Opower is a relatively young energy management company that has experienced rapid market penetration and growth. It approaches home energy management in a different way than many other companies in the field, aiming to achieve small savings in many households, instead of aiming for larger savings in a targeted population. Its solution is to provide consumers with a framework for making strategic energy management decisions. The strategy used is to display fewer recommendations as more data is collected via increasingly targeted tips and advice. Opower’s strategy has clearly led to success: the company is already working with approximately three dozen utility clients and recent customer announcements include Connexus, AEP Ohio, Puget Sound Energy and Commonwealth Edison.
The primary customer touch point is the Opower web portal, which ameliorates the complexity of advanced metering infrastructure (AMI) consumption data and presents summary information and tailored power conservation recommendations in a user-friendly manner. Key features include an insight dashboard that analyzes usage data and provides actionable tips, an audit feature that gathers information from users via streamlined periodic questions, an efficiency community that users can participate in to share tips and advice, and a dynamic rate comparison tool that can be used to model consumption against different rates to make recommendations on the best plans. The software base for Opower’s products is a profiling engine that gathers, combines and cleans data from sources including tax assessor data, third-party demographic data, GIS data, and weather data to create customer profiles. The company reports that many of its deployments are in territories without AMI, but claims that the platform works even better with AMI data.
Being very focused on results, Opower constantly updates its impact on its website, represented in kWh saved, savings on energy bills, and lbs. of CO2 abated. According to the company, since the launch of the customer engagement portal in 2008, it has achieved more than 375 GWh of total saved energy, equivalent to $33 million. Opower claims its products have been shown to achieve 1.5% to 3.5% of energy savings across the user population and it was recently revealed that the company is considering introducing an automation device into its product suite to achieve even higher savings numbers (currently, its platform does not include any hardware). Opower is also currently working with utilities offering hourly meter reads to be able to start providing peak demand reduction.
Primary competitors: Tendril, Aclara (Consumer Portal), Calico Energy
Analyst Note: It can be argued that the genius of Opower is not technology innovation, but technology packaging. Company founders elected to enter the well-established and relatively static energy efficiency market but with a decidedly web-focused spin. In essence, Opower is an interactive marketing agency that went after a utility business problem: getting consumers to engage in energy consumption. Instead of driving targeted response, Opower drives targeted action, inducing people to adopt energy-efficient lighting, unplug dehumidifiers, and follow through on other tweaks and tips. As a whole, the utility industry has been a laggard in adopting web technology, creating a ripe opportunity for a company like Opower to step in.
At the same time that heavyweights like Microsoft (Hohm) and Google (PowerMeter) flopped with their attempts at consumer energy data management, Opower has taken off. To their detriment, Microsoft and Google tossed their technology into the public domain and figured their brands and clout could get utilities to cooperate by providing access to customer consumption data. This ended up being a deal-breaker, as utilities quickly raised concerns about consumer data privacy. Within weeks of each other, Google and Microsoft pulled out of the market.
To its credit, instead of tossing data management into the public domain, Opower decided to provide a program management solution to utilities that enabled utilities to keep control over their customer data. The stark contrast between the success of Opower and the abject failures of Microsoft and Google is ample fodder for business school case studies. Meanwhile, established utility software companies are left shaking their heads and wondering why and how they have been upstaged by a newcomer.
Whether Opower can retain and grow its existing client base and continue to win new clients remains to be seen, especially as the traditional energy efficiency community begins to scrutinize Opower’s claims (measuring the energy efficiency of various programs is a complex multivariate analytical exercise that is complicated by the number of overlapping programs and market forces at play at any given time). Also, companies like Tendril, EnergyHub and others are beginning to embrace more web-centric business models. Meanwhile, Aclara has also conducted its own independent research project that has achieved similar savings to what Opower claims to have garnered via its own consumer web portal.
Still, Opower has laid down the ante in what is clearly becoming a heavyweight marketing contest to engage consumers in energy management. The real winners in the end will be consumers, who will save money, and the environment, which will absorb less greenhouse gas. Opower lays rightful claim to being an innovator and catalyst successfully changing the way consumers relate to energy.
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