In 2001, graduate students from Arizona State University and California State University San Marcos conducted an experiment designed to persuade households to use less energy. They tested four messages to determine which had the biggest impact on reducing energy use: save money, save the planet, be a good citizen or your neighbors are doing better than you in saving energy.
Surprisingly (or not), the first three strategies had little or no impact. The last one, however, which brought social pressure to bear, spurred a significant drop in energy consumption.
Inspired by this experiment, Harvard graduates Alex Laskey and Dan Yates created a company, Opower, with a single goal in mind: to use the power of behavioral economics to motivate people to save energy.
Opower created a customer engagement platform to help electric utilities deliver energy efficiency programs to their customers. Opower’s primary products are home energy reports based on user data and behavioral science principles. The company uses a mix of data from the utilities on user consumption patterns and crowdsourced data from energy users themselves. Its online scoreboard encourages friends to discuss and compare their own household electricity use.
Opower then gamifies the experience by allowing energy users to complete challenges, participate in groups and earn points and badges tied to reduced energy use. Using data from these interactions, Opower constantly tweaks its processes to keep energy users engaged. The company now partners with 95 utilities; its model generates energy savings of 2 to 4 percent, translating into hundreds of millions of kilowatt hours saved.
This sort of model will soon be the norm as utilities and developers leverage the data of the smart grid to drive end-user behavior. In particular, “gamifying sustainability,” using games and game mechanisms to encourage energy and water conservation.
WaterSmart is often called the Opower of water because it also creates reports using behavioral science, neighbor comparisons, and customized efficiency tips to drive conservation of water. On the digital front, the customers are guided to a web portal where an interactive experience reveals personalized water-saving recommendations, program updates, leak alerts, and other custom communications.
The increasing presence of smart, networked devices like the Nest Learning Thermostat will help drive the movement toward more sustainable living. These gadgets know you better than you know yourself, studying your habits and patterns to find the most optimal ways to use energy and water. By 2020, most consumers buy Nest-style devices as part of bundled “home energy management” offerings. Governments will have to work to balance the inequality between citizens who can afford to generate or negate their energy use via solar and smart devices and those who cannot.
The key to all these offerings are better, faster feedback loops between the customer and developer. Innovators like Opower and Nest continually collect and analyze consumer feedback and use the resulting insights to improve and redesign their offerings and recommendations to consumers.
To learn about other future trends in government, energy and environment, explore Deloitte Research’s look at the future of government here
William D. Eggers leads Deloitte’s public sector research and is the author of 8 books, including his newest, The Solution Revolution: How Business, Government, and Social Enterprises are Teaming up to Solve Society’s Toughest Problems (Harvard Business Press 2013).