Rebound to Utopia?

Making our homes more energy-efficient should reduce the amount of energy we use, right? That seems obvious... but it may not be as simple as it first appears.

In the late 18th Century, James Watt‘s new high-pressure steam engine delivered much more usable work from each ton of coal burned than had previously been possible—in others words it was more efficient.

In 1865, an economist named William Jevons noticed that Watt’s efficiency improvements, far from reducing the use of coal, had actually increased it dramatically. This seems counter-intuitive, but is largely due to economies of scale: as coal became a more efficient source of energy, its usefulness increased, so it was used more, so costs fell, in a loop which led to a massive increase in its use. In fact, Watt’s engines were so efficient that they were used not just to replace older coal-powered engines, but also clean sources of power such as water and wind.

This so-called rebound effect is a well-understood phenomenon in economics. If a resource becomes cheaper, its use increases. If the use increases sufficiently, it can cancel out any gains from the increase in efficiency.

Fast-forward now a hundred years or so, and three more economists, Harry Saunders, Leonard Brookes and Daniel Khazzoom, separately applied Jevons’ finding to the idea of increasing energy efficiency in order to reduce overall consumption. This culminated in 1992 with Saunders proposing what he called the Khazzoom-Brookes postulate: as the efficiency of the equipment used in industry and in the home increased, the overall consumption of energy would increase, rather than decrease, as energy became cheaper and more accessible.

This was observed in the 1970s when the oil crisis caused the automtive industry to find ways to make their vehicles more efficient. In spite of this increase in efficiency, overall consumption of oil by cars increased.

However, from the perspective of an individual household, real savings are possible. If you insulate your loft, you’ll reduce the amount of energy you use for heating. You’ll probably then spend the money you've saved on other goods and services which have an energy impact, but not as energy-intensive as burning fuel directly. So by improving efficiency in your home, you can reduce your own overall consumption and improve your quality of life at the same time. AlertMe is about making consumption more intelligent, and because households consume so much, a small amount of intelligence invested in control of this energy monster can reap large benefits.

The rebound effect is hard to predict. So what if our efforts to improve energy efficiency do backfire?

Bob Metcalfe, the creator of the Ethernet standard which connects all our computers to the internet, recently claimed that increased consumption won’t matter once energy becomes "cheap and clean".

He suggests an analogy with the early days of the internet when much attention was focused on making communication efficient, because bandwidth was so limited. But this didn’t prevent us increasing the amount of bandwidth we use: "We made bandwidth cheap and clean. And now we use a million times more." His argument is that once we’ve made our energy supplies cheap and clean, we can increase our use of it too. But is Metcalfe’s utopian vision of cheap, clean energy realistic? And how do we get there from here?

One way that governments could avoid the danger of a rebound effect is to impose a green tax, to counteract the gains from energy efficiency increases. So even though you consume less energy, you still end up paying the same, meaning that you don’t have money "left over" to spend on more energy consumption. This may well be inevitable: if there’s one thing that Governments are good at, it’s raising taxes.

Green taxes work in two ways. First, they make energy more expensive (which could be seen as just making the cost a truer reflection of the true cost to society of generating it, given the carbon production) and consumers will then react to this rise in cost by reducing their consumption, simply out of self-interest. Second, the money raised can then be ploughed into renewable energy production, taking us a little closer to Bob Metcalfe’s vision.

So where does this leave us? Should we bother to make our homes more efficient? Or will this end up increasing the amount of energy we consume? It seems clear that in the short-term, we consumers can improve our quality of life by spending less on energy, leaving us with more money to spend on other things. The rebound effect from this is likely to be small and the overall effect will almost certainly be a reduction in consumption overall. Then it’s up to governments to find ways to make sure that this reduction in consumption is used as a driver to increase the use of renewable energy sources. Perhaps Bob Metcalfe’s vision isn’t so unrealistic after all!

Sense and Sustainability

UK utility nPower recently sponsored the 2009 Energy Challenge, a student competition which sought answers to the question ‘What should a power generation company’s response be to climate change?’

First prize was won by a group of students from the MSC in Sustainable Energy Futures course under Professor Sandro Macchietto at Imperial College London The team did a fun presentation to government - and cited AlertMe as the ideal platform to use to bring their ideas to fruition.

Their idea is called Complete Energy Service Arrangements (CESA), and it sounds to me like a type of ESCO (Energy Services Company) . They describe it as follows: "Instead of selling kWhs like before, we enter into a contract with our customer. They pay a monthly flat rate. We assess properties for saving potential and make investments."

The video of the presentation is here (we're mentioned at 04:55) and the slide set is here (see notes on slide 6).

Response to DECC Smart Meter Consultation

The government recently published a paper about Smart Meters, and asked for responses. Here's ours:

An architecture which is open to consumers - and their agents

We believe that smart meters are an important part – but only a part – of our low carbon future. To realise their true benefits they must interact fully with the rest of the Smart Energy home.

The typical consumer today has almost no information about where energy is consumed within their home, and has no convenient way of optimising it. Smart Meters can be a great source of information, but they do not – on their own – cause any carbon reduction. To achieve actual reductions, the information they produce needs to be delivered to:

1) The consumer, as meaningful, engaging information
2) Home appliances, which can act on the information

Information technology, in the form of increased connectivity and intelligence, can dramatically reduce home energy consumption in two ways: 1) by delivering meaningful information to the consumer, and 2) by automatically reducing consumption by making all appliances aware of the changing cost of energy in conjunction with other important information such as lifestyle patterns and preferences.

We are moving into a future in which, for a large and growing number of UK consumers, “if information is not online, then it might as well not exist”. As evidence of this, it is the government’s stated intention to provide universal broadband within the UK by 2012, providing a permanent data connection to every home.

The UK Smart Meter roll out can take advantage of this expansion in connectivity by implementing meters and metering infrastructure with real-time, open interfaces throughout – both in the home and online. If real-time electricity and gas consumption data is made available to consumers and their agents – not just as “closed”, proprietary displays and pre-digested information, but as live accessible data – then it can be used by devices and services both inside the home and online to help the consumer drive down consumption.


In short, we believe that consumers and the environment will not derive anything close to the maximum achievable benefit from a fixed, closed architecture, where the consumer is just passively delivered “packaged” information:









Instead, we believe that the smart meter architecture should be open and future-proof, so that third-parties like Google Power Meter, AlertMe.com and many other providers can offer the consumer devices and services which leverage live metering data to deliver greater energy savings:















Answers to specific questions

1. Do you have any comments on the Government’s preference for the Central Communications model?

We agree that the Central Communications model is the right way to deliver and manage the wide area communications infrastructure and data carriage.

However, we note that under this model the Central Communications provider will collect and store detailed energy consumption data from smart meters. We believe that both consumers and suppliers should be able to analyse/visualise this data and identify the most appropriate actions to take that would reduce energy consumption.

Therefore we recommend that consumers should be recognised as co-owners, with their energy supplier, of their own live and historical energy consumption data and the associated tariff and pricing data. This data should be available to download, simply and free of charge, from a secure internet site. The data itself should be made available in an open, industry standard electronic format.

Furthermore, consumers should have the right to delegate to third parties the right to securely download, store and process their data for the purposes of data analysis and visualisation. By allowing third parties to access this data, as well as individual consumers and their suppliers, the Government will enable the market to deliver innovative new products that enable consumers to recognise energy saving opportunities and take appropriate action.

An analogy here is retail banking, where most high street banks have internet sites that allow customers to view their recent transactions and manage their accounts. However, these sites also allow their customers to download their banking data in industry standard formats, so that they can load it into third party programs which give access to a wider range of features than typical bank websites. In the energy sphere the Alertme.com energy products produce data that can be analysed on the Alertme.com website, but can also be downloaded for analysis in third party programs and on other websites. Google are working on a service known as PowerMeter, currently in private testing, that will allow users to upload and analyse data about their energy consumption. These are examples of the benefits that accrue to consumers when data about their daily activities – whether financial or energy related – is made available in open, industry standard electronic formats.

7. Do you agree with the functionality proposed for electricity meters?

Our key recommendation with regard to the proposed functionality for electricity meters is that a consumer should be able to purchase an in-home device and be confident that it can securely access real-time data from their smart meter without being restricted by the need to gain authorisation from their energy supplier.

It is important that consumers are both able to analyse/visualise their real-time energy load and consumption, and take appropriate action to reduce energy consumption, without being dependent on their energy supplier to provide this service. In-home displays are the most well known means of engaging consumers with their energy consumption. However, “home hubs” (for home area networks or HANs) will have an important role in alerting consumers to energy saving opportunities in real time, whether through in-home displays or by alerting the consumer through email, text messages, mobile phone applications and websites, and also in automatically co-ordinating (and therefore reducing) home energy consumption. The Alertme.com energy monitoring product is a good example of a third party product that can engage consumers in energy saving, using real time energy load and consumption data to power email and text message alerts, and allowing them to monitor and review the consumption using in-home displays, mobile phones and the Alertme.com website.

The Government has an opportunity to create a dynamic market for products and services that let consumers analyse their consumption data and suggest energy saving options. In practice, this means that in-home devices such as displays and “home hubs” should be able to securely access real-time data from electricity and gas meters using an open industry standard such as the ZigBee Smart Energy profile. Such data would include real-time electricity load, recent electricity and gas consumption, tariff and pricing information, and other information originating from suppliers such as demand-response requests and meter-functionality updates.

Consumers who purchase an in-home device to measure and manage their energy consumption, such as a display or an Internet-connected home hub, will expect their new device to easily interface with the smart meter. However, consumers should also be confident that their energy consumption data will not be available to unauthorised third parties. Therefore it is important to create a security scheme for access to real time smart meter data that balances the requirement for data security with an open market for innovative in-home devices.

Giving suppliers the right to arbitrarily block in-home devices from accessing real-time data generated by their customers’ smart meters would allow them to impose unreasonable barriers to market entry for innovative in-home devices. Although suppliers have an important role to play in the deployment of in-home devices, we strongly believe that consumers should be able to purchase and self install an in-home device that can access real time energy consumption data without having to obtain permission from their supplier.

There may therefore be a need for a security accreditation process for in-home devices to be allowed to securely access this real-time data. This process should be run by the Central Communications provider, who should mandate an open, industry standard security scheme to be supported by smart meters and in-home devices, such the ZigBee Smart Energy profile. If it becomes necessary to create a central, Internet-connected authorisation service for consumers to “pair” in-home devices with their smart meter then the Central Communications provider should be responsible for operating this service.

9. Do you agree with the functionality proposed for gas meters? Please explain your reasons and if possible give reasons for your comments.

We believe that the same principles of allowing in-home devices open access to real-time data should apply to gas meters and electricity meters. It is clearly also important that the same wireless protocols and security scheme that governs the interaction between in-home devices and electricity smart meters should be implemented on gas smart meters. This will reduce the cost of in-home devices, by allowing the same chipset and software stack to be used for access to both meters in a typical house, and enable consumers to engage with an integrated, whole-house view of their energy consumption.

12. Do you agree with the Government’s position that a standalone display should be provided with a smart meter?

We fully support the Governments intention that consumers who have a smart meter installed are able to better understand their energy consumption and take steps to reduce their energy consumption, save money and save carbon. We agree that one way to engage consumers is to bundle a real-time in-home display with each newly installed smart meter. However, we are concerned that by choosing to mandate a real-time display, at the suppliers’ expense, the Government may actually be preventing suppliers from installing other types of in-home device, such as smart-meter enabled “home hubs”, that would enable more sophisticated and long-term energy saving strategies. This is underlined by the eight year roll out timetable – in that time, entire new categories of energy saving products and services are likely to emerge, but their adoption in the UK could be significantly impaired if suppliers are required to install simple, in-home displays with an obsolete, out of date specification.

We believe that Government should require suppliers to drive consumer engagement by offering in-home devices to consumers when a smart meter is installed, but that the suppliers should be allowed to offer a range of options to consumers that have been proven to enable energy savings. These options might include simple and advanced real-time displays, but also “home hubs” that monitor energy consumption and engage consumers through website, mobile phones or indeed in-home displays, and other technologies that are not yet widely available. Government may choose to require suppliers to submit such devices or products for certification, whether through CERT or a similar process. Crucially, this would allow innovative new energy saving products to be introduced to the market by suppliers, giving consumers the benefit of new technology as it emerges, and avoiding inappropriate technology lock-in.

The Alertme.com energy monitoring product is a good example of a third party product that can engage consumers in energy saving, using real time energy load and consumption data to power email and text message alerts, and allowing them to monitor and review the consumption using any combination of in-home displays, mobile phones and the Alertme.com website.

13. Do you have any comments on what sort of data should be provided to consumers as a minimum to help them best act to save energy (e.g. information on energy use, money, CO2)?

As we have outlined in our answers to questions 1 and 7, we firmly believe that consumers should be recognised as co-owners, with their energy supplier, of their own historical energy consumption data and the associated tariff and pricing data. This data should be available for consumers to easily download in electronic format from a secure internet site. Furthermore, consumers should have the right to delegate to third parties the right to securely download, store and process their data for the purposes of data analysis and visualisation. The same principle should apply to real-time energy data generated by smart meters.

We believe that the Government should specify the items of data that smart meters should capture and make available, both in real-time locally, and to the Communication Provider. However, we do not believe that the Government should mandate the specific data that consumers should receive. As we have explained in our answer to question 12, we believe that suppliers should be required to drive consumer engagement by offering in-home devices to consumers when a smart meter is installed, but that the suppliers should be allowed to offer a range of options to consumers that have been proven to enable energy savings. These options might include simple and advanced real-time displays, but also “home hubs” that monitor energy consumption and engage consumers through website, mobile phones or indeed in-home displays, and other technologies that are not yet widely available. Specifying the “correct” set of data that is presented to consumers would limit the scope of innovative devices and products that might lead to new methods of enabling energy saving by consumers.