Never heard of a Choice Engine? | Enervee Blog

First of all, hats off to the whole ACEEE team for pulling off their first ever virtual Buildings Summer Study this past week! It was a very different experience than the Asilomar summer camp setting we all cherish – and I know it was a lot of work for the organizers – but it succeeded in bringing together the leaders in the energy efficiency field as it always has. No small feat!

Writing from California, where flexible load prevented even worse outcomes, when temperatures recently soared into the triple digits in many parts of the state simultaneously, leading to rolling blackouts, the theme of “Efficiency: The Core of a Clean Energy Future” could not have been more apt. Roughly 400 papers were published across 13 tracks, ranging from residential technologies & programs to behavioral insights & applications. The program also included the – in light of the Black Lives Matter movement and COVID realities, timely – topic of energy efficiency equity, which was first introduced as a stand-alone track at the 2018 Summer Study. Lots of great papers! 

Enervee's contribution to the 2020 event was a paper in the market transformation innovation track entitled "Eliminating Market & Behavioral Barriers with Choice Engines".

For those who are unfamiliar with the term "choice engine", I encourage you to read this 2013 HBR article by Nobel Laureate Richard Thaler and his colleague Will Tucker. In a nutshell, Choice Engine® technology empowers consumers to make better buying decisions, without incentives – by aggregating and interpreting data from many sources, integrating the entire retail market, and changing the choice architecture, such that the efficient choice becomes the obvious choice.

Online utility marketplaces powered by Choice Engine technology were first deployed in 2014/2015, some as pilot or demonstration projects. They were designed to eliminate persistent, pervasive and well-documented barriers to capturing a greater share of economic energy efficiency potential, and they integrate behavioral theory and insights. Rigorous, previously published empirical research confirmed the impact of the resulting designs on consumer choice. Enervee's latest ACEEE paper advances our understanding by reporting results from the growing number of utility marketplace impact assessments prepared by leading evaluation firms. Key insights from these studies include:

• Decision-based marketplaces featuring Choice Engine technology eliminate pervasive barriers that prevent private investment into energy efficient consumer products.
• Leading evaluation firms have developed methods to quantify the resulting energy savings and have documented significant cost-effective savings that were previously untapped potential.
• The dominant contribution of market-based savings, without reliance on incentives, leads to favorable overall cost metrics, while delivering energy and non-energy benefits.
• There is significant potential to scale impact and improve cost metrics with enhanced marketing efforts.

To learn more, download the full paper, which also addresses:

• Rapid growth of online utility marketplaces, with revenue anticipated to quadruple from $118.2 million in 2020 to $468.0 million by 2028
• Fundamental difference between “decision-based” and “direct sale” marketplaces, with Choice Engine technology as the differentiator
• Proven influence of decision-based marketplaces on consumer choice
• Current utility marketplace deployments
• Independent assessments of energy and carbon impacts. Studies conducted on behalf of AEP Ohio and Con Edison, for example, found that these two deployments cut electricity demand by 16 megawatts (MW) and delivered over 41 GWh of electricity savings on a gross, first-year basis (186 MW and 543 GWh on a lifetime basis).

The paper also points out that the online marketplaces – available 365 days a year, 24 hours a day, and which facilitate safe, online purchases – were among the few energy efficiency program offerings that proved resilient in light of the COVID-19 pandemic stay-at-home orders.