QUBY STUDY

How Quby’s smart thermostat can play a vital role in reaching renewable targets and emission reductions

Kees van der Leun, Joop Oude Lohuis, Bram Smeets and Margriet van Lidth de Jeude (Ecofys)

Ivo de la Rive Box and Tako in ‘t Veld (Quby)

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2015: the year of an accelerated energy transition

Energy systems across the globe are in an unprecedented state of transition. 2015 was a year in which the transition of the world’s energy systems accelerated in several dimensions. The Paris agreement has reinforced the momentum for climate action. All major countries are now aligned. The agreement raised the bar for the emission reductions needed, boosting momentum and urgency. A future phase-out of fossil energy sources has explicitly been addressed. This is creating conditions that will translate into a broad range of actions, on the supply side as well as on the demand side of our energy system.

The EU is one of the leading actors globally, and its 2030 commitment (INDC) specifies ambitious measures and targets that will substantially reshape the energy systems in the coming decade. Individual countries in the EU subscribed to these targets and (need to) follow this initiative. In order to reach the targets, which were set for 2020 in the EU 20/20/20 policy and for 2030 as part of the preparations for the Paris agreement, many policy measures have been initiated, and many are also already in place. CO2 emissions in the EU are well on course: the target to reduce emissions by 20% by 2020 (compared to levels in 1990) is expected to be (over)achieved with 24% in 2020.1 However, some member states (including NL, UK, and France) are lagging behind on their renewables target and many will have to speed up to meet their energy efficiency targets for 2020.

Based on analysis of Member States actions and additional forecasts, it is estimated2 that the 2020 target is likely to be missed by 1-2 percentage points, unless additional efforts are made to ensure timely and full implementation of the agreed legislation. Specifically, the improvement rates for efficiency in buildings, industry and transport fall short.3

In addition to governmental action, the private sector is taking an increasingly important role, and leading companies have launched several initiatives that will contribute to

1 SWD (2014) 15 final “A policy framework for climate and energy in

the period from 2020 to 2030

2 Communication on Energy Efficiency and its contribution to

energy security and the 2030 Framework for climate and energy policy

COM(2014) 520 final.

3 Moreover, these improvement rates mostly refer to improvements

‘on paper’; in reality, there will be a lot less savings.

a more sustainable world. Examples include One-planet thinking, an initiative by Eneco, Ecofys and WWF; Science-based targets, in which companies set emission reduction targets that are in line with the required global reductions in the coming decades; and RE100: a collaborative, global initiative of influential businesses committed to 100% renewable electricity.

Importance of demand reduction in households

Improvements in efficiency on the demand side of the energy system play an essential role in this transition. Whereas many strategies aiming to reduce greenhouse gas emission focus on an increased utilization of renewable resources, it is important to recognize that avoided consumption is the most effective way to reduce emissions. Consequently, energy efficiency is often referred to as “the fifth fuel”.

Avoiding consumption in people’s homes, reducing energy of buildings and declines in energy demand are the most effective ways to reduce emissions.

The EU member states acknowledge the importance of demand reduction, and in National Energy Efficiency Action Plans, they specify their approach to enhance the efficiency in end use sectors of the economy. The European Energy Efficiency Directive is an overarching strategy for the EU, establishing a set of binding measures to help the EU reach its 20% energy efficiency target by 2020.

Moreover, the directive specifies a set of national policies. As part of this, energy distributors or retail energy sales companies have to achieve 1.5% energy savings per year through the implementation of energy efficiency measures.

How Quby’s smart thermostat can play a vital role in reaching renewable targets and emission reductions 3

Among the several end use sectors4, households play a key role to establish savings, representing 27% of EU final energy consumption5 and showing significant potential to reduce energy consumption.6

Within residential energy consumption, it is important to distinguish the different types of final energy demand (low temperature heat, high temperature heat, electricity for mixed purposes, mobility), as these types will require different initiatives to enhance efficiency.

Whereas efficiency improvements can lead to avoided energy consumption in many respects, it should also be recognized that some end use functionality will stay (e.g., a warm home, light for reading). This remaining functionality needs to be made as efficient as possible.

Energy use and carbon emissions in buildings

However, policies to enhance energy efficiency in buildings have lacked effectiveness. In the Netherlands, energy savings in buildings are projected to be 22 PJ in 2020, which is 58% behind target7; several other Western European countries show a similar trend.

Efficiency improvements will require different initiatives and enhanced engagement. Households play a key role to establish savings, representing 27% of EU final energy consumption and showing significant potential to reduce energy consumption.

4 Typically, 4 end use sectors are identified: built environment,

transport, industry and other end use (including e.g., agriculture and

forestry).

5 Source: updated EEA number 2013: http://www.eea.europa.eu/data-

and-maps/indicators/final-energy-consumption-by-sector-9/assessment

6 See an EEA-assessment for information on shares up to 2012.

7 Source: ‘Voortgangsrapportage Energieakkoord 2015’

Targets and instruments in current EU regulations

Within the existing policies, 3 types of targets can be identified: first, targets with respect to the share of renewables in total electricity production; second, with respect to levels of CO2 emissions; third, improvements in Energy Efficiency are targeted.

The intention for the built environment as well as power production is that these two sectors should be zero emission in 2050 (EU scenario’s). 5-15% remaining emissions are reserved for some manufacturing processes, process emissions and transport.

Best-in-class standards have shown dramatic improvements in the last two decades: nowadays, zero-emission houses are feasible and their costs are dropping rapidly. A big issue is the existing building stock.

Recognizing this, the EU plans to make significant declines in energy demand, and reducing the energy consumption of buildings plays an important role in this strategy.

The EU has implemented specific policy instruments to improve energy efficiency in the EU: within the Energy Efficiency Directive, a specific framework for the built environment is the Energy Performance of Buildings Directive. Targets and monitoring obligations are binding for all member states, whereas implementation is left to individual countries.

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The crucial role of consumer behaviour in energy savings

The lion’s share of existing policies and mechanisms to reinforce the set targets, have placed emphasis on energy savings measures that can be verified in a straightforward manner (e.g., energy labels of buildings depend on an assessment of a list of insulation measures, with a binary outcome: the measure has been taken or not). However, many of these regulations fail to address the importance of actual behaviour as a driver, whereas this has a major impact on the final energy consumption levels. As a result, there is a discrepancy between energy performance on paper and in reality.

Several reasons can be found for this discrepancy. First, calculated values of energy performance have to assume a “standard user”, whereas typical consumption patterns show strong variability among users, such that actual behaviour can substantially deviate from the standard.

Second, many standards assume ‘optimal behaviour’, yet actual behaviour can be sub-optimal and deviate from what was foreseen in the establishment of the standard norm.8

Third, improvements in energy efficiency or performance can also affect other aspects (improvements in the energy standards of a house will also lead to an increase in comfort levels), with limited impact on energy savings. In fact, they can sometimes even lead to increased net

8 Numerous examples can be provided:

think of insulating the house, but leaving

the door open; investing in more efficiency

lighting but leaving the lights on in empty

rooms; heating rooms redundantly; or leaving

electrical appliances in standby-mode.

Current performance in the Netherlands

Whereas heat consumption of new buildings has improved by approx. 80% in the past ~2 decades, modifications in existing houses have smaller impact: the heat consumption of renovated houses is typically ~20-60% higher1 than building code requirements for new buildings.

Moreover, renovation and upgrading of existing houses is a slow process. To achieve the goal of a zero emission housing stock by 2050 (or earlier), at least 3% of the housing stock needs to be brought to that level each year.2

Households generally show interest in improving the efficiency of their house, but lack a fact base providing insight in the specific upside, allowing a prioritization of specific measures. “Side benefits”3 and natural moments often play a major role in their decisions.

There is a long list of barriers keeping individual households from investing more in energy efficiency. These include: lack of knowledge/trustworthy advice, lack of finances, lack of priority/attention, split incentives (e.g. owner/user), lack of feedback, lacking business cases, underestimated non-financial barriers, and others.

Seen from another angle there are specific issues related to the different parts of the energy savings process, like investment in insulation (floors/walls/windows/roof), investment in energy installations: boiler, heat pump, hot water equipment, solar boiler, PV, airco, storage, and (automated) behaviour aspects: use curtains, number of rooms heated, night temperature thermostat, etc.

Access to funding is often assumed to be a significant barrier: But after 2 years, only 12% was used of a €300 million fund made available to improve energy efficiency of residential houses, showing there are more barriers than just financing.

Individual households play an increasingly important role to reach national targets: Dutch minister Kamp of Economic Affairs emphasises the importance of private parties’ contributions (households, firms) to reach national targets in his recent comments on the Energy Report 2016.

1 Based on a comparison of deep retrofitted buildings; Source: Low energy apartment

buildings study for European Commission

2 See for instance “A Roadmap for moving to a competitive low carbon economy in 2050”,

pp. 6, for savings targets for households and services.

3 Side benefits in the context of energy savings measures refer to all other upsides that can

be realized, such as increasing comfort, reduced expenditures, reducing waste of resources,

increasing independence, increasing property value, and more social/sociological factors such

as feeling good and getting an image of a responsible person.

How Quby’s smart thermostat can play a vital role in reaching renewable targets and emission reductions 5

consumption (e.g., heating more rooms after going to a new central heating system instead of only 1 or 2 rooms).

As a consequence, energy saving actions are addressed in policies, but their impact, as expressed in the final energy consumption levels of households, is not. This leads to gaps between intended outcomes of the energy savings measures and the actual outcome: actual household consumption today on average is 30% higher than the theoretical values according to standards.9 This can have an important detrimental impact on credibility of policies, as can be seen from developments in adjacent markets.10

Several reasons can be found that explain the omission of actual performance in policies: first, it has historically been challenging to measure improvements in energy efficiency; second, governments prefer factual, verifiable measures as basis for their policies because they provide clear grounds for subsidies or tax calculations.

In order to realize the intended savings in residential buildings, it is key to generate engagement among individual households. Since in many cases, the individual households are the ultimate decision-makers for these energy saving measures, policies and support mechanisms should trigger their investments in improved infrastructure or devices as well as modifications in their behaviour.

Current approaches fail to realize this engagement: in many cases, funding is even available to support households in making the required investments, but households show low interest to make use of it. A necessary condition for enhanced participation is that individual households have insight in the potential upside of the measures they may be willing to take. A starting point for this is insight in the individual household’s energy consumption patterns.

Moreover, the incentives from the policy system in place need to be aligned better with the intended outcome: reductions in actual energy consumption. Additional efforts are required, to more adequately support, facilitate and incentivize individuals, at the end of the decision chain that needs to lead to energy savings measures.

9 See for example: “Towards measurement and verification of energy

performance under the framework of the European directive for energy

performance of buildings”, Burman et al., Energy, Vol. 77, December

2014.

10 Examples include the car market, where theoretical emissions and

actual performance show significant differences.

Technological advances can contribute to a solution to get to significant and real reductions

Recent technological developments offer new opportunities that can help address this challenge of engaging individual households. Smart thermostats can serve as catalyst for individual households to enhance the energy efficiency of their house. They provide detailed insights to households about their household-specific energy consumption, and can therefore help to provide a fact-base on potential upsides of investments to enhance energy savings (trigger investments and trigger specific behaviour).

Moreover, these devices provide insights on a frequent (typically hourly) basis, triggering changes in behaviour that will play an important role to confirm and justify behavioural changes.

There’s a lack of a fact-based insights in the upsides and prioritisation of specific measures. Barriers prevent individual households to invest in efficient solutions.

Smart thermostats can serve as catalyst for individual households to enhance efficiency of their house. These devices provide insight that can trigger and justify behavioural changes and inform investment measures.

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Quby’s smart thermostat is an example of such a smart thermostat, which leads the market in the Netherlands with a user base of 250 thousand households. Insights based on this smart thermostat user group show that energy savings can be reached based on installation of this smart thermostats in its current version. Extensions in functionality (such as offering behaviour-specific advice and showing financial upsides of taking energy saving measures) can further boost this impact, as well as further enrich the fact-base across the value chain, from energy supplier to specific installation companies and consumer markets.

Moreover, smart thermostats support households to reach more advanced levels of modern, comfortable living, providing additional pull for rapid large-scale adoption. Personalised insights and advice for consumers

Surveys show that many households are willing to take energy-saving measures by investing in new products, appliances or energy-generating technologies or by

Smart thermostats can act as a catalyst to drive energy savings

Energy savings are often perceived as an abstract concept - and therefore a somewhat ‘distant’ topic - for households. Smart thermostats can make saving energy more specific (“What can I do in my specific situation?”) bringing the topic alive and closer to the individual.

A key lever for this is feedback. A recent review1

shows that feedback is effective in generating impact especially when it is given frequently, directly, with a comparison message, over a longer period of time, and in combination with other interventions (e.g., a goal, incentive). A good example of the possible impact of such specific feedback comes from a recent study on the impact of an energy and water meter2: A feedback device installed in the shower made people take shorter showers which led to ~20% of energy savings within this specific behaviour. This shows that when feedback is direct and frequent people can be motivated and capable to save water and energy.

Smart thermostats can use these strategies. Via its home display and app, smart thermostats can give direct, specific feedback close to where the behaviour occurs. Also, it can compare usage with the usage of similar others (“What others with the same profile realised”) making a strong connection to what is proven to be possible. This ‘social proof’ is more effective than communicating technical standards which are seen as unreliable sources to individuals because these are often seen as commercial or unrealistic/too optimistic.

Moreover, smart thermostats can learn about and address an individual’s (or a household’s) irrational, emotional and contextual drivers and barriers for taking action.

For example, it is known that in general people heavily underestimate the energy use of more intense, less visible3 energy users at home (such as cloth dryers and boilers that heat the home) while they slightly overestimate the energy use of smaller investments (such as switching off lights when not in use)4. Smart thermostats can address such misperceptions by helping to prioritize the most effective actions in individual situations.

Another example of a misperception smart thermostats can address is the perception of how well a home is insulated. About 8 out of 10 current clients (80%) that participated in a market research assume that their home is insulated well and more than 9 out of 10 (91%) indicate their thermostat is programmed well. These numbers give reason to think people underestimate the amount of things they can do. This can be addressed by presenting an overview of all that is possible including less visible and therefore less well-known solutions such as boiler installation inefficiencies that are relatively easy to fix. Correcting these misperceptions can raise interest: The market research showed that clients who believe their home is not insulated well or heated efficiently, show stronger interest in saving advice than clients who do believe the opposite.

1 Karlin, Zinger & Ford (2015). The Effects of Feedback on Energy

Conservation: A Meta-Analysis, Psychological Bulletin.

2 See Thiefenbach et al., 2016; the study focused on the Amphiro

energy and water meter.

3 Thiefenbeck et al (2015). Overcoming Salience Bias: How Real-Time

Feedback Fosters Resource Conservation. Working paper.

4 Attari, et al (2011). Public perceptions of energy consumption and

savings, PNAS.

How Quby’s smart thermostat can play a vital role in reaching renewable targets and emission reductions 7

modifying their consumption behaviour. However, households often face barriers that prevent them from taking these steps. Examples include lacking insight in the potential upside of these measures, but also incorrect believes about what would be effective in their situation.

Smart thermostats can help households overcome these barriers, in first instance by providing a fact-base of more specific consumption levels. As an extension, many additional services can be provided, adding richer insights (e.g., by comparing to other households) and giving a tailored advice to the consumer. Depending on user preferences, specific suggestions can be made for modifications in behaviour, but also for investments that can help reduce the energy consumption and/or improve the comfort. Several aspects of this extended technology are not yet implemented in the current generation devices. However, current trends in product development strongly focus on an extension of functionality based on the application of state-of-the-art insights from behavioural economics and psychology such as personalization, goal-setting, working with different commitment levels (eg. ‘spend a minute, spend an hour, spend a day’), reducing hassle, utilizing momentum and using beneficiary default settings. As a result, smart thermostats make actions Easy, Attractive, Social and Timely (EAST).11

11 EAST, Four simple ways to apply behavioural insights; see www.

behaviouralinsights.co.uk

Recent market research amongst smart thermostat users gives reason to believe that at least half of the current smart thermostat users are willing to receive and use such personalised advice. They think a smart thermostat has a justified role here and that advices are likely to be honest and not too commercially driven. “Because a smart thermostat is connected to the home I expect more sincere advice from a smart thermostat than from a letter or advertisement”.

Smart thermostats have the potential to support individual households to get personalised insights and advice using big-data techniques. Until recently, household specific feedback was available only from an energy conservation coach based on a home visit. This is not only time-intense, but also based on one diagnostic moment and on less extensive data that can be generated via a smart thermostat.

Smart thermostat will enable household specific feedback at a large scale. This will enable this group to make a major contribution to energy savings, and consequently to move closer to the targets that have been set for the coming years.

By aggregating Quby smart thermostat-insights across households, impacts of energy conservation measures on energy demand can be assessed.

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New insights through a ‘Living Lab’

While energy conservation interventions have been rolled out to millions of households, the underlying psychological mechanisms and the therefrom resulting effects are not well understood. Policy measures are often evaluated by their impact on energy consumption as final outcome, whereas successful initiatives depend on the interaction of multiple levers, such as user behaviour, housing characteristics and external (weather) conditions. Traditional approaches often do not address these drivers of energy consumption, assess them separately, or depend on multiple different sources to establish a combined perspective. Moreover, the resulting insights often lack accuracy or contain bias, because self-reported behaviour is used (leading to questions about validity) and/or the set-up of experiments is of limited quality (no control group; not enough participants; interventions are not disentangled well leading to a lack of knowledge on why the effects found occur). Whereas recent developments such as smart meters create new opportunities, by themselves they do not provide a solution, since they only provide insight on consumption data.

The Quby smart thermostat can be a game changer: with energy and behaviour data of 250.000 households (tenants and home-owners), it can provide exceptional ‘living lab’ opportunities to further understand conditions under which investment decisions and behavioural changes do (not) occur. Moreover, it is able to provide an integral perspective on the drivers of energy conservation as described above. People can be easily approached and selected based on what is known about them. Next, via the thermostat display,

webpage and app it is possible to test the effect of specific interventions on short and longer term impact and engagement amongst specific target groups. Examples include knowing when and why people change thermostat settings, adjust boiler set-points, improve the cool-down ratio of their home, take shorter showers, buy a more efficient fridge and decrease stand-by usage.

As the number of participants that can be selected per condition is large, the resulting insights can be rich and accurate. This provides several notable advantages:

• Policy measures can be assessed in detail, through access to a large user base. Individual exceptions (e.g., lower energy use because children left the house), which can lead to misleading insights if not assessed in their proper context, can be filtered out or “averaged out”, by analysing a sufficiently large group of households with similar characteristics.

• At the same time, detailed granularity can be reached by zooming in to the individual household level, where high-frequency energy consumption data can be coupled with insights on other household characteristics. These insights can be leveraged to design and tailor policy measures aimed at boosting energy conservation.

• An integrated perspective on individual households, without merging multiple data sources, provides more consistent insight and greater accuracy.

Example: Analysis of gas consumption at neighbourhood level based on Quby smart thermostat data - Sunday 22 March 2015.

How Quby’s smart thermostat can play a vital role in reaching renewable targets and emission reductions 9

Collaborate with us

Quby is actively seeking collaborations with governments, academic institutions and other organisations to broaden our knowledge on consumer energy consumption and the opportunities to increase efficiency.

Are you interested in more information about our findings, or sharing your knowledge on this topic? Please contact us via info@quby.com.

250,000 connected households

The Quby smart thermostat user base offers a “living lab” of over 250,000 households, supporting large-scale research on energy efficiency improvement

Quby’s smart thermostat offers a unique opportunity to monitor user behavior, energy usage, house characteristics and weather conditions in an integral manner.

The resulting real-life data contains a wealth of insights, and can contribute to strong improvements in CO2-reduction models, which currently rely on theoretical average values.

Substantial user base allows for detailed pilots and large-scale control groups to support research and enhance statistical reliability of insights on savings measures.

250.000

10 Quby study© 2016 Quby. All rights reserved.

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Already a European market leader in smart thermostats with over 250,000 thermostats sold, we commit to exclusive and long-term strategic partnerships with energy providers.

We offer a foothold into the smart home market.

It’s the platform you’ve been waiting for.

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+31 (0)20 462 1680info@quby.com

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