Drawing lessons from PowerMeter's demise

In the wake of Google's decision to retire its PowerMeter application, industry insiders showed little surprise. But the episode illustrates how the bar has been raised in the nascent home energy management area.

Google on Friday said that it decided to retire PowerMeter, a Web application that displays how much electricity a home is using. Company executives had hopes of expanding the product into a broad set of features, but customer uptake was not as strong as hoped, Google said in a company blog.

For the many smart-grid companies actively working in home energy management, Google's departure reflects how difficult it is to make money in the field of energy efficiency and control. From a product standpoint, the move is a reminder that simply surfacing energy data is not enough to get consumers en masse to care about energy.

"[PowerMeter] really suffered from a fundamental flaw in its operating assumption that people are interested in monitoring their energy usage at a 15-minute level of granularity, or in real time. They are not. People lead extremely busy lives and studying a line chart showing their hourly energy consumption is simply not going to make anyone's priority list," said Ogi Kavazovic, the vice president of marketing and strategy at Opower, a home energy efficiency company.

Dozens of companies have built applications or gadgets called in-home dashboards that show detailed electricity usage with the idea that more information will provide clues on how to conserve energy. For example, showing people that a pool pump is a big energy consumer could lead them to run it on a schedule rather than all the time.

What's more challenging, though, is motivating consumers to stick with energy-saving efforts, according to energy efficiency professionals. To reach a large number of users, information should be presented in a variety of channels--whether it's a Web portal, handheld device, e-mail, or paper--and focus on consumer behavior as much as the technology, they said.

Opower, now a well-recognized company in the field, made its mark with paper reports that show customers how efficient one home is compared to people in similar homes and communities. It focuses on simple presentation of information online and offline and the social psychology around efficiency. For example, its reports have a smiley face to indicate how well people are doing compared to peers on efficiency.

Similarly, smart-grid company Tendril acquired a small company called Grounded Power, which had developed a system designed to engage consumers in energy by relying on peer recommendations and other social psychology techniques, such as setting goals and providing feedback.

Google's PowerMeter, meanwhile, was geared at the very energy-conscious consumer by providing a very "literal" representation of meter data, said Mike Bukhin, a co-founder of Grounded Power and now the senior director and architect of consumer products at Tendril. But it didn't include enough context to make it relevant to people, he said.

Many energy management companies considered to be PowerMeter relatively simple, feature-wise. But Google never really succeeded in making it a platform for other developers to make applications on top of, Bukhin said.

Also, the pace of product development for PowerMeter, which was developed by Google's philanthropic arm, was slower than others in the field. "It kind of stagnated," said IDC Energy Insights analyst Rick Nicholson. "It seemed to be stuck in a no-man's land, so I wasn't entirely surprised they decided to discontinue it."

Gateways needed
There were some business factors keeping PowerMeter back, which sheds light on some of the industry's difficulties.

To get PowerMeter to market, Google partnered with utilities with smart-meter programs and energy monitor makers to get information into PowerMeter. But even with millions of smart meters installed, the product was limited by the need for a communications gateway and Google's ability to partner with utilities.

"Many, many consumers with an interest in having access to information on their energy usage were unable to use it because their utilities were not part of PowerMeter. This has less to do with Google than it does with the ongoing debate around providing consumers with access to data--a fundamental prerequisite if consumers are ever to be fully empowered to manage their energy usage," wrote Tendril in its company blog.

Google's departure is a "market correction," said Opower's Kavazovic, who predicted that other companies with similar products or direct-to-consumer strategies will struggle. Tech companies that work through utilities with an incentive to boost efficiency of their consumers have a better chance of succeeding, he said.

"It's unclear that consumers are willing to pay for energy monitoring products, and yet there are real costs in building and provisioning such products. Google found out that they would have to invest millions to make this work, and yet there was not clear ROI," he said.

Still, there are many companies working in the field, with more sprouting up on a regular basis. The company that makes The Energy Detective whole-house electricity monitor, for example, is already pointing customers to alternatives. Google helped all those other companies by validating energy monitoring and getting more people familiar with these types of products, other companies said.

"Making energy visible is an important concept," said Tendril's Bukhin. "Google could have become a threat because they are well positioned to create an [energy information] platform, but that's just not their business."