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We-power translates complex energy data into simple information and helps people save energy while investing in electrification projects.


Description

Summary

  In 2017 over 1 billion people live without electricity whereas cities in developed countries have been found to use more electricity than needed  - this is called the energy efficiency gap and represents one of the challenges of climate change mitigation [1].

  Buildings are responsible for at least 40% of energy use in western European countries [2]. If we want to bridge the energy efficiency gap before turning fully to renewable energies, solutions must be found immediately! The knowledge and technology exists, but behavioural, organisational and financial barriers stand in the way. The solution that We-power proposes is to shift the behaviour of tenants by educating and motivating them to make small changes in their energy consumption patterns without compromising comfort, resulting in a high climate impact.

  We-power - Energy Coach, is a platform that transforms already available user and market energy data into understandable and user friendly information. Through the unique algorithm that We-power will develop, the end-user will receive recommendations that will drive energy efficient behaviours and will keep them engaged through an interactive interface, gamification strategies and the opportunity to donate a part of their savings to social electrification projects in marginal communities [3].

  The successful implementation of We-power will have a positive impact on decreasing CO2 emissions, as less electricity generation will be required in a country (Portugal) where half of its electricity is produced by fossil fuels. Following the  forecasts, 110,000 tons of CO2 per year could be reduced by reaching 1 million end-users.

  We-power team blends together different nationalities and backgrounds, as well as a diverse set of skills and experiences that will lead to the success of the project. The team is united by the following mission, vision and values:

 


Is this proposal for a practice or a project?

Project


What actions do you propose?

   A. Idea: Creating a Platform

In order to tackle inefficient energy behavior in buildings, we will create a platform that will leverage existing electric smart-meter, energy market, and weather data, and transform its complex outcome into intuitive and relevant information, giving understandable insights to the end-users on their energy consumption and possibilities to become more efficient.

In order to gather the user data, we will rely on the yet-underused smart metering devices that have been installed in buildings in several countries in the world, along with public energy market and weather data, which are usually open-source at national levels.

This online platform will provide its users with recommendations for energy savings, determined by an algorithm (to be developed) that will take into account load shifting practices (shifting the consumption peaks and spreading the energy use throughout the rest of the day), historical data on energy use and weather prediction amongst others.

  1. The Algorithm

 The core of the algorithm will be a knowledge-based system wherein the factors involved in the calculation of energy spend, such as current consumption patterns from smart-meter devices, energy prices published by the centralized system operator and weather data will be encoded as the set of rules that will guide the knowledge-based system. The algorithm will then combine the different readings from these sources to produce the most convenient recommendation to the final customer in real time.

 The complexity breakdown of this information is key to the success of our system, thus, simple and only the most relevant data to the user’s energy efficiency potential will be presented, following the features of gamification and social impact evidence. To speed up the software development, these features can be incorporated into existing smart-meter devices, giving us the advantage of reducing production costs as well as providing a base for our user interface component.

       2.  Consumer Behavior Testing Phase: The Light Bulb

In order to test the interaction of end-users with a platform that seeks energy-efficient behavior, We-power will launch a light bulb that will change its color depending on the percentage of electricity generated by renewable resources (depending on the country’s electrical production system): If the electricity used is being produced in the majority by them, the light bulb will turn blue, otherwise, if the majority of the production is fossil-fueled, it will turn red. The light bulb will be We-powers’ entrance to the market’s behavior and will provide information about the end-users. The information gathered will help to deliver information about the customer’s behavior towards renewable energy generation and the interaction with additional hardware devices and notification systems.

                                                   Figure 2. Color changing light bulb

     3.  The Platform

The WePower platform will give recommendations to its end users on how to save energy. The platform will “translate” the complex energy data into an intuitive and visual language to which the final user can relate with (see the image of recommendation feature below).

                                              Figure 3. Recommendation feature

  The challenge lies in motivating people to care about their energy consumption and therefore incentivizing energy efficient behaviors. Translating and processing the data while giving concrete recommendations is not enough, ideas must be found to keep the users engaged with the platform, so they continue using it. Various papers researching behavioral change have shown that financial gains are not enough to drive energy efficient behaviors, especially for high-income households and offices. This is why We-Power introduces a UNIQUE combination of features: gamification, and interactive interface and the ‘Save to Donate’ feature - with a focus on the latter.

- Gamification: The gamification feature will make use of interactive means to encourage end-users to use energy more efficiently in a fun way.  Features of the gamification aspect will include the possibility for comparison with other We-power users, resulting in a ranking system and perks for being in the top; option to set targets and energy saving goals, keep track of them and get rewards if meeting them and a personalized savings plan to reduce the energy bill. Comparative feedback will lead to a sense of competition, social comparison and social pressure that may be more effective, strategies which have demonstrated to be effective with behavioral change [4,5]

 
                                               Figure 4. Gamification feature


- Save to Donate: The main feature that WePower differentiates itself by is the option called “Save to Donate”, which will give the end-user the option to donate his/her savings in electricity bills to electrification projects of vulnerable communities. Existing literature on behavior over energy and energy-focused projects have shown that having a financial profit itself is too weak to drive a behavioral change, but having a greener imager or certainty of demonstrable social impact have demonstrated to be more efficient behavioral-change drivers [6].

After gathering responses from an online survey, the data shows that almost 93% of people would be motivated to save electricity if they knew that their savings could be redirected to vulnerable communities lacking proper electrification.

                                                       Figure 5. Data online survey

Also, our research has shown the following distribution of donations:

                                                     Figure 6. Data distributions of donations

We-Power will also introduce a virtual points systems called efficiency coins. The financial gains generated by energy savings through We-Power will be automatically exchanged to efficiency coins inside the platform. Further, the user has the option to either invest the efficiency coins into social electrification projects in marginal communities or keep the coins and exchange them for their currency. This strategy should increase the percentage of donations and have a similar effect to cards being topped up at festivals - the user will be tempted to spend it all rather than retrieve the money at the end.

                                                   Figure 7. Efficiency Coins

Another important aspect of the ‘Save to Donate’ feature is that We-Power will partner with carefully selected NGOs and will also have the requirement that they provide concrete proof of their work and impact, such as photos of their achievement and of the communities provided with renewable energy.

                                                      Figure 8. Save to donate feature

B) Business Model

The main objective of the platform is to incentivize and give insights to end-consumers to generate energy savings through its features. According to the Boston Consulting Group, the development of knowledge of customers through big data models could increase Energy Retailing company’s EBIT margin by 7 to 22% [7]. We-power would seek a partnership with utilities in order to offer the service to the utility’s customers and have immediate access to their consumption data and would sell the analyzed data to the Energy Retailing companies.

The utility companies will benefit from customers using their energy more efficiently, regarding peak hours, releasing pressure from the system and their plants. It also helps them dispatch their most efficient power plants only and helps them in the transition of becoming energy service companies, not only utilities.

                                                       Figure 9. Business model

C) Action Steps

  1. Registration and Initial Funding for the Project

  2. Customer and End-user Research - adapting the platform based on the feedback received from the potential customer ( utility companies) and end-users ( households, offices)

  3. Technology & Algorithm Development - developing the algorithm for recommendations, building the platform from an IT and design perspective

  4. Development of the Color Changing Light Bulb

  5. Initial Partnerships with a utility company for setting the ground for the future testing phase

  6. Business Development Phase I - Behavioral Testing Phase - testing the Color Changing Light Bulb hypothesis

  7. Business Development Phase II - Initial penetration in the market - launch the first tests of the project with 1.000 end users, improve based on the received feedback


Who will take these actions?

  1. We-power team will be responsible for developing and marketing the product, therefore will create the platform design, data management, and algorithm. Also, We-power will contact the target  NGOs to forge partnerships.

  2. Data Centers and Server suppliers will host the platform and deliver the processing power. Local IT service suppliers will be partnered with in order to have access to their services. We-power will not own any hardware.

  3. Utility companies will give We-Power access to the user energy data through leveraging existing smart meters. They will be partners in the technology development.

  4. A specific NGO will manage the raised funds for electrification projects. Following the third year, when profits are expected to grow, more NGOs will be targeted for partnerships. Having a specific NGO managing the funds will demonstrate the transparency of the Save to Donate feature.

  5. Energy consulting and energy product companies will serve as partners for marketing purposes, as the energy recommendations may focus on the use of specific technologies or consulting services.


Where will these actions be taken?

  Since the platform is an online product and the algorithm used to run it can be developed as long as there is a computer or laptop available, the first prototype of We-power will be developed and coordinated therefore online.

  In terms of raising funding, the We-power team plans to raise investment through various programs and opportunities such as incubator or Greenhouse programs.

  The company will be registered in Lisbon since that is where it plans to operate and enter the market.  During the first year, after developing the first MVP/prototype of the We-power platform, the first trial of 1.000 end users will be launched in Lisbon as well, in cooperation with the utility company.

  In the long term, We-power plans to scale its service in order to reach 1 million users by the end of its 5th year, expanding to further end-users in Portugal but also to Germany and the United Kingdom.

  The We-power platform can be launched in countries and markets where energy data is available at no other costs or with no other entry barriers set by the government or utility companies. Also, smart meters will be leveraged in order to get the users’ energy data, therefore We-power can operate in countries where these are available. In Portugal for example, smart meters are mandatory for offices and available at no cost for households. Another advantage of Portugal as a favorable market is the fact that energy tariffs change on an hourly basis, allowing the algorithm to update hourly in terms of monetary savings.

    Other markets, that don't have access to smart meters, are also of interest for We-power. In their case, energy bills will be used to calculate the energy savings and the market data gathered from the utility companies will be used to for the algorithm, driving recommendations based on load shifting practices. 


In addition, specify the country or countries where these actions will be taken.

Portugal


Country 2

Germany


Country 3

United Kingdom


Country 4

No country selected


Country 5

No country selected


Impact/Benefits


What impact will these actions have on greenhouse gas emissions and/or adapting to climate change?

  At the beginning of the business, We-power will focus on electric energy, with the intention of leveraging existing smart meters and electric infrastructure. Therefore, initial climate impact considers only the results of reducing electric energy consumption in end-users. We-power potentially reduces 34 tons of CO2/year for every 100 end-users reached, aiming to have a high impact by reaching a significant number of end-users in an exponential growth, partnering with utility companies and other big players in the energy sector. This climate potential means 340,000 tons of CO2/year could be reduced by reaching the 1 million end-users estimated for Lisbon. A rough estimate of including heat consumption in savings for end-users reveals the climate impact would be increased by 45% to 493,000 tons of CO2 with the same 1 million end-users.

Looking further into the future, these are the estimates of CO2 savings : 

Year                  2020             2030           2040            2050  
                             
Tons of            34,000       1,572,881     1,808,814      2,080,136
saved CO2
    
  These energy savings are estimated by assuming a 30% reduction in energy consumption can be achieved by following the recommendations and insights from WePower’s platform, as well as a 50% acceptance rate of them by the end-users. WePower’s initial estimate of a reduction of 340,000 tons of CO2eq is the equivalent of providing electricity to 143,742 households in the European Union.

  Taking into account a more conservative estimation of 10% of energy savings achieved by the end-users of We-power, the impact would then be of 110.000 tons of CO2 by reaching the 1 million end-users. 

   These are estimates and numbers can vary from case to case once the We-power platform will be launched. 


What are other key benefits?

  The We-power platform will include the option for its users to donate a percentage of the revenue coming from energy savings to social projects in developing countries. According to a survey conducted during the research phase, 95% of people would donate on average 20% of their savings to social projects. We-power itself  commits to destine 3% of its annual profit to support electrification projects in marginal communities.

  The first non-profit organisation partner will be The Alliance of Rural Electrification (ARE), an international non-profit organisation that promotes and provides efficient renewable solutions for rural electrification in developing countries.

  By investing a part of the company’s profit into such projects and by enabling end-users to donate a percentage of the energy savings they generated through We-power recommendations for the same purpose, the UN Sustainable Development Goals of providing affordable and clean energy (7th goal) and reducing inequalities (10th goal) are being pursued directly.

  Additionally, by delivering a tool which empowers its people to be more energy conscious, sustainable cities and communities are being built (11th goal) through the fact that awareness of responsible energy consumption is raised (12th goal).


Costs/Challenges


What are the proposal’s projected costs?

 Launch costs for the platform are estimated at €259,600 for the algorithm, IT development, formalization and initial operating expenses.

Initial expenses look as follows: 

Software Design = €140,000

Product Development = €60,000

Computing Architecture =  €8,000 - €10,000

Software maintenance = €10,000 - €20,000

Color Changing Light Bulb Production( 100 pieces)  = €2,100.00  (€4 -  light bulbs; 10€ - wifi module; 5€ - microcontroler and passive elements; 2€ - PCB)


Color Changing Light Bulb Development = €3,500.00

Other operational expenses = €15,000

TOTAL = €259.600

These estimates for are for a highly functioning prototype. We-power can actually cut down the costs to around €70.000.

End-user revenue and costs are presented as follows:

  • Cost of sale per end-user (annually): €3.
  • Revenue from sale per end-user (annually): €7.

  The project is evaluated through 5 years, in which the Gross Profit Margin averages 65%. Project break-even occurs during year 2. After operating expenses, EBITDA margin increases gradually until stabilizing at 52% for year 4 and 53% for year 5. Equally, the Net Income Margin increases gradually stabilizing at 42% for year 5.

  The project’s Net Present Value from future cash flows is €9,242,445 discounted at a 20% rate.


Timeline

  1. Registration and Initial Funding: The company will be registered in Portugal. An initial funding will be sought out followed by the registration of the company. Several greenhouse programs have been considered, including the Climate KIC from the European Institute of Innovation and Technology, along with independent investors.

  2. Feedback Gathering from Potential Customers and End-users: This phase will run in parallel with phase number 1. We-power will focus on conducting surveys in order to gather data on the customer need while trying to contact the first utility companies. 

  3. Technology & Algorithm Development:  At this stage, the focus will be on developing the algorithm that will give the necessary recommendations to its end users in terms of energy savings. During this time, an IT specialist will join the team and code the platform. The design of UX of the platform and the website will be done in parallel, and can take 2-3 additional months. 

  4. Development of the Color Changing Light Bulb: As the product and technology development processes continue, the development of the color changing light bulb will start.

  5. Initial Partnerships: Partnerships with utility companies will be looked for. These will be valuable partners for the data gathering and getting to the final users.

  6. Business Development Phase I - Behavioral Testing Phase: Next, we expect to deploy the first test and provide 20 end-users with the color-changing light bulbs in order to test if energy end-users are rather reacting on a physical device other than on notifications appearing on their electrical devices.

  7. Second round of investment: During the Behavioural Testing Phase, a second round of funding will be sought out to cover processing, HR and additional development expenses and modifications determined necessary from the Behavioural Testing Phase.

  8. Business Development Phase II - Initial penetration in the market: Once the platform has been developed, the first end-users will be introduced to the platform, and an alliance with the Alliance of Rural Electrification (NGO) will be sought for, to direct the funds of the Save to Donate feature. It is expected to gather at least 1.000 end-users by this phase.

  9. Marketing and sales: After the second year, heavy investment in sales, marketing and developing additional features will be made, in order to allow the platform to evolve and to gain new partners and customers.

Forecasts: The company’s break-even point will be reached before the end of the second year of operation. After running the business for two years, the co-founding team aims to provide 20.000 end-users with recommendations to reduce their energy consumption and invest in electrification projects.

  In the long term, We-power is scaling up by providing 100.000, 500.000 and 1.000.00 people with its service by the end of the third, fourth and fifth year, respectively.

         

                                             Figure 9. Realisation Schedule


About the author(s)

 

We-power consists of an interdisciplinary co-founding team with members from five different countries:

Júlio Arend is currently studying Engineering Science (B.Sc.) specialising in Mechanical Engineering at the Technical University of Munich;

Ioana Dragos has a background in International Business Administration and is currently working in the performance marketing department in a start-up;

David Duque Lozano is studying Sustainable Energy Technology (M.Sc.) at the Eindhoven University of Technology in a partnership with the European Institute of Innovation and Technology's InnoEnergy, and is passionate for engineering projects leading towards the development of new sustainable energy systems, fostering efficiency and sustainable development.

David Luna Espinosa has completed his Postgraduate education in Energy Management at EGADE Business School and has experience in climate entrepreneurship at The Founder Institute, as well as by co-funding Life Sustainability Consulting in Mexico;

Cátia Magro is a PhD student in the field of Sustainable Systems with Environmental Engineering background at Nova University of Lisbon as well as the co-founder of the Nova University’s Junior Enterprise.

  Additionally, the remarkable passion for climate innovation and entrepreneurship is shared by every single member. The link between the differing expertise, internationality and the commitment to the social and technical part of the project will ensure that the company will grow, constantly adapt and improve based on customer feedback and market trends while achieving a relevant social and environmental impact and aligning with the goals of the Paris Agreement.


Related Proposals


References

[1] McKinsey & Company. (2010). ‘Energy Efficiency: A compelling global resource’, United States: McKinsey & Company.

[2] Burkhard, B. J. and Kadakia, R. (2010) ‘Energy Efficiency in Buildings’, World Business Council for Sustainable Development, pp. 1–38.

[3] Gangale, F., Mengolini, A., & Onyeji, I. (2013). Consumer engagement: An insight from smart grid projects in Europe. Energy Policy, pp. 621-628.

[4] Abrahamse, W., Steg, L., Vlek, C. and Rothengatter, T. (2005) ‘A review of intervention studies aimed at household energy conservation’, Journal of Environmental Psychology, 25(3), pp. 273–291.

[5] Covig, F., Ardelean, M., Vasiljevska, J., Mengolini, A., Fulli, G. and Amoiralis, E. (2014) ‘Smart Grid Projects Outlook 2014’, JRC Science and Policy Reports.

[6] Honebein, C., Cammarano, F., & Boice, C. (2011) ‘Building a Social Roadmap for the Smart Grid’, The Electricity Journal, pp. 78-85.

[7] Boston Consulting Group. (2014) ‘Making Big Data Work: Retail Energy’,  The Boston Consulting Group.