Is This the Silver Bullet for the Environment?

Utilities are willing to pay Google a lot of money for data on your energy usage.

Apr 27, 2014 at 11:40AM

The future of energy efficiency could be driven by data. At least that's what companies such as SolarCity (NASDAQ:SCTY) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) are banking on. SolarCity offers its customers PowerGuide, a home energy monitoring system. Meanwhile, Google's recent purchase of Nest Labs came with the Learning Thermostat, which also monitors home energy use. Both systems are aimed at saving consumers money by using data to reduce energy consumption.

Nest

Photo credit: Google. 

The idea is that homeowners will use this information to make money-saving changes to their energy consumption. SolarCity cited research that found that "immediate feedback" on energy use could save users 5%-15% on their utility bills. This happens because customers will use the real-time feedback provided by the data to shift energy-intensive activities, such as washing clothes, to off-peak hours to level out usage. This saves the homeowner money and reduces peak load demand at the utility, which could mean burning less coal.

Google's Learning Thermostat can actually take this data one step further. In select areas of the country, utilities will actually pay owners of Google's Learning Thermostat to have their thermostats turned down during peak demand on hot summer days. The program, called Rush Hour Rewards, could enable homeowners to receive rebates of $20-$60 from their utility for unit, in addition to the energy savings from turning down the air conditioning during peak demand.

Nest Cooling With Leaf

Photo credit: Google (nest cooling with leaf)

The program allows the thermostat to pre-cool a home when it's cheaper to do so. Then, while everyone else is paying peak rates, the Rush Hour Rewards member's AC unit auto-adjusts to a higher than normal temperature. This should keep participating homeowners comfortable, while saving them money and reducing peak load demand for the utility.

Utilities are willing to pay big money for demand response systems such as this. It is estimated that a good demand response system, which will reduce energy use in a home by 30% during peak times, is worth about $80 per thermostat. Nest believes that it can actually reduce consumption by 50%-60% during such periods with its thermostat, making it even more valuable to utilities and to homeowners.

Access to have real-time data to drive energy use down could have a significant impact on demand. Data could encourage SolarCity customers to hold off on energy-intensive activities, while that same data could lead to rebates to owners of Google's Learning Thermostat. While this trend might not be the silver bullet to save the environment, it can help by leveling out some of the energy load during peak times. Not only will that reduce the amount of fossil fuels being burned to meet demand, but it will save both consumers and utilities a lot of money.

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Matt DiLallo owns shares of SolarCity. The Motley Fool recommends Google (A shares), Google (C shares), and SolarCity. The Motley Fool owns shares of Google (A shares), Google (C shares), and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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