Course:ECON371/UBCO2011WT1/GROUP 7 - d

ARTICLE http://www.greenprogress.com/green_building_article.php?id=1784

SUMMARY

This article covers an announcement made by firms Honeywell and Opower to cooperate in the development of new energy management tools. The combination of Honeywell’s residential automation and control systems expertise and Opowers energy analytics and customer engagement techniques will result in technology that allows consumers to cut energy use and expenses. The technology will come in the form of a web-connected programmable thermostat capable of analyzing and reporting electricity use and accessible from the web. The result is a clear and comprehensive view of energy use and spending. The system will also automatically implement changes and allow for comparisons between households in the same geographical area. “We believe Honeywell and Opower will successfully combine information, motivation and control to help homeowners reduce energy consumption and costs." says Honeywell’s vise-president of energy solutions, Jeremy Eaton.

ANNALYSIS

This technology made available by Honeywell and Opower would have interesting effects on residential energy-consumption analysis. As opposed to a vague daily, weekly or monthly average, the system would allow for dynamic monitoring of energy consumption. Although the technology will only be available for residential use, the potential for consumer savings and energy-reduction is huge. With this technology, consumers could avoid using energy at peak consumption times, thereby avoiding any increase in energy price during those times. the system would also allow for large reductions in usage, for example by reducing or eliminating heating during the hours no one is home. This technology also creates a moral suasion factor in energy consumption since the system puts people face-to-face with their own energy consumption. “Empowering consumers to adjust how they use electricity starts with awareness” says Jeremy Eaton, and I think this is very true. There is a very clear and easily-measurable cost-benefit aspect to this technology in terms of individual households. The price of installation plus costs of maintenance and running the system versus the reduction in energy spending. If indeed the benefits exceed the costs on such a small, single-household scale, it seems very likely the system would be widely adopted and achieve a meaningful reduction in energy consumption. However if costs exceed benefits, moral suasion would have to be relied on in terms of attracting customers. On a broader scale, we could analyze the total benefits of less energy consumption achieved by the system (MD curve) versus the total costs of implementing and running it (MAC curve). if curves could be identified for both, this would give policy-makers an enticing objective - to increase use of the system to the point at which the benefits and costs of the system are equated. Many policy instruments could achieve this objective. A tax-exemption on installation of the system for a period of time or a technology standard requiring installation of the system in particularly wasteful geographical areas would are two examples of how this could be achieved. An interesting issue then would be the slope of the marginal damage curve. Assuming the MD curve is relatively flat (energy consumption by one household does not greatly affect the level of environmental damage) a tax policy would be a wiser choice for policy-makers since the costs of error would be much smaller than under a standard. Finally, one of the most interesting features of the system is that it would allow consumers to track their individual energy demand/MAC curves. if a household MD curve were indeed established, this would allow each and every household using the system to adjust consumption to each household’s most efficient level. While this system is still in the process of being tested before it is released on the market, I believe it is an excellent way to achieve lower household energy consumption levels without dramatic renovations, utility replacement or costs. The article states that 50% of all residential energy consumption comes from heating and cooling equipment and I believe that this system provides an excellent way to reduce that level.

Prof's Comments

Nicely done.

10/10