The following is an article written by William Hughes, a senior research analyst who leads Guidehouse Insights’ building automation and control solution.
It seems obvious that when an owner replaces an old device or light fixture with a more efficient one, it is always a good thing. Surprisingly, it is not that clear. A number of studies have found that certain types of home energy retrofits not only do not result in significantly less energy use, but end up increasing energy use. The good news is that many utilities are offering solutions to address this challenge by using disaggregation tools to offer homeowners information on why their energy bills are increasing rather than decreasing.
Many people pride themselves on being environmentally conscious
Before proposing a solution to this dilemma, it is important to understand the drivers behind this counterintuitive situation. The main reason is that people are often excited about their new energy-efficient purchases and want to take advantage of them. This behavioral trend has been observed by academics and is called the Khazzoom-Brookes Postulate. In the 1970s, economists Daniel Khazzoom and Leonard Brookes noticed that people were trading their gas-guzzling cars for more efficient ones, followed by a tendency to drive these new vehicles more often than the previous ones.
This result is not a case where your mileage may vary by referring to the United States Environmental Protection Agency (EPA) fuel economy labels displayed on new cars. The postulate notes a change in behavior with the net result of increased fuel consumption, although efficiency in miles per gallon is better. Applying this scenario to the home, the EPA states that residential LEDs “consume at least 75% less energy … than incandescent lighting. “The EPA estimates that a complete conversion to LED lighting in the United States would eliminate the need for annual electrical production from 44 large power plants.
If people use LED lighting as much as incandescent lamps, it means that the energy consumption for lighting would drop by 75%. Instead, in the report “Are Residential Energy Efficiency Programs Effective? An empirical analysis in Southern California“, a UCLA team estimated the power consumption of millions of homes in Southern California and found that actual energy savings were less than 1%. The numbers indicate that people who get LED lights that use 25% of the power of incandescent lamps end up leaving LED lights on about four times as long.
This report also found that newer, energy-efficient dishwashers and washing machines resulted in higher energy consumption. Previous generations of dishwashers and washing machines offered users a manual option to select smaller or larger loads. Newer generations of machines can detect load sizes and automatically adjust the amount of water required. While this feature has inherent water conservation benefits, electricity consumption does not vary significantly depending on the size of the load. This result is consistent with the behavior described by the Khazzoom-Brookes postulate. People are likely to benefit from doing extra loads with smaller amounts of dishes or laundry.
UCLA researchers cited 10 other studies that also found that investments in energy efficiency were not meeting the expected level of savings. For example, the National Bureau of Economic Research reports “Are investments in energy efficiency profitable? Proof of the Weatherization Assistance Program” and âHow effective are energy efficient housing? Proof of a field experience in Mexico â to illustrate that assuming that owners will use new devices in the same way they used old ones is not an exact assumption.
Is it wasteful or are people getting more value from their energy-efficient purchases?
An economist can look at this situation and conclude that the owner is getting more value from their investment. This result is positive. Conscientious homeowners may have turned off incandescent lights as much as possible to save energy. With LED lights, they can enjoy the lighting with the feeling of being responsible for using a more efficient lighting option. They can also get carried away by the idea that LED is so much more efficient that it is not worth turning off a light. It is not possible to know the details of the motivation for this behavior.
Likewise, a homeowner with a new, energy-efficient washing machine may change their behavior and prefer to run smaller loads. This prevents the piles of laundry from becoming bulky. For example, if they were running an average of 10 loads per month at $ 0.30 per load for electricity with the old machine, it would cost $ 3.00 per month (10 x $ 0.30). They then buy a new washing machine and do 20 small loads per month at $ 0.20 per load. Their bill went from $ 3.00 to $ 4.00 (20 x $ 0.20).
Disaggregation is the solution
A homeowner may regret spending the money on a new appliance marketed as being more efficient to see their electricity bill go up. It can be difficult for the homeowner to discern such a slight dollar increase specifically for their washing machine. However, utilities are increasingly providing disaggregation data that breaks down major uses, including appliances and lighting.
This detailed information tells the homeowner that their investment in a new appliance is not reducing their energy use as expected. In the case of the washing machine example, this would show them that the cost of their electricity for that appliance increased by 33%, from $ 3.00 to $ 4.00.
Disaggregation data can provide useful information to the owner. This can show them the change in their behavior when they have doubled the number of charges. It can also show them that the average cost of the new device compared to using the old device has decreased by 33%, from $ 0.30 to $ 0.20.
Everyone wins when owners have information
The presentation of this type of granular analysis is particularly important when utilities offer market services to their customers. Customers may not be sure to trust utility suggestions as they represent a change from the traditional transactional relationship. Without knowing that they are using twice as many loads, some customers might see a higher electric bill and assume that the utility’s recommendation for energy-efficient appliances was a ploy to trick customers into buying more electricity. Their confidence in their usefulness would decline.
With more information about changing their number of charges, customers would realize that they shouldn’t blame their utility for the higher electricity bill for the washing machine. Some owners would choose to make the environmental choice of only operating at full load. They would see their electricity bill consumed by their washing machine go down. Confidence in their usefulness and its market would increase.
The rest of the customers who appreciate the convenience associated with the smaller loads would have the information to understand that they have a choice. They can run full loads or small loads. In both cases, the cost per charge is lower. Their confidence in their usefulness and its market would also increase.
Greater confidence encourages additional purchases
Utilities are implementing disaggregation solutions for their customers. Often, this supports their efforts to better target new services and offer products that will help customers reduce their electricity consumption. For example, disaggregation can identify when an owner acquires an EV. Many utilities offer programs that reduce the cost of recharging electric vehicles to the owner and allow the utility to meet this demand with lower cost energy.
If owners trust their utility, they are more likely to take advantage of this offer. Homeowners could opt out of this program if they feel distrust and animosity towards the utility and its market. Adding information that shows their before and after usage patterns for new products adds credibility to energy efficiency efforts, especially if it is a utility recommended solution. It can also reduce the risks of missed energy efficiency savings described by the Khazzoom-Brookes postulate.