Q&A: Unlocking energy-use data has vast efficiency potential, researcher says

A treasure trove of energy savings and environmental benefits sit untapped in reams of data from smart meters that show individuals how to cut their energy use. The data also reveal larger insights about the value of different efficiency investments, potentially sparking a vibrant, competitive efficiency market.

But that data is going relatively unseen and unused, since many consumers don’t know what to do with — or even have access to — their own data. Utilities that hold the data are often reluctant to release it, in part because they are concerned about liability if the data is misused or hacked.

Mark Templeton is director of the Abrams Environmental Law Clinic at the University of Chicago, a member of the University’s Energy Policy Institute and an associate clinical law professor at the Law School.

He is an expert on energy data access and how data can unlock the potential for significant energy savings and ensuing environmental benefits. In June Templeton and his students published a report examining the great potential and legal implications of expanded energy data access.

The report offers model laws and regulations and examines pros and cons of different options for utilities, third-party providers and consumers, including ways of addressing questions of liability and privacy.

Mark Templeton

“There is very little existing law allocating liability for disclosure of energy-use data; those interested in this issue must refer to a patchwork of utility laws, privacy statutes and the common law to assess the legal risks,” the report notes.

While the report acknowledges concerns and risks from expanded data access, it also notes the great potential for technological innovation and entrepreneurship: “By utilities making data available, the market will sort out what investments truly are cost-effective and which are not.”

Templeton brings to the data access question a diverse background in balancing and protecting the interests of different stakeholders. Previously, he served as executive director of the Office of Independent Trustees for the Deepwater Horizon Oil Spill Trust, overseeing the distribution of $20 billion pledged by BP for claims of those affected by the 2010 spill. Templeton also previously served in the cabinet of Missouri Gov. Jay Nixon as director of the Department of Natural Resources, where he oversaw the state’s energy office and its environmental protection efforts.

He recently talked with Midwest Energy News about data access options and possibilities.

Midwest Energy News: Is this essentially a new legal frontier, since a decade ago, this access to data wasn’t even an issue because we didn’t have the technology to get it?

Templeton: The utilities have always had monthly data for billing purposes, of course.  As we’re moving to the smart grid, part of the whole theory of the billions of dollars that have been and will be invested is that we’d have much better information — when is energy being used, by whom and for what purpose — so we could target opportunities to save energy and to shift when it is being consumed.

What role does the law play in this emerging market and sector? Is it important to have proactive laws and policies protecting consumers as things are changing?

Law has an important role, and it is absolutely important to ensure that consumers’ interests are represented and protected.  I’m heartened by the fact that in the past decade, one sees environmental groups as well as traditional ratepayer groups participating—and often joining forces—in the stakeholder processes in front of regulators and legislators. These are not always easy policy choices.  It’s important that more and different perspectives are brought to bear and not just the traditional utility and regulator perspectives.

So with the movement for data access, there are at least two separate ways it needs to be available and used. Customers want to be able to give third parties access to their data so they can act on that data directly, like controlling their smart appliances. And then bulk data can be collected and used to drive policy or investments. How do these approaches compare? Is one more challenging to achieve than the other?

Different states are at different places along the data-sharing spectrum. One approach is just giving consumers access to their own data, so they can share it with others who can analyze it and make recommendations to them (on energy use or energy efficiency improvements). When a customer has access to his or her data and shares it with a third party, that third party can install energy efficient technologies or help conduct demand side management. There’s also a model of on-bill financing where a company says, ‘Okay consumer, we’ve analyzed your bills, we can offer you a deal,’ where you pay the company a certain amount of money that will be less than your current utility bill, and the company then invests in energy efficiency technologies for you– a smart thermostat, insulation, better appliances, etc. The company pays your utility bill and keeps part of the savings. The consumer pays just the third party provider, and that provider pays the utility. It’s like a residential ESCO [energy service company].

And this is happening now?

Yes, entrepreneurs are trying to make efforts like these happen now.  Companies include Sealed and Effortless Energy in Chicago, started by Harris School [University of Chicago public policy] grads, among others. It’s anything from giving your data to someone to analyze—and they recommend opportunities for savings—all the way to a situation like a residential ESCO.  They and we believe that they can be more impactful if they have access to more data.

With those situations, the customer gives consent to pass their data to the third party provider, and there’s no issue of anonymity. But with the other type of data use, you’ve suggested anonymization and aggregation as a way to deal with privacy worries. How does that work?

Our report argues that anonymized and aggregated data sets should be made available to appropriate entities who can analyze them and identify energy efficiency opportunities. Drawing on utility data, entrepreneurs could look at a portfolio of  houses, see where energy use is high, and target those residence for upgrades.

Drawing on data collected through existing energy efficiency programs led by utilities or government, entrepreneurs could compare the efficiency measures deployed in those homes to the changes in energy use and determine the costs and the benefits.  From a policy perspective, one wants to have the data aggregated so that you don’t have individual privacy problems, but you also want it at a low enough level of granularity so that it can be used to target savings.

We suggest systems like 15/15, where there are at least 15 customers in an aggregation and none of them makes up more than 15 percent of the total data, or 4/80, with at least four customers, none of them making up more than 80 percent.

There have been conspiracy theories about smart meters. You point out potential risks like energy-use data being used by thieves to determine when someone isn’t home, or a “nosy neighbor” interested in your energy use data. How serious privacy concerns here?

People have concerns. The report talks about protections, safeguards and incentives to address those concerns, in terms of fixing liability for third parties who get access to data, providing financial assurances such as an insurance policy or bond, implementing data security measures, making sure entities that have access to data are doing so for a permissible purpose, and making sure data is being handled in an appropriate way.

And how big is the potential for data to spark energy conservation and savings?

McKinsey & Company estimated energy efficiency technology with behavior adjustment could lead to savings of 20 percent for the total U.S. residential consumption. There have been studies critical of McKinsey’s engineering-based approach. But even if savings were half or a quarter of that, that still is a significant amount of energy. Furthermore, it reduces consumption at the margin, which is supplied by the most expensive sources of generation. When you are taking away the most expensive marginal generation, that reduces prices for everyone in competitive markets. The concept is called DRIPE, or the Demand Reduction Induced Price Effect. You don’t need power supplied by the more expensive provider, so the market clears at a lower price, and all consumers should pay less.

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