Energy, demand reduction, and who is going to get me some nice lightbulbs?

Green energy people in the UK didn’t have a comfortable summer despite the sunny days, with unpleasant surprises like cuts in Government financial support for solar energy generation.

The new direction from the UK Government is to help people reduce their domestic energy costs (and maybe carbon), without costing the Government any money.  At the same time policies must keep businesses on board, and win public acceptance. Enough of a challenge to keep anybody busy.  Energy efficiency as a strategy to resolve that cluster of problems is therefore, in policy land, the site of big hopes.

I heard some great policy ideas recently to help people consume energy more efficiently. One I liked a lot came from Simon Roberts OBE at the Centre for Sustainable Energy, pitched at a ‘Dragon’s Den’ event at the Policy Exchange thinktank in London. The idea stood the idea of supply and demand on its head.

Simon proposed a ‘Demand Reduction Obligation’ (DRO) to be put onto energy suppliers, i.e. the Government would set targets for energy suppliers to reduce the demand from their customer base. The idea has the beauty of being both simple and radical. It is simple because it sets a desired outcome without being prescriptive about the means. It is radical because it sets businesses free to build new types of service, new types of customer relationship, and new types of management system. It could free up demand for technical innovation in energy efficient products, social innovation (social marketing of energy efficiency) or most excitingly, business model innovation. That’s why it stands the idea of supply on its head, because it is mandating businesses to sell less of their product – with the implication that they need to find something else to sell.  Perhaps most businesses will not welcome an obligation to sell less of their product. But a few business leaders may see it as an opportunity to give their business a new direction, perhaps carving out a niche within circular economy principles or taking up a service model.

The implications for consumers become interesting. If you are a low energy user, you could find yourself courted with great deals as energy companies seek to entice you over to keep their portfolio balanced. There might need to be some smart profiling – for example, private rented housing is likely to be much less energy efficient than owner occupied or social housing, but the data is there to create fair DROs for suppliers. And you would need to make sure there were no dwellings that nobody would serve.  But the idea could be really exciting for sustainability leaders in the energy supply business, and for  consumers.  Maybe some particularly energy efficient consumers could become entrepreneurs themselves, trading their abilty to avoid using energy at peak times with people who have to feed the whole family and put the washing on between 6-8 pm.

When asked what energy suppliers should do if not supply energy, Simon Roberts proposed that one shift would be to develop businesses such as ‘LED lightbulbs as service’. At the moment if you want low-energy lightbulbs you can’t have the pretty ones. The vintage-type ones that look like someone’s been waving a sparkler up and down inside a lightbulb, are F rated. The plain, functional, virtuous LED ones are A+ rated.

Imagine a company that not only reduces your lighting costs but offers a range of nice lightbulbs as service, maybe identifying where your family needs different kinds of light, or maybe with a winter special of warm-glow lightbulbs swapped with cool bluer bulbs in summer.  That’s the sort of thing that could make energy efficiency inspiring to people as home-dwellers, not as bill-payers.  As people at the Policy Exchange event kept saying ‘people are not spreadsheets’ and yet that’s how energy efficiency is marketed. And as a result, people for whom status and luxury is more important than cost, are one of the groups stubbornly failing to make energy efficiency savings.  Cost is a huge driver of consumer behaviour, but it is not the only one.  Making life more inspiring can go hand in hand with living more efficiently and sustainably.

A rare example of a pretty LED lightbulb, by Edison.