Energy Waste in HomesEnergy Waste in Homes The Untapped Potential The Untapped Potential

George MalekEnergy Efficiency Portfolio Manager

Disclaimer: This presentation includes energy usage estimates for illustrative purposes only. Although most of the assumptions can be sourced, some have been made solely based on the author’s professional experience.

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• Energy Consumption in Homes

• Electricity End Use Profile in Homes

• Waste Due to Inefficiencies

• Waste Due to Behavior

• Typical Utility Rate-Based Programs

• Behavioral Economics

• Example of Behavioral Energy Efficiency Initiatives

Outline

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Energy Consumption in Northern Illinois Homes

• ComEd Average for Single-Family home: 9,800 kWh a year

• Average Gas Heated Home : 1,200 therms a year

• Average Electric Cost for Single-Family home: $0.11 per kWh

• Current Natural Gas Cost for Single Family Home: $0.60 per therm

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Average Annual Energy Usage in Northern Illinoisby Enduse (% of Annual Cost)

Space Heating38%

Space Cooling12%

Water Heating11%

Lighting10%

Electronics7%

Refrigeration6%

Cooking5%

Computers2%

Other5%

Washers/Dryers/Dishwashers

4%

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Energy Waste by Enduse

Electric Enduse CategoryEnergy

CostPercent of

CostBehavior

Waste

Cost Less Behavioral

Waste

Inefficient Waste

Space Heating $ 700 38% $ 132 $ 567 $ 145

Space Cooling $ 227 12% $ 23 $ 204 $ 11

Water Heating $ 201 11% $ 87 $ 114 $ 35

Lighting $ 173 10% $ 24 $ 150 $ 87

Electronics $ 126 7% $ 6 $ 119 $ 20

Refrigeration $ 106 6% $ 27 $ 79 $ 47

Washers/Dryers/Dishwashers $ 73 4% $ - $ 73 $ 32

Cooking $ 84 5% $ 9 $ 76 $ 14

Computers $ 41 2% $ 17 $ 24 $ 4

Other $ 90 5% $ 18 $ 72 $ 21

Total $ 1,820 100% $ 325 $ 1,405 $ 395

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Energy Waste (% of Annual Cost)Waste due to

Equipment and System Inefficiencies:

• Furnaces and air conditioners with low efficiency ratings (Low AFUE, Low SEER)

• Refrigerators and appliances with substandard efficiencies (Non ENERGY STAR®)

• Building construction quality (insulation, air leakage)

• Incandescent Lighting vs. CFL and LED

Occupant Driven Unnecessary

and/or Excessive Use:

• Thermostat Settings (over heating/cooling)

• Failure to turn off lights and equipment when not in use

• Lack of system maintenance (ex: replacement of air filters)

• Failure to use sleep or power savings modes for computers

18% 60%

22%

Useful Energy Use

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Waste Due to InefficiencyTargeted Typically by Energy Efficiency Programs

Electric Enduse CategoryEnergy

CostPercent of

CostBehavior

WasteCost Less

Behavioral WasteInefficient

Waste

Space Heating $ 700 38% $ 132 $ 567 $ 145

Space Cooling $ 227 12% $ 23 $ 204 $ 11

Water Heating $ 201 11% $ 87 $ 114 $ 35

Lighting $ 173 10% $ 24 $ 150 $ 87

Electronics $ 126 7% $ 6 $ 119 $ 20

Refrigeration $ 106 6% $ 27 $ 79 $ 47

Washers/Dryers/Dishwashers $ 73 4% $ - $ 73 $ 32

Cooking $ 84 5% $ 9 $ 76 $ 14

Computers $ 41 2% $ 17 $ 24 $ 4

Other $ 90 5% $ 18 $ 72 $ 21

Total $ 1,820 100% $ 325 $ 1,405 $ 395

Rebates on high SEER-rated air conditioners

Discounts on ENERGY STAR® qualified CFL

and LED bulbs and fixtures

Rebates on ENERGY STAR® qualified appliances and

electronics

Rebates on high-AFUE furnaces and

energy efficient water heaters

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Waste Due to Behavior

Electric Enduse CategoryEnergy

CostPercent of

CostBehavior

Waste

Cost Less Behavioral

Waste

Inefficient Waste

Space Heating $ 700 38% $ 132 $ 567 $ 145

Space Cooling $ 227 12% $ 23 $ 204 $ 11

Water Heating $ 201 11% $ 87 $ 114 $ 35

Lighting $ 173 10% $ 24 $ 150 $ 87

Electronics $ 126 7% $ 6 $ 119 $ 20

Refrigeration $ 106 6% $ 27 $ 79 $ 47

Washers/Dryers/Dishwashers $ 73 4% $ - $ 73 $ 32

Cooking $ 84 5% $ 9 $ 76 $ 14

Computers $ 41 2% $ 17 $ 24 $ 4

Other $ 90 5% $ 18 $ 72 $ 21

Total $ 1,820 100% $ 325 $ 1,405 $ 395

Energy Efficiency Programs tend to

lack elements that address

behavioral waste

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Old School Marketing…

Traditional Energy Efficiency/Conservation Marketing

• Relied on standard economic theory– Consumers are rational. Given incentives and complete information,

they will make the best possible decision to maximize their gain – regardless of internal biases.

• But a consumer’s internal biases undermine standard economic theory’s ability to influence purchase decisions and behaviors– Emotional factors can stymie logical purchase decisions

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New School Marketing: Behavioral Economics

Five decision-making biases influence the way people consume energy.

1. Bounded Rationality -Too much information can be overwhelming and can de-motivate decision-making.

2. Gain versus Loss Framing-A negative consequence is more motivating than a positive benefit.

3. Dynamic Inconsistency- People value immediate gratification and tend to put off or delay unpleasant costs or conditions.

4. Social Preferences - People tend to do what other people do regardless of what information they have, and regardless of what they predict they will do.

5. Small Rewards - Enticing behavior modification with small incentives can reduce desired efforts and behaviors.

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Further Findings and the Insights they Precipitated

Finding Insight

Not influenced by any 1 single factor No magic bullet

Behavior change is long-term process Energy efficiency incentives are transactional and fleetingly finite in nature

Hard to measure: The effects of Behavioral change are not easily seen or identified

Implementing requires keeping the faith, while working on customers to “stay engaged.”

Unique barriers and motivators can compete with each other

Motivation doesn’t always come from the desire to save money; and feedback is a critical ingredient

for overall success.

Behavior change is different for every person Accurate customer segmentation/messagingplays an important role.

Loyalty programs are best able to effectively change the behavior

of targeted consumers

A strategy of customer acquisition, engagement and retention is the only framework

that demonstrates longevity.

Electricity is cheap, clean, plentiful and always there, it will always be very low involvement

commodity

The desired behavior must be attached to something that people care about.

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Behavioral Type Programs

• Energy Consumption Feedback

– Home Energy Reports

– In-Home Displays

• Contests

• Community Challenges

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ComEd Home Energy Report

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Contests

SmallBusinessShowdown

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Community Challenges