A PG&E SmartMeter on a Bay Area home. (Photo: Lauren Sommer)

Smart meters have arrived for many Californians. More than 11 million have been installed by electric utilities in the state, with PG&E leading the way. The new meters digitally track a household's energy use. So, for the first time, we can see our daily and even hourly data online (with a one-day lag before it's posted).

Studies have shown that consumers reduce their energy use when they have access to this information. But as PG&E and other utilities have discovered, raw energy data doesn't mean much to most of us (including me in this week's QUEST story).

A number of clean tech start-ups and major corporations are jumping into this space, trying to bridge the gap between hardware (meter) and well, "soft"-ware (consumers).

Getting busy people to change their behavior is no simple task. So I spoke to two companies that have worked with PG&E and other utilities on this problem. Both Opower and Silver Springs Networks have designed the web portals that consumers see when they log into their utility accounts. They're designed not just to make us understand, but to inspire us to use less energy in our daily lives. I asked Dan Yates of Opower and Eric Dresselhuys of Silver Spring Networks what lessons they've learned.

Lesson 1: Keep Up with the Joneses

You might think that saving the planet would be enough of a reason to guilt us into energy conservation. But it turns out that our competitive streak is a bigger motivator.

The companies' websites show customers how their energy use compares to similar houses in their neighborhood. Don't worry – they're not publishing exactly how much electricity the Smiths use down the street. But the companies say knowing how you compare to others is a powerful motivation.

"It's not shame," says Yates of Opower. "It is really just recognizing an addressable opportunity to reduce usage. If I have a $250 utility bill, I don't really know how much I can save. But as soon as I know that a similar home in my neighborhood is paying $150, suddenly I feel like I have an addressable gap of $100 that I want to pay attention."

It's called "normative comparison" in the behavioral science world. And Dresselhuys agrees. "People don't like to lose. People start to wonder why they use so much more than their neighbor does and they start to dig into it."

Opower is rolling out new social features later this year that allow customers to compare themselves to friends on Facebook. "It puts the information in a context that's relevant to people. We've seen the power of the neighbor comparison and we're taking it to the next level with the friend comparison," says Yates.

Lesson 2: Provide Concrete Advice

Once you get people's attention, they need specific recommendations to take action on – and those recommendations need to be doable, say Yates. "People don't want data, they want insights."

"I always joke that my mom is my litmus test. And I know that she would never spend a minute looking at raw energy data. But what she would love to find out is that her freezer is very energy intensive and it would be worth it to buy a new one," he says.

Opower is working with PG&E to roll out a new web portal to customers by the end of the year. Using smart meter data, they can analyze a household's energy use and break it into four categories: heating, cooling, base load (like refrigerator and DVR) and everything else (like lighting and TV watching).

Heating and cooling makes up half of a home's energy use on average. Yates says reducing your heating and cooling load is one of the easiest ways to save energy and reduce your bill.

Lesson 3: Get Information Out There

"The average customer isn't getting up in the morning and checking their energy use data," says Yates. Emails, text messages and plain old snail mail are crucial for getting customers to pay attention.

Eric Dresselhuys says mobile devices, including iPhone apps, are making it much easier. "You can get a text if your electricity usage is getting high. Or the utility can send a message on peak days when they need customers to conserve energy," he says.

Letting customers know what their bill will be is also a good way to get their attention. "Today, getting your utility bill is like shopping for groceries all month long and never seeing a bill until the end of the month," he says.

Lesson 4: Set a Goal

Remember those gold stars in elementary school? It turns out we still like to be rewarded when we achieve something.

"What we see is that getting people to go after a goal, even 5%, has a big impact," says Yates. When they track a customer's progress towards a goal, Yates says it helps them save energy, no matter the size of the goal. "It's applicable even if you're at the very bottom of the pile and use a ton of energy," he says.

Lesson 5: Tell People When They Do Well but Don't Overdo it

Say you're super energy efficient, turning off lights and power strips in your house with unrelenting dedication. If your utility tells you that you're head and shoulders above everyone else, chances are you'll stop trying so hard. "This was a concerning outcome of earlier studies we did," says Yates.

"It's been seen in other scenarios. There was an anti-drinking campaign called ‘two beers is enough' at college campuses. There were non-drinkers who started thinking ‘if the campus is telling me two is enough, maybe I should drink more beer," he says.

"We've designed our reports so everyone has a goal in front of them," says Yates. It's always good to reward people for doing a good job, but Yates says they stay away from telling people if they're achieving way above expectations.

Lesson 6: The Smart Grid is Probably Smarter without Consumers

Home automation, as its known, is almost a holy grail for utilities. If technology can take care of energy conservation, then customers don't have do remember to do it.

The idea is that on peak days, when the utility needs to conserve energy, it can send a message to a customer's smart meter. The meter is connected to the thermostat over a Home Area Network, so the thermostat adjusts itself by a few degrees to conserve electricity. Customers can opt-out anytime.

Both the carrot and stick in this case comes in the form of a varied pricing plan. During hot afternoons or so-called "peak events," electricity would be more expensive. So the customer has the potential to save money by shifting their energy use later in the evening when power is cheaper.

Dresselhuys says they saw the potential of this in a pilot with Oklahoma Gas & Electric customers. "The more automation in the home, the higher the level of savings. Using that home automation about doubles the amount of money they can save," he says.

A "smart" demonstration home set up by Southern California Edison. (Photo: Lauren Sommer)

California's electric utilities have installed more than 11 million smart meters in homes and businesses around the state. Which means for the first time, customers can see how much electricity they're using every hour, instead of once-a-month when the bill comes.

Consumers use less energy, studies have shown, when they can see that real-time data. But getting customers to pay attention in the first place may be the biggest hurdle.

Digital smart meters provide a stream of energy use data, which industry analysts say has the potential to remake our homes. That's evident just outside of Los Angeles, where Southern California Edison has set up a "smart" demonstration home.

"Above us we have photovoltaic solar panels to the left used for generating electricity and a solar thermal water heating system," says Cynthia Miller as she leads a tour of the "Smart Energy Experience."

"You might notice that we have some nice appliances," she says, pointing to the kitchen. The house is a green gadget-lovers dream. There's an electric car in the garage, LED lights, and a "smart" washing machine that communicates with the dryer.

"They're able to talk to each other so the washer can tell the dryer what its washing and the dryer can determine the optimal heat setting for that particular load of laundry," Miller says.

There's also a small screen in the kitchen that shows how much power the house is using at any given moment. Miller demonstrates what happens when you turn the toaster on. "And we'll see a jump here… and there we go. The jump happened and it's 1.7 kilowatts at 41 cents per hour."

The real intelligence of this house is its ability to communicate with the electric grid through its Home Area Network. So on a hot summer day, when SCE is cranking out power, the utility could send a message to your house that kicks your home into conservation mode.

"You notice my lights have dimmed, the ceiling fan turned on, the shades are coming down," says Miller. The thermostat turns up to 73 degrees and the air-conditioning shuts off. SCE would offer this as a voluntary program with financial incentives to sweeten the deal.

"You know, what we anticipate is the awareness is really going to drive a change in behavior for our customers because this information is compelling," says Miller.

Swimming in a Sea of Data

Of course, our homes today aren't quite as advanced. That's evident every time I log into my PG&E SmartMeter account.

My home energy use on PG&E's website.

My account shows charts of my home's daily and hourly energy use. But, for the average consumer like me, it doesn't tell me a lot. I see a few spikes in the chart where clearly my husband and I used more electricity, but what caused it? Neither of us could figure it out.

"For most people, including for me, that really is not very useful information," says Jim Sweeney, director of the Precourt Energy Efficiency Center at Stanford University.

Studies have shown that consumers reduce their energy use by as much as 10 percent when they have smart meter data like mine. Sweeney says they also studied that with a group of Google employees.

"The results have been very disappointing. In the first month, there was a significant reduction of energy use, but by end of three or four months, they were back to the same amount. This becomes an interesting toy or gimmick for people at first, but then they get tired of doing it and they revert right back to the old behavior patterns," Sweeney says.

No One Said Change Was Easy

Sweeney says using electricity in our homes is a lot like going grocery shopping in a store with no price tags. "There are flank steak and chuck steak and hamburger. But you've never seen a price tag ever in a grocery store. How good a shopper would you be with that little information?"

There are reasons to pay attention to energy, whether it's to reduce your carbon footprint or save money on your utility bill. But even though electricity may seem expensive, Sweeney says it's only a small part of the average household's income.

"We use 2.3 percent of our disposable personal income for electricity, natural gas and all other energy in the house. So if you have work hard to save that, you're probably not going to do it," he says.

Sweeney believes the key is to attach a price tag to the decisions we make the second we make them. So, if you turn up your air conditioning, the thermostat tells you how much more you're spending.

The technology to do that isn't far away. Today's smart meters already have the capability to talk to your house through a home area network. The California Public Utilities Commission also recently ruled that utilities must make customers' energy use data available to third-party companies that sell home energy management systems, if a customer purchases one.

But utilities have a long way to go to get customers to think this way. Only 20 percent of PG&E customers have set up online accounts. And according to one study, consumers interact with their utilities for only six minutes a year on average.

Clean Tech Companies Search for the Secret Recipe

"We have to get it right when we have those six minutes," says Dan Yates, CEO of Opower, a smart grid technology company that's trying to find the secret sauce of behavioral change. PG&E has hired Opower to redesign the website I was looking at. (Check out a preview here.)

"People don't want data, they want insights. So, I always joke that my mom is my litmus test. And I know that she would never spend a minute looking at raw energy data. But what she would love to find out is that her freezer is very energy intensive," he says.

Working with other utilities, Opower says their program has helped households cut their energy use by one to three percent and the change sticks. They do that by showing customers how their energy use compares to similar homes in their neighborhood. (More about what motivates us).

"It's not shame. It is really just recognizing an addressable opportunity to reduce usage. And then when you start to have people's attention, the key comes down to have relevant, targeting insights," says Yates.

Yates says for utilities that are used to dealing with hardware, working with behavioral science is a new challenge. But it's one with the potential to remake the way we consume energy. PG&E's redesigned SmartMeter website will be available by the end of the year.

And old, 19th Century windmill in contrast to wind turbines today.

Last summer I visited the Netherlands, the original home of the windmill. Surprisingly, I saw hardly any of the quaint structures we associate with Dutch wind power. One hundred years ago Holland had about 10,000 wooden windmills dotting its landscape. Today, barely 10% remain. What I saw instead were high tech wind turbines, white and spare and gracefully generating electricity with wind from the North Sea. Many view these modern day towers as an eyesore, but I see them as a sign of hope. Like giant flowers across a landscape, they symbolize for me a clean energy future. But wind power, and solar, have a handicap that fuels claims that renewables will never be more than a small percentage of U.S. power. These energy sources can't be counted on when night falls or the wind subsides. Their inconsistent and therefore unreliable nature poses a problem for a world with an enormous appetite for electricity. If only excess power could be stored on a grand scale, it might solve many of our energy problems.

It isn't that electrical energy isn't currently storable, but as Andrew Tang, Senior Director of PG&E’s Smart Meter program points out, the current generation of batteries can’t store electricity at a price that's cost effective. But both he and Steve Berberich from California System Operators were optimistic about future storage possibilities. Tang described an experimental project that uses a sodium sulfur battery the size of an 18-wheeler trailer. The battery would be located next to a substation, or somewhere in the network, and its stored power would be used during times of peak demand. He also talked about the future of plug-in electric cars whose batteries could both store energy and in theory put it back onto the grid when the car's not in use. Steve Berberich envisioned several possibilities for storing excess power. He proposed converting it to hydrogen, which could be burned in a gas plant or could be used in a fuel cell. And he suggested using power to compress air, which could be injected into the ground and called upon when the wind's not blowing and the sun’s not shining.

Whatever the final solution to storage, you can guarantee it will be a game changer in the renewable power industry. No longer will wind and solar be looked upon as unreliable. Hopefully this missing puzzle piece will go a long way towards helping us detach from our dependence on fossil fuels. But we’ll still be left with the challenge of getting all that clean, green energy onto the power grid. And you can be sure that environmental concerns, zoning, aesthetics, and cost will undoubtedly be cantankerous issues for years to come.

Watch the Climate Watch: Unlocking The Grid television story online.

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