Five years ago came the promise: A great new way of saving money on your energy bills was on its way. An impressive new device called a “smart meter” – a key component of the much touted “smart grid” – would let consumers actually see how much power they’re using in their homes, thus empowering them to change their habits and slash their bills.
But when it comes to changing people’s energy behavior, the smart-meter revolution so far hasn’t been very revolutionary.
True, the meters are everywhere – utilities have installed 50 million at homes across the U.S., reaching 43 percent of homes overall, according to the Edison Foundation’s Institute for Electric Innovation. But that doesn’t mean consumers are easily accessing the available data or using it to change their energy use.
“Initially, I had pretty high hopes,” says Carrie Armel, a research associate at the Precourt Energy Efficiency Center at Stanford University and a leader of a new wave of behavioral research on energy use. “I think the technology has a lot of potential. In retrospect, in that nobody has really leveraged the technology along with efficient behavioral techniques, I find it’s not surprising that we didn’t find rate savings.”
Behavioral research suggests that technologies alone don’t necessarily change what we do, how we act, the habits we form. In the case of smart meters, what still seems missing in most cases are user interfaces that relay information from the meter in real time and translate it into dollars and cents. Consumers also need much more access to an innovation called “smart pricing” – in other words, electricity prices that vary based on supply and demand – a key change the federal Smart Grid initiative was designed to enable, and one that might make it a lot more worthwhile to pay attention to your energy behavior.
The upshot: Right now, smart meters aren’t waking Americans up and making them conscious of their energy use – because they aren’t being paired with what behavioral research shows us is needed for that to happen.
So what do consumers need?
A variety of studies in the growing field of behavioral studies of energy use hint at the answer. They suggest you must not only provide people with real time information about their electricity use in the home, but also show how that translates into dollars and cents.
One key strain of evidence about how to make consumers pay attention to their energy use comes from a radically different way of purchasing electricity. It’s so rare that, unless you live in certain areas such as Phoenix or Texas, you probably never have heard of it: So-called “prepay” systems.
In prepay, buying electricity is much like recharging a phone calling card. You simply open an electricity account, pay in advance for a certain amount of power and sign up for regular messages – by text, email or phone – about your account status. The cost of your power use is subtracted from your balance daily, and you receive regular updates about usage and how much money is left in your account.
So what else works?
Many studies suggest that providing real-time feedback about an individual’s energy use can change their behavior. One of the most compelling in this respect, by Katrina Jessoe and David Rapson at the University of California at Davis, came out last year in the journal American Economic Review. It examined 437 Connecticut households, which had been randomly assigned to one of three groups. All of the households received smart meters that transmitted electricity use information every 15 minutes – and for the control group, that’s all they received.
The other two groups, however, received advanced notifications about so-called “dynamic pricing” events – summer days when their utility was forecasting high electricity demand and would accordingly charge significantly more per kilowatt hour. So if the study subjects cut back their use during these blocks of time, they’d save a lot of money. Finally, one group received both dynamic pricing information but also in-home displays, so they could see their energy use in real time, and its cost.
The result was sharp: The alerts about dynamic pricing events led to less energy consumption, but the real savings came when you combined alerts with the in-home display. The houses that had both cut energy usage by 11 to 14 percent.
What’s the reality?
The key upshot is that significant energy savings, empowered by smart meters, might come from combining real-time information with dynamic pricing. But right now, it appears that most Americans don’t have either of these things – even if they do have a smart meter.
Deployment of in-home displays under the Smart Grid is vastly lower than deployment of smart meters. Only 9,800 have been deployed thus far – versus 15.4 million government-installed smart meters.
The private sector doesn’t seem much better: The 2013 survey by the Smart Grid Consumer Collaborative found that only 1 percent of Americans had “a device in your home that lets you monitor your home’s electricity usage using data from your smart meter.” One problem is cost – it’s not clear who should pay for these devices, the utilities or the consumer.
Still, the American consumer may not be faring as well in this transition as those in some other countries. For instance, energy suppliers are rolling out 53 million smart gas and electricity meters across Britain from 2015 through 2020, with 1 million already installed. And according to the British Department of Energy and Climate Change, every single customer will be offered an in-home display.
