A Free-Reprint Article Written by: V Rory Jones and Stephen Malloy
Article Title:
The Fastest Way To Reducing Residential Energy Demand
See TERMS OF REPRINT to the end of the article.
Article Description:
How do you get a consumer to take action? Of course, you
make it in their overwhelming interest to act, and you
enable them with guidance and a few tools. Clearly, if you
have an outcome in mind, it is critical to understand what
is actually in the consumer's best interest, and to arrange
motivators to deliver the desired action.
Additional Article Information:
===============================
1437 Words; formatted to 65 Characters per Line
Distribution Date and Time: 2010-08-03 14:00:00
Written By: V Rory Jones and Stephen Malloy
Copyright: 2010
Contact Email: mailto:roryjones@neipartners.com
For more free-reprint articles by V Rory Jones and Stephen Malloy, please visit:
http://www.thePhantomWriters.com/recent/author/v-rory-jones-and-stephen-malloy.html
=============================================
Special Notice For Publishers and Webmasters:
=============================================
HTML Copy-and-Paste and TEXT Copy-and-Paste
Versions Of Article Are Available at:
http://thePhantomWriters.com/free_content/db/j/residential-energy-demand.shtml#get_code
---------------------------------------------------------------------
The Fastest Way To Reducing Residential Energy Demand
Copyright (c) 2010 V Rory Jones and Stephen Malloy
New Energy Investment Partners LLC
http://www.neipartners.com/
How do you get a consumer to take action? Of course, you make it
in their overwhelming interest to act, and you enable them with
guidance and a few tools. Clearly, if you have an outcome in
mind, it is critical to understand what is actually in the
consumer's best interest, and to arrange motivators to deliver
the desired action.
Such thinking - seeing things from the consumer's viewpoint -
needs to be applied to the way policy-makers are approaching the
California residential energy market, where much effort is going
into initiatives that curtail energy demand from utilities like
PG&E and SoCalEd. While good progress has been made in the quest
to unlock wide-scale residential energy demand reductions,
California is still a few of steps short of its goals. The
game-plan for these last steps can be borrowed from the private
sector, where they have been tested in countless markets.
Get To Know What Will Drive Action In Each Customer Group
Of course, electricity and gas price increases over the last 6
years has received the attention of many consumers, particularly
the heaviest energy consuming ones, with bills doubling in many
cases since 2004. However, others have seen little change, and to
get the most of our consumption reduction investments and efforts
we need to distinguish between consumers.
( Related Image #1: http://bit.ly/bdvcVU )
First, it is key to recognize that the top 20% of residential
energy consumers (in Sonoma county, these folks have monthly
bills exceeding $300) consume about 40% of all energy and,
conversely, the lowest 50% of energy consumers (with monthly
bills under $100 in Sonoma) consume barely 30% of energy; see the
chart to the right. This presents an amazing opportunity;
pursuing relatively few consumers is likely to deliver
disproportionate results. A prioritized return-on-effort approach
is warranted. The good news is that it's actually easier to get
heavy energy consumers to undertake demand reduction measures:
i. Efficiency matters more to heavy energy consumers - as they
use a lot of fuel. If one spends $1,000 on home heating fuel
annually, a 30% efficiency improvement is worth $300 per year. A
$3,000 replacement high-efficiency heater will be paid-off over
its 20 year life. But, if you spend only $100 in heating
annually, $30 in savings will not support any efficiency
investment.
ii. Heavy energy consumers pay much higher energy prices
(especially for electricity, where the marginal price is four
times that for low energy consumers; $0.40/kWh versus $0.11/kWh).
The result is even mid-energy consumers are thrust into the high
bill amounts of (i.) above.
iii. Heavy energy consumers have a clear economic motivation to
undertake efficiency investments, as they are usually homeowners.
Low energy consumers tend to be renters, and rely on landlords to
upgrade energy system efficiencies (alas, landlords rarely pay
utility bills).
Money Is What Really Motivates Action
Nothing motivates consumers as much as their pocketbooks. Most
citizens want to operate environmentally responsibly, but if
action requires a net cash outflow there is always hesitation -
almost always resulting in inaction (especially true when
investment needs are in thousands of dollars; the case for most
non-trivial demand reduction measures).
( Related Image #2: http://bit.ly/clFKdo )
The chart to the left summarizes a study of nearly 200 households
in Sonoma County. It shows the average 20-year benefit of
undertaking only economically positive measures for the three
segments of households; low consumers with monthly bills under
$100, mid consumers paying between $100 and $300, and heavy
consumers paying over $300. An economically positive demand
reduction measure is any retrofit, behavior change or energy
generation that will pay for itself after all costs (equipment,
installation and 7% financing, and assuming fuel prices increase
at historic rates). This detailed study has a clear message; low
energy consumers have little to gain investing to reduce demand,
while heavy energy consumers have much to gain; more than enough
to drive action - enough to pay for a college education!
So, what magnitude of reductions in energy demand is associated
with such enormous economic benefits? The potential is
staggering. With the proper guidance, using combinations of
efficiency retrofits, minor behavioral changes and solar
generation, heavy consumers would profitably reduce electricity
consumption over 60%, and gas nearly 30% (see discussion below).
On the other hand, the opportunity to profitably reduce demand
among the low energy consumers is very limited, owing to the
lower prices enjoyed today by this customer segment, and their
lower fuel throughput.
( Related Graph #1: http://bit.ly/agzX3Q )
So what does California have to gain by embarking on a program to
get consumers to act in their own economic interest? Again, the
opportunity is staggering. Projecting this study's Sonoma County
figures to the rest of the state (notably, Sonoma's potential is
likely lower than other counties in California, owing to its mild
coastal climate), the back-of-the-envelope calculations in the
table above shows 35 billion kWhs are at stake, along with 1.5
billion therms, every year!
Want Success? Attack Each Customer Type Differently - Use What
Works!
The nature of the demand reduction opportunity is very different
between consumer segments, as illustrated in the charts below for
typical electricity and gas customers in each segment.
( Related Image #3: http://bit.ly/cj00Ir )
( Related Image #4: http://bit.ly/9aTnzo )
The huge differences in the nature of these opportunities demand
a different approach, tailored to the needs of each customer
segment:
( Related Graph #2: http://bit.ly/b8RF8P )
Low / mid energy consumers: The economic viability of demand
reduction investments by low / mid energy customers is limited.
Professionally installed solar electricity generation is never
worthwhile, and much the same is true for most other measures.
The majority of the opportunity in electricity demand is, by far,
only achievable by light bulb replacement and a few behavior
changes. With this in mind, the most efficient approach for the
state to drive demand reduction in this segment is,
unquestionably, a broad-based educational media campaign focused
on 3 or 4 simple messages; the positive economics of light bulb
replacement and behavioral tips.
Heavy energy consumers: These 2.8 million California households
offer an opportunity to reduce the state's utility-supplied
energy by 23 billion kWh and 720 million therms annually -and
each will receive a huge economic gain in the process. The state
just needs to tip the cart slightly and allow self-interest to
take over.
The Sonoma county study found that homeowners rarely take action
because they have no idea what investments will pay-off, and are
most afraid of losing money in erroneous investments.
They need help figuring out what to do, but cannot find anyone
able give them an action plan that is assured to reduce their
energy-related spending. The only potential source of help is the
energy audit industry, but they are currently going down a path
focused on calculating HERS scores for homes - not in delivering
optimized plans for homeowner action. Moreover, even if they
started to come up with such plans, homeowners would still not
take action as they are so risk-averse they refuse to spend
anything on energy audits in the first place.
There Is An Ultra-Low Cost Solution...
The solution is quite simple, and was successfully used in the
Sonoma county study. There are two parts to it: First, software
is needed to automate the highly complex energy-economics
optimization calculations needed for each unique home; only with
such automation can several person-months of analysis be whittled
down to a millisecond. Second, California's energy-audit system,
currently oriented around giving structures a "HERS" energy
score (a number seemingly dreamed up by engineers), needs to be
re-focused on the consumer's viewpoint of home
energy-economics1, and simplified to actions that drive down
spending.
Both the software and structure energy-economics diagnostic were
developed and used in the Sonoma county study (see
yoUtilBill.com), such that after 1 person-hour of effort, each
home in the study received a custom action-plan that delivered up
gains for the homeowners concerned up to $650,000 in 20-year
savings (again, net of all costs, including capital/financing
costs)!
If all the heavy energy consuming households in California
undertook such a diagnostic, paid for by the state to ensure
widespread coverage, the cost to the state would be $250 million.
Now, if only 50% of those households undertook the prescribed
action plans, the savings would be 11.5 billion kWh and 360
million therms each year. That's 2 cents per kWh saved and 80
cents per therm saved annually - a cost far lower than any
initiative the State of California is currently paying for, and
one that is likely to deliver wide-scale results very quickly,
since consumers act in their own interest.
---------------------------------------------------------------------
New Energy Investment Partners is on the web at:
http://www.neipartners.com/
V Rory Jones: Partner, New Energy Investment Partners LLC
Rory has operated as an advisor to leaders in large- and
mid-cap businesses for over 20 years, and has helped create
billions in cash flow and business value. Rory was Partner at
PricewaterhouseCoopers Strategy Consulting, where he led the US
Shareholder Value advisory practice. Rory co-founded Business
Value Associates; consultants specializing in value growth, and
has served leaders in today's most successful businesses; Diageo,
Encyclopedia Britannica, HP, Liberty, IBM and others. Rory earned
his MBA from the University of Chicago, and his BSc from London's
City University. He is widely published and speaks regularly,
and is quoted regularly in the media. Rory also sits on several
boards, including the Association for Strategic Planning. His
book, Boosting Cash Flow and Shareholder Value is published by
John Wiley and Sons.
Steve Malloy: Partner, New Energy Investment Partners LLC
Steve's 20 year career spans strategy consulting and leadership
at technology companies. Immediately prior to NEIP Steve was a
serial entrepreneur, founding and leading several technology-
driven ventures (including Cachet Solutions, a Financial Services
software play, and several renewable energy investments). Steve
was a Principal in PricewaterhouseCoopers Strategy Consulting,
where he advised leaders at Ameritech, Motorola, Samsung and
elsewhere. Steve earned his MBA from the University of Chicago,
and his BA from Carleton College. Steve serves on several boards,
and speaks and writes on renewable energy market issues.
--- END ARTICLE ---
Get HTML or TEXT Copy-and-Paste Versions Of This Article at:
http://thePhantomWriters.com/free_content/db/j/residential-energy-demand.shtml#get_code
.....................................
TERMS OF REPRINT - Publication Rules
(Last Updated: May 11, 2006)
Our TERMS OF REPRINT are fully enforcable under the terms of:
The Digital Millennium Copyright Act
http://thomas.loc.gov/cgi-bin/query/z?c105:H.R.2281.ENR:
.....................................
*** Digital Reprint Rights ***
* If you publish this article in a website/forum/blog,
You Must Set All URL's or Mailto Addresses in the body
of the article AND in the Author's Resource Box as
Hyperlinks (clickable links).
* Links must remain in the form that we published them.
Clean links should point to the Author's links without
redirects having been inserted into the copy.
* You are not allowed to Change or Delete any Words or
Links in the Article or Resource Box. Paragraph breaks
must be retained with articles. You can change where
the paragraph breaks fall, but you cannot eliminate all
paragraph breaks as some have chosen to do.
* Email Distribution of this article Must be done through
Opt-in Email Only. No Unsolicited Commercial Email.
* You Are Allowed to format the layout of the article for
proper display of the article in your website or in your
ezine, so long as you can maintain the author's interests
within the article.
* You may not use sentences from this article as an input
for any software that steals sentences from others in
order to build an article with software. The copyright on
this article applies to the "WHOLE" article.
*** Author Notification ***
We ask that you notify the author of publication of his
or her work. V Rory Jones and Stephen Malloy can be reached at:
roryjones@neipartners.com
*** Print Publication Reprint Rights ***
If you desire to publish this article in a PRINT
publication, you must contact the author directly
for Print Permission at:
mailto:roryjones@neipartners.com
.....................................
If you need help converting this text article for proper
hyperlinked placement in your webpage, please use this
free tool: http://thephantomwriters.com/link-builder.pl
Would you like to learn how to improve the performance of your
article marketing campaigns? Download our F.R.E.E. 108-page
Article Marketing Ebook at:
http://thephantomwriters.com/ebooks/advanced-article-marketing.html
*****************************************************************
*
* This email is being delivered directly to members of the group:
*
* aabusiness@yahoogroups.com
*
*****************************************************************
=====================================================================
ABOUT THIS ARTICLE SUBMISSION
http://thePhantomWriters.com/ is a paid article distribution
service. thePhantomWriters.com and Article-Distribution.com
are owned and operated by:
Bill Platt
3010 E Raintree
Stillwater, Oklahoma USA 74074
Learn more about our article distribution services by visiting:
http://thephantomwriters.com/x.pl/tpw/info/article-distribution/index.html
The content of this article is solely the property
and opinion of its author, V Rory Jones and Stephen Malloy
http://www.neipartners.com/
---------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
---------------------------------------------------------------------
------------------------------------
########################################################
Looking For Quality Content?
The Syndicator provides free, quality syndicated articles
for your website that are automatically updated each week.
Syndication feeds include:
Business/Sales
Internet Marketing/Promotion
Web Design/Development
Biz Tips
Web Design Tips
Home & Family Matters
Dinner Ideas
Health & Fitness
Horoscopes
AngelVoice
Headlines
and more...
http://www.web-source.net/syndicator.htm
########################################################
Post Articles: mailto:aabusiness@yahoogroups.com
Subscribe: mailto:aabusiness-subscribe@yahoogroups.com
Unsubscribe: mailto:aabusiness-unsubscribe@yahoogroups.com
Change subscription: http://groups.yahoo.com/group/aabusiness
List owner: mailto:aabusiness-owner@yahoogroups.comYahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/aabusiness/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/aabusiness/join
(Yahoo! ID required)
<*> To change settings via email:
aabusiness-digest@yahoogroups.com
aabusiness-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
aabusiness-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
0 comments:
Post a Comment