An environmentally conscious energy customer plans to install LED light bulbs throughout his family’s home. It’s an investment, he knows—these bulbs aren’t cheap. But he figures it will be worth it because he’ll surely reduce his energy use.
Or will he?
It seems like a simple question. A quick comparison of pre- and post-LED energy bills would appear to give an answer, demonstrated by dollars saved from one billing cycle to another. But the comparison won’t give a complete picture of changes in the customer’s energy consumption patterns unless it also accounts for one very important factor: the weather.
Here’s how weather makes a difference. The customer receives a bill for $50 for this July’s post-LED installation energy use. He compares it to last July’s pre-LED $70 statement, and he can easily attribute this savings to the new bulbs. But what if the average temperature this July was a mild 75 degrees, and last July it was a sweltering 90 degrees? How does he know he didn’t really save that money by using less air conditioning this summer? If this year’s average had been 90 degrees again, what would his savings have been? How much difference would the LEDs really have made?
A simple question has suddenly become quite complex.
Weather normalization leverages real-time data
Luckily, energy providers can help their customers get to the bottom of the question: “am I using less electricity?” by incorporating weather normalization into their customer reports.
Weather normalization uses statistical science to correlate energy consumption to up-to-the-minute weather conditions. In doing so, energy providers can determine what the customer’s bill would have been if weather didn’t vary month-to-month and year-to-year. By removing the impact of weather, the energy provider can now provide a far more accurate view into how much energy the customer saved compared to what he would have spent had he not made any changes.
Real-time analysis means better customer personalization
By factoring in the unique weather patterns around their homes, customers can receive individualized results that tell them exactly how they’re doing in terms of managing their energy consumption and the associated costs. Instead of receiving incomplete comparisons to last year’s consumption, energy providers can offer their customers tailored information that instead tells them, for example, “You were six percent more efficient this year, which means you saved $11 on your bill.” Those numbers will be accurate no matter how different temperatures were from one year to the next.
In addition to giving customers this meaningful assessment, weather normalization can help energy providers target offers for additional products and services to individual customers. When these energy saving tools are tailored to customers, presented in the ways they prefer to engage and made relevant to their specific environments, customers are more likely to participate, benefit financially and reduce their energy use.
And for the customer who installed LEDs in an effort to use less energy? He can assess more precisely the impact of that investment. He can know that the energy use reports he receives post-installation don’t exist in a vacuum: they reflect energy use within the existing conditions and they compare it to what energy use would have been in the same weather, pre-LED adoption. The customer will know for sure whether the investment was worth it, and he’ll know exactly what to do next to keep reducing his energy consumption.
Chris Black is CTO/COO of Tendril.