-Efficient Economy (ACEE), available for free here, researcher Skip Laitner defends returning to behavior awareness as a critical component in DSM; "The adoption, use, and innovation of technology are firmly rooted in human beaver.  Therefore, it is difficult to fully distinguish where behavior ends and technology begins, or to determine how best to attribute energy savings whether as a function of technology or behaviors.  In fact, most energy savings that are through the application of new technologies also rely, to vary degrees, on changes in behavior."  His comments support his work in energy-efficiency research related to behavior including notable writing on the 'rebound effect.'  This and other nuances of residential energy efficiency only build the case that consumer behavior cannot only be dictated by economic theory.

Though economic theories such as Pricing Signals, Value vs. Utility, or Rational Consumption clearly have their place while developing any utility DSM program, behavior modification also demands utility attention.  "Lights-off" campaigns for example should not be relegated as a boutique or bonus strategy over a technology-heavy programs given behavior changes have alone resulted in 20% reductions across various empirical studies.  Behavior-heavy programs that build from insights in the social sciences, which has had tremendous success in B2C banking and financial services, could be a great starting point.  Think ING Direct Online Bank's saving tools and the now-copied industry culture they created.  Examples abound of industries and firms slowing their inclination to force technology on theirs customers in favor of a more combined human/tech approach.  DSM across the U.S. can continue to improve on this front.  Programs must become more sophisticated sellers of conservation-as-a-service.

A final dash of salt...

Investor Owner Utilities probably don't favor behavior awareness programs because their results are only faintly quantifiable.  I understand this, but a clever program could overcome this barrier.

Building Energy Management Systems: A Growth Industry

Building Energy Management Systems (BEMS) and the associated industries are set for YoY growth of over 15% through 2020, according industry consultants, Pike Research.  The usual suspects are of course talking up these business segments in their 10-K's as being a major part of growth opportunities: Siemens, Johnson Controls, G.E. I.B.M., as well as countless startups are drooling over this forward-thinking energy industry.  The U.S. commercial building stock provides almost endless room to target existing structures, all of which often see incredible energy savings and payback periods. 

I enjoy watching this industry for several reasons, but primarily because it exemplifies the work required of an efficient and progressive economy, which I'm an ardent supporter of.  A multitude of professionals must come together for a building to become active or alive: one that adapts its systems real-time.  Pipe-fitters must work alongside technologists, engineers with facility managers, or programmers with office clerks.  BEMS design is clearly a stakeholder responsive industry, which requires tight integration of many disciplines.  Firms in this field often tout their vast network of professionals from across industry as a selling point to clients.  One of many reasons I'm motivated to become part of this industry as a business professional. 

A Final Dash of Salt…

What's additionally fascinating about this industry is it's only recent growth due to several technology advancements: network technologies, wireless communications, and micro computing power.  I believe these three tech trends are some of the most powerful societal advancements solidified in the past decade and may sit next to antibiotics, steel, and modern sanitation as critical, historical advancements and paradigm-makers.

IBM's bet on the industry:

http://www.youtube.com/watch?v=fquhe95YTHI

SIEMENS recent 10-Q:

http://quote.morningstar.com/stock-filing/Quarterly-Report/2011/12/31/t.aspx?t=XNYS:SI&ft=&d=14df53e546b524b68980f27c8302a2bb

Thin-Slicing & Rapid Cognition in Commerce

Those who've bickered about business and industry with me over a cup of coffee know I love to blend larger socio-observations into the folds of commerce.  After all, businesses exist within these environments and sometimes even create them.  Because of this congruence, I'm forever enticed by their relation.  As it relates to this post, I'm specifically interested how business leaders make decisions amongst the relentless flow of information in the modern, data-driven world.

The concept of Rapid Cognition or "thin-slicing" is why people declare; "You don't get a second chance to make a first impression."   Thin-slicing refers to the ability of the unconscious to find patterns in situations and behavior based on very narrow slices of information and is a dazzling part of of how people make sense of sophisticated problems such as the hiring of a new executive.  Does it take 8 months for a hiring manager to understand a new-hire's competency or can a settled understanding be had during a single interview?  Much outstanding research supports the fact that the single interview may, given certain a certain context, be more reliable.  So how can this be used in business?

I've been recently writing much about the prevalence of data and real-time decision making in business.  The relentless pursuit of data-driven businesses has flooded most executives minds with more raw information than is bearable and though these metrics do ease many business processes, they also can distract.  Information-overload is pervasive and the topic of many corporate training sessions for small businesses and corporate chains like big-box stores.  I recently spoke with a professional friend who Manages a local Walgreens store.  He reviews hundreds of Key Performance Indicators (KPI's) daily, which are a product of the sophisticated data-driven business Walgreens runs.  I'm curious how his intuitive senses and thinly-sliced judgment may stack against these KPIs.  This Walgreens Manager shares the decision-maker role with countless others within industry trying to make highly influential decisions in regards to very complex problems and sometimes we hear stories of courageous executives turning off the dashboards, etc. and using the the Gut.  The Gut is a product of thin-slicing and research has proven its effectiveness in decision making.  Decision-makers use it when they walk a factory floor or make deals via a hand shake.  The disregard the endless complexities associated with the decision and instead make smart decisions in hours, minutes, and seconds.  Because of proven success, I suggest a tempered look at using thin-slicing during everyday decision making as well as during highly complex problems.  This can work especially well with problems that present countless variables to consider.  Overall, it's simply another angle by which a complex decision can be refined into manageable parts.

A Final Dash of Salt…

Many factors affect the quality of a decision made using rapid cognition techniques and therefore it is inherently full of caveats.  However, I'm most interested how the many topics of data-driven commerce, several which have been touched on in prior posts, can be influenced by rapid cognition.  Business leaders are flooded with data, much of it benign.  Rapid cognition may be the key to making quick, deeply reliable, and sophisticated decisions without getting lost in the sea of information.

Wind Turbine Power Generation & The Science of Emergence

I’d like to continue piggy-backing on my previous posts about localized data and control with an entry-level post about wind forecasting as it relates to energy production and energy markets. 

Wind prediction is part of our local, nightly newscast and the principles guiding it are scientific standards: low pressure persuaded by distant bodies of water make wind.  This is nothing new.  What is new, however, is the hyper near-term prediction of wind velocity, angle, density, etc. for the use in wind farm design and operation.  Day-out forecasts have long been available for these purposes, but several firms now offer data-analytics software (i.e. LIDAR) and turbine blade hardware that can make real-time predictions of incoming wind several thousand feet away.  Micro adjustments are then made to blade pitch and the like so as to better capture the energy within the wind.  This ability is not necessarily new as many newer turbine blades incorporate design that exploits complex hydrodynamic principles, but adapting them to further increase production is still ongoing. This is very similar to the use of automated flight stabilizing flaps used on commercial aircraft.   The below video is a quick, anecdotal example.

What’s more, I believe the concept of Emergence used in Science could also compliment the refined efficiency of large farms.  Emergence is the concept of self-organization without leadership.  Fire-flies, ants, fish, and the like use it to build complex societies and coordinate movement without the aid of central command.  It’s the same reason why some neighborhoods within a city sprout and gentrify quickly.  One unique shop or venue opens up and passerby’s stop.  Soon enough, people come to view the venue, start new venues, move, multiply, grow, etc. until a new neighborhood has formed with new character all without official direction.  I’m leading to the point that wind farms can benefit from this concept too. 

A farm built in such a way so as to capture wind data from the front-facing turbines could then communicate valuable data backwards to the “school” of turbines stacked behind it just as fish do effectively letting them "see" and adjust to wind in real-time.  Farms could make quick, forward-looking micro adjustments to harvest the best catch.  Assuring every installation of wind generation has more up-time is critical to making it a viable node within the larger generation/transmission system.  Independent System Operators will be able to consider using this power more regularly and at better prices with these increased efficiencies instead of it currently being relegated to generation for nighttime load.

A Final Dash of Salt…

This post isn’t a rant into the awesomeness of wind power.  Instead it’s an extension of my recent theme on data-driven, networked energy production and consumption.  I look at any opportunity to turn passive technologies (i.e. wind) into active and controllable ones.

Has Distributed Generation (DG) Reached a Fall-line in the Utility Industry?

In follow-up to my previous post about the Internet of Things, I’d like to discuss one of the most prominently affected industries and a topics: Utilities and Distributed Generation (DG).

When Edison first performed Direct Current (DC) transmission of electricity, the concept of DG was the paradigm of electric consumption: consume electrons near where they’re produced.  Consumption remained this way for a small amount of time before Alternating Current (AC) allowed the gap between generation and consumption to literally widen.  Today, this model is even more evident as most consumers cannot even speculate as to where their electrons come from.  However, several evolving forces have renewed interest in this classic concept and reinforced the possibility of DG becoming a valuable energy alternative for Industrial, Commercial, and even Residential consumers.  It is being seriously evaluated by many agencies and utilities around the country.

                Utility administration must craft their perspective on this topic as it will be continually discussed in this and several upcoming decades.  First, they should settle upon why not to embrace this concept, which includes fundamental power production and distribution issues such as power quality.   Utilities traditionally discourage multiple generation sites on the account of power quality.  The introduction of various generation points, times, sources, voltages, etc. greatly affect the physics of producing and transmitting “good” power: load factor, voltage, harmonics, etc.  In many cases, DG directly erodes the effects of the natural Economies of Scale traditional to electricity generation and the very reason Centralized Generation (CG) exists.  On a purely mathematical basis, increasing DG, at least in 2012, will make CG less efficient.   Classic Economics assures us the most efficient player should always produce the appropriate good/services, which has so far been demonstrated by the AC generators of the last 100 years.  Interestingly, this paradigm is now also driving a resurgence of DG discussions across the spectrum of Utility customers. 

                There are increasing instances when the actual consumer of electrons may be able to produce them more efficiently than a centralized Utility and as such each Utility must render an opinion on why to embrace the concept.  Micro-generation technologies such as turbines, battery storage, PV, bio-reactors, etc. allow for this.  Utility point of view sometimes changes as they begin to run the numbers on Avoided-cost.  If the harm of DG on power quality and planning can be minimized, it may be more efficient to allow for DG, thus making the avoided-cost component an immeasurable real-time stat to monitor.  This is generally in contradiction to most people’s thinking of big Utilities in that many believe they simply want to sell as much electricity as possible just as any other business would.  In reality, Utilities want to sell the right amount of power, which is a delicate dance between bulk and efficiency.  So does DG stand a realistic chance amongst evolving fuel and technology prices?

                Real potential exists for DG to gain noticeable traction right now largely due to two macro trends.  First, the advancement of micro or hyper-local generation technologies across the Utility customer spectrum makes on-site generation economical.  Second, the real-time and decision-making power of a data-driven economy and energy marketplace make micro control and connection realistic.  The Classic Economics referenced prior state that the most efficient player should produce any given service/good, but this fundamental decision process has never been widely applicable to energy generation and consumption.  Energy has always been dumb.  The data-driven information revolution and the implementation of data analysis, real-time control, and networking technologies make it possible for Generators and Consumers to interact, which is a new element to the Utility industry.  DG can generate when most efficient while CG reduces peaking-plants and vise versa.  These are the data trends that are flipping a 100-year old Monopoly on its head and should surely become action-items on any utility CEO’s desks if they aren’t already.

 A Final Dash of Salt…

 Data-driven energy generation and consumption: the biggest change to the utility industry since AC

transmission?  I think so!

Extra Reading…

Check out the sections on the changing nature of risk.

http://www.ferc.gov/legal/fed-sta/exp-study.pdf