In an era of “big data,” powerhouses like Amazon and Netflix have figured out how to put enormous amounts of consumer data to use to target their products and services, boost sales and make consumers happy. Consumers in turn have come to expect that their laptops and smart phones will tell them what they want to watch, listen to or buy next. The same revolution is possible to help save energy.
From the Nest thermostats and other sensor devices that make homes ‘smart’ to the electric vehicles sitting in driveways all throughout America, there’s a lot of energy data being collected but not used to its full potential. That data shows everything from how much energy consumers use and at what points in the day they use it most to where they charge up their cars and how charged those cars are when they plug in. At the same time, meters that used to be read once a month are now collecting data in real time.
Linking all this data could help consumers make better energy choices and save money. All told, using data to shape the generation, distribution and consumption of electricity could bring about as much as $340 billion to $580 billion in value annually. While innovative strategies exist to free this data and make it usable, they’re not being employed fully. And, that’s holding back enormous progress. (Learn more on how in EPIC’s Off the Charts podcast)
Study after study—including ones by my University of Chicago colleague Michael Greenstone (such as here and here)—has shown that energy-efficiency investments are not delivering the expected returns largely because they are based on model projections instead of real-life data on consumers’ energy use. If they had significant amounts of actual data, entrepreneurs, researchers and decision makers could study the “before” and “after” of specific energy improvements to target which investments are working and which are not.
Rather than the government specifying where energy-efficiency funds should flow, the market would reward entrepreneurs who figure out which investments have the best returns. From there, entrepreneurs could help consumers learn which behaviors are costing them the most and which energy-efficiency improvements they actually need to cut their energy use and energy bills. Everyone from automakers to appliance manufacturers could learn how to improve products to meet consumers’ needs at the lowest cost and for the least amount of energy. And, utilities, combining their data with device makers, could learn to make better decisions about how to manage local grids—just in time for more EV chargers, more distributed solar and wind resources and more advanced energy storage to come online.
Policymakers in Washington and around the country know that the lack of access to energy data is a barrier. Last year, Senator Edward Markey and Representative Peter Welch introduced companion bills in the Senate and the House—the Access to Consumer Energy Information Act or the E-Access Act—which direct the Department of Energy to encourage states to allow customers to access their energy data. Other policymakers have started efforts like the Green Button Initiative, which makes it easier for consumers to access and share their individual data, and the Energy Data Initiative, which tries to cobble together available information and make it useful for entrepreneurs.
Despite the known benefits and efforts to make a change, meaningful amounts of energy data are still not getting into the hands of the people who could use it—largely because of privacy, liability and financial concerns. But there is a way forward that addresses these concerns and opens up the market to savings and innovation. My students at the University of Chicago Law School and I have come up with a slate of solutions and model rules that will help policymakers address the concerns of utilities, privacy advocates, third-party energy-efficiency providers and consumers.
The most critical of the solutions target the challenge of privacy and the related concern about potential liability for unauthorized data disclosures. We suggest that regulators address privacy concerns by requiring utilities and third-parties to aggregate data across groups, time or both. This would anonymize the data by altering it to remove the energy users’ identifying information. The more the data is aggregated and anonymized, the more consumers will be protected from unwanted invasions of privacy.
Apart from removing individually identifiable data to keep consumers safe, we suggest that states implement procedures for sharing data securely, allocating liability if a breach does occur and determining which specific parties can be allowed to receive consumer energy data, among other important tools. Because each state may want to strike a slightly different balance based on its own goals and circumstances, our report provides options for lawmakers and regulators.
When legislators and regulators adopt our proposed approaches, more energy data will be unleashed—safely and securely. And with it will come the true revolution: not the information itself, but actions that arise from mining the data for insights that will in turn spur innovation, save money and protect the environment. With benefits like these, it’s time to let the data flow.