Closing the information gap

Consumers need to know that changes in behaviour result in actual energy savings.

For years, campaigns to save energy have targeted consumers’ habits: do not leave the light on if you do not need it; do not leave appliances on stand-by overnight; replace incandescent light bulbs with compact fluorescent lights; and so on.

But these messages come with a big flaw. Without extra metering and new billing systems, most consumers are left in the dark about the effects of such measures on actual consumption, as they receive no feedback on savings made until months later. In many countries, billing based on actual – as opposed to projected – consumption of gas, electricity and water takes place just once a year, which makes it difficult for consumers to assess whether installing a new shower has really led to savings, or to correct any behaviour that may be driving up consumption.

Legislation is now catching up with the idea that this information gap is a major barrier to efficiency gains. The EU has banned old-style light bulbs and introduced labelling requirements for household appliances. Now, in its energy efficiency directive, presented on 22 June, the European Commission has underlined the need for end-users to have easy, free access to real-time and historical data on actual consumption. The draft directive calls on member states to ensure frequent and accurate billing based on actual use.

Up-to-date data

John Harris, vice-president of government affairs with Landis+Gyr, which provides metering systems, compares the deficiencies of the current situation to “asking drivers to adhere to a speed limit, but without a speedometer” in the car. “In order to save energy, people need consumption and cost information as close as possible to time of consumption,” he says. “Monthly billing on actual consumption is the minimum. Better is direct feedback on actual consumption, for example through an in-home display that shows consumption and cost information, or a smartphone application.”

The focus on consumers, however, will go only so far in increasing energy efficiency. At first glance, increased efficiency is attractive because it does not require consumers to change their habits significantly. Buying energy-efficient light bulbs or putting appliances on stand-by is a small sacrifice compared with leaving the car in the garage and taking a bus to work. Smart meters, however, are on a different level of ambition and require up-front investments, as well as changes to energy companies’ billing systems. In order to shape consumers’ choices, regulators need to tackle the incentives for utility companies, whose revenue is based on the amount of energy they sell.

This is the logic behind the Commission’s proposal that energy companies should cut the volume of their energy by 1.5% every year. Ulrich Bang, head of international and EU affairs at the Danish Energy Association, a group of energy companies, says that similar obligations on Denmark’s energy companies have “kick-started” the market for energy services, and turned out to be the most cost-effective policy to increase energy efficiency.

Bang says that the obligation scheme has produced savings equivalent to the annual consumption of 400,000 households. However, the Commission proposal allows the member states to come up with “alternatives” to obligation schemes, prompting complaints from environmental groups.