(This story was originally published on 1776dc.com. 1776 is a startup incubator in Washington, D.C.)
Clean energy such as solar power benefits a lot of people—plants and animals, too, for that matter—but it has long posed quite the threat to the existence of utilities companies. Now, as more people make the switch to powering their homes the Earth-friendly way, utilities must find new ways to incentivize customers to stay on the grid.
Some of the smartest solutions are the simplest, such as helping customers understand the cost of their energy use—both financial and environmental.
Opower, a software-as-a-service company, does this in a particularly inventive way. They provide households with detailed reports that compare homeowners’ own energy-consumption levels with the levels of their neighbors. Conserve more electricity than the family across the street, and you just might get a smiley face on your report.
“In most places, utility regulation hasn’t changed much since Thomas Edison,” Opower founder Alex Laskey said in a TED Talk. “Utilities are still rewarded when their customers waste energy. They ought to be rewarded for helping their customers save it.”
The idea came from a behavioral science study conducted at Arizona State University and California State University in which students hung a sign on every door in the neighborhood. All of the signs encouraged citizens to limit their air conditioning use, but they weren’t all the same. Each sign had one of four messages: One cited the specific amount of money they would save; one said it would protect the Earth from greenhouse gases; and another invoked responsibility to conserve resources for future generations. The fourth one employed social pressure, saying that most people in the neighborhood were already doing their part and switching off their air conditioners.
Guess which one made the impact.
As it turns out, keeping up with the Joneses is quite the motivator when it comes to conserving power. Rather than lose ecologically-minded customers, utilities companies are tapping into companies such as Opower to keep them around.
Of course, that might not be enough to convince the most environmentally conscious individuals who are choosing to go off the grid entirely. As solar panels go up, utility sales to those houses take a nosedive. So, how do utilities companies still profit off of these people? That’s where electric cars come in.
1776 explored this trend in depth last week, but here’s a great case study: Sempra Energy, a utilities company in San Diego, wants to bolster sales by installing 5,000 electric car chargers around the city. This project would increase access to chargers considerably, thus encouraging Californians to drive electric cars. It’ll cost $100 million, a bill that customers will foot for about 40 cents per month.
Eco-friendly citizens and utilities companies would both win—air quality would improve, and Sempra Energy would bring in more money. However, the project has received opposition for ignoring a key population. Electric cars are owned almost exclusively by high-income individuals, yet those who earn less would still pay for it in their electric bill.
As clean energy disrupts utilities, opportunities arise for savvy startups to step in and help large companies. Partnering with utilities can be a big step for a small business.