Power Politics

Belatedly, U.S. Mandates Energy Savings as Germany Balks

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Germany is doing little to encourage energy savings, critics say.
  • Why it matters

    Why it matters

    European companies aren’t the only ones getting into the energy conservation business. Some innovative products are starting to come from the United States.

  • Facts

    Facts

    • Half of U.S. states require energy suppliers to achieve savings on a regular basis.
    • U.S. companies are beginning to develop technology to manage energy costs.
    • Nest, owned by Google, sells thermostats that can be operated with a smartphone.
  • Audio

    Audio

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When lawmakers make energy conservation mandatory, new business models develop. This is becoming especially apparent in the United States at the moment. About half of the states have installed systems that require energy suppliers to achieve savings on a regular basis. These measures affect about two-thirds of the U.S. population.

Resourceful companies like Nest, which makes a digital, interactive thermostat for homes and businesses, are helping energy suppliers reach their conservation goals. The Silicon Valley-based company first attracted attention in Europe when Google invested in Nest in 2011. In January 2014, the search engine giant acquired Nest for €3.2 billion.

Nest helps its customers save energy. The company develops learning thermostats, which adjust room temperature to the outside temperature and the habits of residents. The thermostats can be controlled via smartphone and they also monitor consumption.

Many Americans, completely inexperienced with saving electricity, oil and natural gas, are using the new opportunities to directly control how much energy they use to heat their homes.

Another provider influences consumption behavior in a different way. According to the U.S. company Opower, it now provides 32 million households and businesses in nine countries with energy-use data that goes well beyond the information normally provided on utility bills.

The company juggles large amounts of data and, for example, gives consumers information on how much energy they use in comparison with other customers with similar user profiles. Each individual customer can draw their own conclusions from this information. The company, which has been particularly successful in the United States, already has five million European households as customers.

Silicon Valley-based Nest first attracted attention in Europe when Google invested in Nest in 2011. In January 2014, Google acquired Nest for €3.2 billion

In Germany, energy savings hasn’t been an easy subject for politicians.

For years, experts have noted with concern that while a lot of money goes on building wind farms and solar plants, when it comes to promoting energy savings, German policymakers’ efforts have been mostly limited to providing low-interest loans to make buildings more energy-efficient.

But the tools for energy conservation are already available. They are listed in the European Union’s Energy Efficiency directive, which the German government is having trouble implementing at the national level.

The key provisions of the directive were supposed to have been translated into national legislation in June. But even the previous administration in Berlin treated the subject gingerly, and the current government has also shown little evidence of progress.

While a lot has been spent building wind farms and solar plants, when it comes to promoting energy savings, German efforts have been limited to low-interest efficiency loans.

Article 7 of the directive, which requires energy suppliers and producers to reduce the amount of energy they deliver to consumers by 1.5 percent a year, has been and remains especially controversial.

But what some economic sectors criticize as a classic feature of a command economy, other companies see as a great opportunity. They want to turn the conservation requirement into a business by helping suppliers reach their reduction targets.

For instance Ista, an energy metering company, aims to increase transparency for tenants and landlords. It argues that consumers who receive monthly or more frequent information about their use of energy for heating in a quick and uncomplicated way, such as through email or by app, will act accordingly.

“The monthly consumption information is provided without any government funding,” says Ista CEO Walter Schmidt. His company estimates the additional costs of billing at one to two euros a month, generating annual savings of €100 ($134).

“Transparency is critical to being able to act at all. Modern billing systems for heating costs ought to be mandatory. There is tremendous potential for savings,” says Stephan Kohler, chief executive of the German Energy Agency. According to Mr. Kohler, policymakers have not yet even recognized the respective opportunities yet.

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