Due to an editing error, a story on energy efficiency mistakenly said that PG&E is working with Nest. While Nest does have relationships with energy providers to implement energy-saving services to customers, PG&E is not one of them.
WASHINGTON -- As President Barack Obama pushes ahead on a strategy for confronting climate change that relies heavily on energy efficiency, some Americans may see flashbacks of Jimmy Carter trying to persuade them to wear an extra sweater and turn down the thermostat.
Silicon Valley sees dollar signs.
Long overshadowed by wind turbines, solar panels and other fashionable machines of renewable power, energy efficiency has lately become a hot pursuit for tech entrepreneurs, big-data enthusiasts and Wall Street speculators.
They have leveraged multibillion-dollar programs in several states, led by California and Massachusetts, to cultivate a booming industry. This onetime realm of scolds, do-gooders and bureaucrats has become the stuff of TED talks, IPOs and spirited privacy debates.
"This is not about extra sweaters anymore," said Jon Wellinghoff, a San Francisco lawyer who formerly chaired the Federal Energy Regulatory Commission.
Power companies are tapping databases to profile intensely the energy use of their customers, the way that firms like Target track customer product choices. Google spent $3.2 billion this year to buy Nest Labs, a company that makes thermostats that resemble iPhones and are designed to intuit the needs of their owners. Energy regulators are providing seed capital to startups building such things as waterless laundry machines.
"There was this notion that energy efficiency would never be sexy, never be something people wanted," said Ben Bixby, director of energy products at Nest, which has attracted employees from Apple, Google and Tesla Motors to its base in Palo Alto.
"Nest has built this object of desire," he said.
On hot days, Nest's technology enables Pacific Gas & Electric to precool the homes of customers before the evening rush, helping the utility avoid the need to fire up extra power plants and netting cash rebates for homeowners.
Spending on efficiency technologies and programs soared to $250 billion worldwide last year, according to the International Energy Agency. The agency projects that amount will more than double by 2035.
U.S. power companies have tripled their investment in efficiency programs -- funded mainly through ratepayer fees -- since 2006, with California spending the most per customer.
Now the Obama administration has made energy efficiency a cornerstone of its plan to substantially cut greenhouse gas emissions by 2020.
The plan, released in May by the Environmental Protection Agency, pushes states to boost efficiency by business and residential power users 1.5 percent each year.
"We are very excited about the EPA proposal," said Richard Caperton, director of national policy at Opower, a data-mining firm that nudges homeowners to make better energy choices by alerting them when their neighbors are being more efficient. "We think it opens up more opportunities."
Not long ago, Opower was a small pilot project partnered with the power company in Sacramento. Now it does business with 90 utilities and has gone public.
All the mining of data involved in such high-tech efficiency efforts has some privacy advocates concerned.
In California, utilities are required to report when consumer data is being shared with someone other than the customer and vendors.
Records show that last year immigration authorities, drug enforcement agents and state tax officials issued more than 1,110 subpoenas for records that track energy use of customers in the San Diego area as frequently as every 15 minutes.
Emerging privacy issues will be a focus of a fall conference sponsored by the American Council for an Energy Efficient Economy.
"This is a big deal," Associate Director Neal Elliott said. "But it is not a big deal unique to energy."
Those behind the startups said data already collected by retailers and social media firms create a much bigger potential intrusion. They express confidence that consumers are more likely to be charmed by their innovations than panicked.
So far, most of the efficiency focus has been devoted to what one innovator in the field, Swap Shah, chief executive of FirstFuel in Boston, calls "elephant hunting."
Utilities seek out their biggest clients, a small group of corporations in energy-intensive industries, audit their operations exhaustively and work with them to cut use. Each audit requires a small army of staff, Shah said.
FirstFuel goes after millions of other commercial customers that don't get the utilities' attention. It mines the 36,000 data points of consumption that a modern smart meter generates for a building each year and checks it against troves of other data, such as weather histories and images of the building pulled from Google Maps.
The result is a deep energy-use profile that reveals specific areas of waste, including lights left on all night, air conditioning running when workers are not in the building and poorly insulated windows.
The average customer can use the report to cut consumption more than 18 percent, FirstFuel estimates. No auditors need ever set foot on the property.
Entrepreneurs like Shah hope that their software will ultimately be used by big financiers contemplating whether to back retrofits on large commercial buildings. Investors have not always been eager to put money in such projects amid concern that the investments won't pay for themselves.
A similar innovation includes one recently unveiled by computer engineers at Retroficiency in Boston.
Its Building Genome Project gathered all the publicly available data on 30,000 buildings in New York City to show how huge amounts of energy could be saved with slight modifications, said the company's chief executive, Bennett Fisher.
"Millions and millions of dollars have been spent trying to figure out which buildings are inefficient," Fisher said. "Doing it manually has created a bottleneck. We want to blow open that bottleneck."
Amount spent on efficiency
technologies and programs
worldwide in 2013