Future Forward: Energy Networks Provide Incentives (Including Cash) to Use Less Energy
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Curtis Tongue is the chief marketing officer and co-founder of OhmConnect (www.ohmconnect.com), which works with California’s energy providers to allow residents to earn cash-back rewards for their real-time household energy savings.
California currently is saving 29 percent more energy above international standards, which is equal to the annual electricity demand of approximately 300,000 California homes. In addition, California has one of the most ambitious renewable energy goals in the nation, the California Renewable Portfolio Standard, under which one third of all energy in California needs to come from renewables by 2020, and 50 percent by 2030. Already at 32 percent, the state has almost reached its 2020 goal.
Another part of its program to save energy, money and resources is a partnership with OhmConnect, which was co-founded by Matt Duesterberg, its CEO, and Curtis Tongue, its chief marketing officer.
“We pay people to save energy,” explains Tongue, “and there are three key things that benefit from our program: people, the planet, and the grid’s pocketbook.”
When users subscribe to the OhmConnect service, they link their utility account to OhmConnect, which then can see how much energy their home uses on an hourly basis. When the power grid is stressed or nearing its limit to use renewable resources, OhmConnect sends out text messages to its users, asking them to save “Ohm Hours,” which are the units for not using electricity.
“If we see [a user] was able to save 1 kilowatt during this previous Ohm Hour, they’re going to get paid for saving that kilowatt,” says Tongue. “If another user were to save 2 kilowatts, and another user were to save 3 kilowatts, they would get paid two to three times as much. Everything is done on a very personalized basis.”
In addition to cash payments, OhmConnect creates “environmental savings” by the power utilities not having to activate and use the more-environmentally damaging power plants across the grid. These “peaker plants” typically are old, outdated, inefficient, natural-gas plants that create a lot of pollution.
Another benefit is to the power grid itself, as it’s cheaper and more efficient to simply not use energy rather than create more electricity.
“We help reduce the overall cost of electricity to California,” adds Tongue.
OhmConnect was surprised to find that financial rewards were just one of the reasons its platform has been widely adopted. The program also helps people engage and become emotionally invested in their energy use.
“We had this assumption that people would see Ohm Hours as an inconvenience,” adds Tongue. “They’d think: ‘Sure, I’ll save energy for an hour if that means I can get paid for it.’ But what we found is actually the opposite.”
Customers have seen Ohm Hours as a catalyst to wean themselves off of unnecessary energy use and find ways to disconnect their families from screens—from TV—to reconnect and play board games and go outside, all while making a positive environmental impact.
The Business Model
California’s electricity market, the Independent System Operators [ISO], manages the grid and tells each power plant how much energy it will need and when. When the grid is stressed, California would prefer to pay people to save energy, rather than pay a power plant to produce more. OhmConnect coordinates those energy savings across the state.
If OhmConnect provides California with 100 megawatts of reduction, the grid views OhmConnect as if it were a power plant that provides 100 megawatts of energy generation. ISO then pays OhmConnect for those energy savings.
“From what the ISO grid pays us, we take a small commission,” says Tongue. “The majority of the energy payments are passed directly to our users.”
As an example of cost savings, Tongue notes that the cost of building a power plant that can provide 100 megawatts or more of energy is hundreds of millions of dollars. For programs such as OhmConnect, California only needs to set aside tens of millions of dollars—a significant savings.
Another unexpected benefit was uncovered in a local school district. Many users connect their OhmConnect accounts to PayPal accounts to receive automatic payments. OhmConnect noticed that many payments were going to the same account, which they learned was a school PTA PayPal account.
“This is a great way to get communities involved,” says Tongue. “This is a great way to teach kids and schools why energy saving is important and how to make the most impact, all while helping to support a local school community financially.”