Issuu on Google+

GREEN BUTTON PROGRAM

Business Opportunities Arising From an Energy Data Standard By Lawrence Han

l

MBA/MS 2012 Erb Renewable Energy Scholar


The Erb Renewable Energy Scholars Program is supported by the Koch Family, U.S. Renewables Group, Peter Mertz and the Erb family to encourage Erb Institute MBA/MS students to explore and develop early-stage ideas and insights in the renewable energy field.

h


Green Button: Introduction Definition: The Green Button initiative helps customers more easily retrieve their energy usage data, in hopes that by better understanding their electricity consumption, they can make their homes more energy efficient1. It is called the Green Button program because customers will click on a “green button” on their utilities’ websites to retrieve their detailed energy usage data2. If customers can easily retrieve their data, they are more likely to pass this data along to third parties such as energy consultants, repairmen or building owners. On the backend, the greatest benefit of the Green Button initiative is the standardization of energy data across utilities. By standardizing energy data, software developers can focus more on creating analytic tools rather than adaptors for each data set. In addition, with the added long-term certainty of a standard, companies and investors are more willing to invest in ideas that utilize energy usage information. History: The Green Button program was announced by Aneesh Chopra, the US Chief Technology Officer, on September 15, 2011 at the Gridweek Smart Grid conference. It is an industry-led effort—an agreement among utilities to adopt the energy usage reporting standards set forth by the National Institute for Standards and Technology3. It has the official support of the White House’s Office of Science and Technology Policy. The program officially launched in January 2012 with two utilities in operation: Pacific Gas & Electric and San Diego Gas & Electric. Today, there are four total utilities that have put Green Button on to their websites, with 15 more committed to the program4. In all, these promises bring in 27 million households into the Green Button program. Green Button is modeled off the highly successful Blue Button program. The Blue Button program, introduced in 2010, allows patients to download their health care information easily through participating websites5. Blue Button differs from Green Button in that its initial implementers were government agencies, instead of privately-held utilities. Opportunities: Along with the release of the program, the White House predicted a set of opportunities that could be unlocked by Green Button. As presented in the press release, they are as follows6:     1

Insight: entrepreneur-created web portals that can analyze energy usage and provide actionable tips Heating and Cooling: customized heating and cooling activities for savings and comfort Education: community and student energy-efficiency competitions Retrofits: improved decision-support tools to facilitate energy-efficiency retrofits

http://www.greenbuttondata.org/greenabout.html http://ecodoginc.com/SDGE_GreenButton.htm 3 http://www.greenbuttondata.org/greenabout.html 4 http://www.greenbuttondata.org/greenadopt.html 5 http://www.whitehouse.gov/blog/2010/10/07/blue-button-provides-access-downloadable-personal-health-data 6 http://www.whitehouse.gov/blog/2011/09/15/modeling-green-energy-challenge-after-blue-button 2


  

Verification: measurement of energy-efficiency investments Real Estate: provision of energy costs for tenants and/or new home purchasers Solar: optimize the size and cost-effectiveness of rooftop solar panels

The remainder of this paper builds detail on the various business opportunities, and provides pioneering examples already in the market place.

Insight: Energy Portals Current state: Web portals are websites that bring together various blocks of information together to a single webpage. Portals are already common across the Internet; at work, many large companies have internal portals to help employees locate relevant information. At home, users frequent websites such as Yahoo to view various types of news: financial, world, sports, etc. all in one place. Portals can be customizable, such as Google’s iGoogle platform, where users put together their own widgets to create their personal portal, with only subjects that matters to them. Green Button: In the energy efficiency sector, there are many companies already building portals for their customers. In Green Button’s initial months, most applications have been in energy portals. People Power has mobile applications that allow users to view energy consumption data from their phones. EcoDog has created a web application where users can upload their Green Button data and see projections for future usage. For the time being, most of these portals are independent applications. However, future developers may incorporate this level of energy insight into other existing portals. For example, up to 2011, Google supported the Google PowerMeter project, a web application that graphically displayed energy usage data and could be added to iGoogle7. Energy usage information could also be displayed in home security system displays or other built in home monitors. As Green Button brings data standardization, expect to see more home services companies interested in the energy usage topic.

Insight: Energy Efficiency Analyzers Current state: Many companies are attempting to go beyond just displaying energy usage information. Many software developers are building algorithms that can analyze energy usage data and provide customized energy savings solutions. Opower is already sending personalized suggestions on how to save energy along with regular utility bills. As of May 2012, Opower has partnerships with 70 utilities with access to over 10 million households. Its efforts have saved over 1 TwH of electricity8. Plotwatt is a competitor that takes the analysis further. They have developed computer algorithms that can detect changes in energy consumption patterns and can make an assumption on what device was turned on at any moment. By understanding energy consumption at the appliance level, Plotwatt’s recommendations can be even more specifically tailored to a user.

7 8

http://www.google.com/powermeter/about/ http://opower.com/utilities


Green Button: Green Button can dramatically lower costs for energy analysis companies. By having a standardized format, companies can cut down their systems integration work when partnering with a new utility. Under the assurance that other utilities are also using the Green Button standard, energy analyzers can pursue smaller utility clients that previously had too small of a customer base. An example of the economies of scale opened up by Green Button is EnergyAi. EnergyAi allows customers to upload their energy consumption data and receive an energy analysis. Customers without Green Button must request a quote that varies depending on how differently their utility presents their energy data. However, for customers with Green Button, EnergyAi charges a flat $20 fee for an energy analysis. By dropping the cost, EnergyAi’s services are now affordable not only to their traditional corporate customer base, but also to individual homeowners.

Heating and Cooling: Smarter Thermostats Current state: Thermostats are already taking advantage of advancements in artificial intelligence. Nest is a learning thermostat that programs itself based on answers to behavior questions and observation of how a user tunes their thermostat over a week9. After learning a user’s habits, the thermostat maintains itself to create the most comfortable and energy efficient indoor climate. Green Button: By standardizing utility data, Green Button opens up the potential to make these thermostats even smarter. With a standardized utility data format, thermostat makers such as Nest have an incentive to build in capability to adapt to real-time utility data. For example, if a homeowner is interested in reducing their monthly bills, they could instruct their thermostat to only heat or cool their homes when energy was cheapest. They could also instruct their thermostats to keep their heating bills on a strict monetary budget. Customers already enroll in budget billing programs to avoid being surprised by large utility bills at the end of the month. These programs help residents maintain a budget by issuing the same power bill every month and normalizing the energy costs over high and low energy consumption periods.

Heating and Cooling: Residential Scale Demand-Response Programs Current state: To avoid the need to turn on additional electricity generation plants, demand-response programs help quickly cut electricity demand during times of high consumption. Currently, demandresponse programs are primarily oriented towards large companies, which receive temporary incentives for quickly turning down their energy usage. Enernoc has been successful in demand response by collecting a large portfolio of companies willing to participate in demand-response programs. When utilities must trigger a cut in energy, Enernoc can quickly summon its portfolio companies and drastically cut energy demand across the grid. In doing this, Enernoc is rewarded with many of the incentives issued by the utility. Green Button: The current cost of extending demand-response programs to the residential market is too high to be very attractive. However, standardization could create the economies of scale needed to lower the cost of residential demand-response. Combined with other smart features, such as detecting if anybody is actually in the house or if unnecessary appliances are currently running, utilities could 9

http://www.nest.com/living-with-nest/


remotely shut down components of individual houses without any disturbance to their customers. There is also an opportunity to follow Enernoc’s model and aggregate residential customers. In order to be profitable in the residential sector, a company must develop significant scale. And it can only develop that scale if it can ensure that it has millions of customers that can be absorbed into its portfolio under one common standard.

Education: Gamification Current state: Gamification is when gaming aspects are applied to traditional applications10. The most recognizable example of gamification is frequent flyer programs. When passengers fly, they receive airline points that are redeemable for prizes, such as free tickets, merchandise, etc. Gamification has increased in new ways under the expansion of the Internet. One example is Foursquare, which rewards users for “check-ins” at stores. Users accumulate points for virtual prizes, such as badges, titles, etc. Despite the lack of material prizes for check-ins, Foursquare now has an estimated 20 million active users11. Gamification has already started driving users to become more energy efficient. In October 2011, Facebook, NRDC and Opower came together to launch Opower Social. Through this service, Opower’s customers can post their energy usage statistics on Facebook, and compare it with other users on the social network12. Simple Energy created a platform where users can earn points and badges, much like with Foursquare, by saving energy. Simple Energy users compete with their friends on who has the most energy efficiency points and badges. Users can use their points to win prizes or redeem for gift certificates13. By creating a sense of competition between users, the companies hope to create social pressure to conserve energy. Green Button: There is room for more companies to create more gaming models for energy efficiency. If a company can create a platform to harness the standardized energy usage data, it may be able to create more scalable games that can be easily incorporated into many utilities. By proving that gamification helps utilities reduce generation costs, utilities may offer more significant prizes for certain actions. Although companies such as Opower and Simple Energy have already entered the space, there is opportunity for gamification at a more local level. For example, a company could run energy reduction contests in a neighborhood or a school, with an energy leaderboard openly pinning families against each other in a race towards energy efficiency.

Education: Developer Competitions Current state: Green Button could spark many software development competitions, much like how Facebook was able to develop many of its early features through “Hackathon” sessions. These sessions

10

http://gamification.org/wiki/Gamification http://www.readwriteweb.com/archives/foursquare_active_users.php 12 http://opower.com/company/news-pre ss/press_releases/40 13 https://www.simpleenergy.com/ 11


attract developers to build a computer program in a set time length, ranging from few days to many weeks. The ultimate goal of these initiatives is to create products that can be turned into companies. There is already momentum calling upon developers to build software for the clean energy sector. The Cleanweb Hackaton was first held in 2011, where 100 developers came together for a weekend and developed 14 Cleantech software applications14. Green Button: One of the easiest ways to participate in these competitions is to make an application that analyzes or displays a large set of data. For example, one of the top performers at the Clean Web Hackathon in New York was an application that interactively displayed the energy consumption data of every building in New York. Green Button’s data set is larger and more insightful than any of these existing energy data sets. An ecosystem is already forming around Green Button applications. Tendril, an energy software platform company, has created Green Button Connect, a central listing of applications that use Green Button data. For developers, it’s a place to publicize their Green Button applications15. On April 5th 2012, the Department of Energy also opened the Apps for Energy competition, offering up to $100,000 in prizes to the best software application that utilizes Green Button usage data16.

Retrofits: Identifying Building Efficiency Projects Current state: Currently, many landlords of commercial or residential buildings are interested in installing energy efficiency projects, to make their buildings more attractive to tenants. This is one of the major selling points of LEED, which command an $11.33 rent premium compared to non-LEED counterparts17. However, this data is frequently unavailable to landlords because it is their tenants who see and control the electricity bills. Tenants are sometimes reluctant to share because they fear higher rents in response to greater energy efficiency savings18. Even when tenants do agree to share energy consumption data, utilities are frequently unable or unresponsive in providing details. Green Button: With Green Button, utilities will not have to worry about the format that they are transmitting energy consumption data. They will also be able to deliver this information directly on their websites, instead of yielding to special requests from customers. Green Button will not solve the energy usage disclosure issues itself, but it can change the mindset on how public we perceive our energy data to be. If people become comfortable with downloading their home’s Green Button data and sending it in for analysis, they may be more comfortable with sharing it with other third parties as well. And these habits may extend into their jobs, more willing to work with building owners to identify energy efficiency opportunities at work. If building owners gain more access to the energy usage data of their tenants, they may be more willing to install retrofits, especially in the current environment of high energy efficiency subsidies. In 2010, the US government started the 14

http://cleanwebhack.com/ http://greenbuttonconnect.com/about 16 http://appsforenergy.challenge.gov/ 17 http://www.usgbc.org/DisplayPage.aspx?CMSPageID=2331 18 http://www.usgbc.org/ShowFile.aspx?DocumentID=18469 15


HOMESTAR program, providing rebates for energy retrofits such as HVAC upgrades, insulation and duct sealing19.

Verification: Energy Efficiency Valuation Current state: While energy efficiency projects may intuitively make sense, businesses need concrete financial projections in order to support them. According to a 2012 report from Deutsche Bank and the Rockefeller Foundation, energy efficiency retrofits in the United States alone could yield more than $1 trillion in energy savings over a decade. Current financial forecasting models do not properly account for these types of savings. As a result, financing for retrofits remains one of the biggest barriers and most energy efficiency initiatives focus on trivial changes, the “low-hanging fruit”, such as light bulb or HVAC changes. Green Button: With universally better access to energy data across a business’ operations, it will become easier to financially justify energy efficiency projects. There is opportunity for a new financial services methodology to specialize in translating Green Button data into existing financial models. With more precise energy efficiency data, it will be easier to demonstrate how specific initiatives are impacting energy usage. Since Green Button delivers energy data at more granular intervals, it will be easier to decouple specific energy efficiency measures from larger trends, such as unusually warm or cold seasons.

Real Estate: Disclosure Current state: LEED has been incredibly successful in advancing green building in the United States. Today, there are more than 10,000 LEED certified buildings in the United States20. However, this still only represents a fraction of all buildings. Despite the higher resale value of LEED certified buildings, building owners can still sometimes not justify the additional upfront and maintenance costs. One of these costs is LEED 2009’s Minimum Program Requirement #6: “Must commit to sharing whole building energy and water usage data. 21” In order to achieve any level of LEED certification, a building owner must commit to providing the USGBC with five years of energy usage data. This data can sometimes be very hard to obtain, depending on the energy provider. Even if the data can be retrieved, it usually comes in varying formats and detail, and cannot easily be utilized by the USGBC to identify best practices. Green Button: The Green Button program makes it easier to obtain this data and ensures that it is identical across organizations22. Green Button can also make it easier to incorporate LEED elements into building codes. With the lowered cost of verifying energy efficiency performance, it will be harder for opposition to argue that the costs of mandated green building codes are unreasonable.

19

http://www.whitehouse.gov/the-press-office/fact-sheet-homestar-energy-efficiency-retrofit-program http://www.usgbc.org/LEED/Project/CertifiedProjectList.aspx 21 http://www.usgbc.org/ShowFile.aspx?DocumentID=6715 22 http://leedpoints.com/one-small-button-for-man-one-giant-leap-for-data-access/ 20


Real Estate: Energy Modeling Current state: Energy modeling is one of the largest costs in the LEED certification process. However, it is necessary in order to secure the largest LEED credit, LEED Energy and Atmosphere Credit 1, up to 19 of the total 110 possible LEED points23. Currently, energy modeling is very expensive and highly inaccurate compare to the building’s actual operation24. Although energy modeling software already exists, it is difficult to use. As a result, most builders pursuing LEED certification must hire an independent energy consultant, in addition to the already necessary LEED consultant. Green Button: Standardized data from Green Button could drive developers to make more accurate energy modeling software. There are opportunities for traditional HVAC companies, such as Trane, to invest heavily in this type of software. If they can make accurate energy models, they will be better positioned to recommend some of their traditional HVAC products as ways to attain LEED certification. With over 10,000 LEED certified buildings in existence, there is opportunity to build an analyzing engine that can take input from original energy models and energy usage data, and refine the existing energy modeling methodology. By making this software cheaper and more complete, Green Button may make it less costly for buildings seeking an energy model or LEED certification. Through this type of review and optimization, LEED itself will also gain more credibility as a worthy certification.

Solar: System Sizing Current state: One of the major problems today with residential solar projects is sizing. Each family considering solar for their homes has very different energy consumption habits. One family may only be at home during the evenings and do their chores at night, when a solar system is not generating electricity. Another family may have a stay at home parent, who does the clothes and dish washing all during the day, when the sun shines brightly on a home’s solar panels. As a result, solar developers find it very difficult to install the appropriate solar system for a family. Without a customized solution, solar developers cannot make precise system cost quotes or give an accurate estimate on electricity savings. Green Button: Green Button allows customers to directly download their energy consumption data and pass it on to the solar developers. With precise, hourly energy data, solar developers can more appropriately size a solar system. They could also provide a personalized payback calculation to further persuade customers to buy a system. As SunRun Home, a residential solar developer, points out, this situation is analogous to a cell phone provider’s25. If a customer is a new cell phone user, or cannot provide details on their calling habits, it is very hard for a sales representative to recommend the optimal cell phone plan. However, if the customer brings in past cell phone bills, the sales representative can make a more compelling recommendation. The sales representative could even unlock additional incentives to financially lure the customer.

23

http://energy-models.com/blog/7-24-11/leed-and-energy-modeling http://www.greenbuildingadvisor.com/blogs/dept/musings/energy-modeling-isn-t-very-accurate 25 http://www.sunrunhome.com/blog/sunrun-supports-green-button-to-make-solar-more-accessible/ 24


Conclusion: International Leadership As detailed throughout this paper, Green Button presents tremendous economic opportunity in the United States. Standardization of energy usage data will send the correct signals to the business community to invest in energy efficiency software. Availability of data makes it easier for consumers to be more proactive about their energy usage and more willing to buy energy efficient products for their home or business. However, the largest impact that Green Button can have is in the global economy. Green Button presents an opportunity for the United States to provide leadership in energy data. In the past, the development of standards in the United States has jump started global industries. For example, the TCP/IP protocol, the backbone of the Internet, was initially developed by the US Department of Defense26. By having TCP/IP become the gold standard of the newly forming Internet, the US led the world into the Internet age and has never looked back. Today, it is the world leader in the Internet industry, home to Google, Facebook, Apple and countless other companies. There is great demand for energy efficiency worldwide. Many countries are in dire need of making their electrical grids and built environment more efficient. In 2007, India lost 32% of its generated power in its electrical grid27. India must reduce grid losses in order to maintain its economic growth, or risk falling into energy and pollution crises. Technologies that help monitor and reduce grid loss, such as those jumpstarted in the US by the Green Button program, are desperately needed in India. The US has a chance to supply the world with these technologies. The White House envisions building a clean energy economy, to become a leader in the field and to export US clean energy products across the world. At the same time, the US economic engine continues to benefit from the momentum of the technology industry. Green Button and the smart grid is a chance to bring together America’s ambition of being a clean energy leader and its proven capability to dominate the information technology industry.

26 27

http://www.yale.edu/pclt/COMM/TCPIP.HTM SMART 2020, page 48


Works Cited Introduction to TCP/IP. (1995, February 2). Retrieved from PCLT: http://www.yale.edu/pclt/COMM/TCPIP.HTM Facebook, NRDC, and Opower Partner to Develop a New Social Energy Application. (2011, October 17). Retrieved from Opower: http://opower.com/company/news-press/press_releases/40 Google PowerMeter: A Google.org Project. (2011, September 16). Retrieved from Google.org. Minimum Program Requirements. (2011 January). Retrieved from US Green Building Council: http://www.usgbc.org/ShowFile.aspx?DocumentID=6715 Improve Energy Data Access. (2012, February). Retrieved from US Green Building Council: http://www.usgbc.org/ShowFile.aspx?DocumentID=18469 Use the New Green Button Data to Save on Your Utility Bills with the EcoDog Web App! (2012). Retrieved May 8, 2012, from Ecodog: http://ecodoginc.com/SDGE_GreenButton.htm Utilities. (2012). Retrieved May 7, 2012, from Opower: http://opower.com/utilities About. (n.d.). Retrieved May 8, 2012, from Green Button Data: http://www.greenbuttondata.org/greenabout.html Bob. (n.d.). LEED and Energy-Modeling. Retrieved May 7, 2012, from Energy Models: http://energymodels.com/blog/7-24-11/leed-and-energy-modeling Chopra, A. (n.d.). Modeling a Green Energy Challenge after a Blue Button. Retrieved September 15, 2011, from White House: http://www.whitehouse.gov/blog/2011/09/15/modeling-greenenergy-challenge-after-blue-button Chopra, A., Park, T., & Levin, P. L. (2010, October 7). ‘Blue Button’ Provides Access to Downloadable Personal Health Data. Retrieved from White House: http://www.whitehouse.gov/blog/2010/10/07/blue-button-provides-access-downloadablepersonal-health-data Cleanweb Hackathon. (n.d.). Retrieved May 7, 2012, from Cleanweb Hackathon: http://cleanwebhack.com/ Gamification. (n.d.). Retrieved May 7, 2012, from Gamification.org: http://gamification.org/wiki/Gamification Group, T. C. (2008). SMART 2020. Creative Commons. Hartke, J. (2012, March 22). One Small Button for Man, One Giant Leap for Data Access. Retrieved from LEED Points: http://leedpoints.com/one-small-button-for-man-one-giant-leap-for-data-access/


Holladay, M. (2012, March 30). Energy Modeling Isn’t Very Accurate. Retrieved from GreenBuildingAdvisory: http://www.greenbuildingadvisor.com/blogs/dept/musings/energymodeling-isn-t-very-accurate Homepage. (n.d.). Retrieved May 7, 2012, from Apps for Energy: http://appsforenergy.challenge.gov/ LEED Projects & Case Studies Directory. (n.d.). Retrieved May 7, 2012, from US Green Building Council: http://www.usgbc.org/LEED/Project/CertifiedProjectList.aspx Living with Nest. (n.d.). Retrieved May 7, 2012, from Nest: http://www.nest.com/living-with-nest/ MacManus, R. (2012, April 16). Just Checking...How Many of Foursquare's Reported 20 Million Users Are Active? Retrieved from Read Write Web: http://www.readwriteweb.com/archives/foursquare_active_users.php Rinehart, E. (2012, March 22). Sunrun Supports Green Button to Make Solar More Accessible. Retrieved from Sun Run Home: http://www.sunrunhome.com/blog/sunrun-supports-green-button-tomake-solar-more-accessible/ Secretary, O. o. (2010, March 2). Fact Sheet: Homestar Energy Efficiency Retrofit Program. Retrieved from White House: http://www.whitehouse.gov/the-press-office/fact-sheet-homestar-energyefficiency-retrofit-program Simple Energy. (n.d.). Retrieved May 7, 2012, from Simple Energy: https://www.simpleenergy.com/ Tendril. (n.d.). About Green Button. Retrieved May 7, 2012, from Green Button Connect: http://greenbuttonconnect.com/about The Business Case for LEED. (n.d.). Retrieved May 7, 2012, from US Green Building Council: http://www.usgbc.org/DisplayPage.aspx?CMSPageID=2331


Green Button Program