An Energy Efficiency Parable
Here’s a story that captures a lot of the challenges we face as we try to improve energy efficiency. Spoiler alert: it doesn’t have a happy ending, but I’m holding out hope for the sequel.
Many of us leave our work computers on 24/7 – estimates suggest more than half of us. I do mainly because I like to use remote desktop from home.
In some organizations, the computer teams insist that desktops remain on overnight so they can run software updates, download the newest security patches, backup files, and do other important stuff during hours when people are less likely to be working.
The folks who pay an organization’s energy bills – let’s call them the accountants – would probably be unhappy if they knew how much they were paying to power computers between the hours of 5PM and 9AM. It’s a lot of money — at electricity prices of 11 cents per kilowatt-hour, a 75W computer left on for all 8760 hours costs almost $75 per year, while one left on for 2000 working hours only costs $16.50. Estimates suggest that nationwide, desktops consume several times more energy than servers.
But, accountants have no visibility on the computers’ energy costs – they simply pay a utility bill at the end of every month and few have any idea how much of it is going to computers versus air conditioning, lighting, etc.
Even if accountants knew exactly how much money they were spending on idle computers, it’s unlikely they could do anything about it. The computer folks, who operate the network, and in many cases dictate what kind of computer employees can buy, would revolt if the accountants mandated that computers be put to sleep or turned off at night.
Employees probably would be upset if they had to turn off their computers, too. How annoying is it to run in late for a phone call and then have to wait 3 minutes for your computer to boot so you can find the phone number? This isn’t an issue if computers are put to sleep and not turned off. But, many of us don’t know how to do that, have bad associations with early versions of sleep, or just can’t be bothered to do it.
Like other energy efficiency examples, this is a case of split incentives – the computer teams’ and employees’ versus the accountants’ – plus poor information.
No computer team is going to request computers that use less energy if it in any way makes the computers more vulnerable to viruses or harder to operate. And, no one in the organization has good information about how much money is spent on energy because of nocturnal computers.
But wait, my neoclassical economist friends might say. Isn’t there a boss who cares about BOTH lower energy bills and productive employees with virus-free computers? Shouldn’t the boss be motivated to collect the information and then get the accountants and the computer team to sit down and figure out a good solution? Workdays would need to be 108 hours long before that crossed most bosses’ minds.
What if Apple and Microsoft develop operating systems that allowed computers to get downloads off the network even while it’s asleep? Computers that are asleep use almost no energy – 1-2 Watts – it’s almost as good as turning them off.
A colleague of mine at LBNL, Bruce Nordman, was part of a team that set out to solve just this problem. If this were a movie, they’d be wearing capes.
They worked with a standards organization and formed a committee that included Apple, Microsoft, AMD, Intel, Sony (game consoles are networked and often stay on to receive occasional bleeps), among others. This is no easy task to get a bunch of competitors together to talk about collectively changing their products, particularly when the topic is as unsexy as energy efficiency.
They helped develop a “network proxy,” which effectively lets a computer go to sleep while the proxy tells the network it’s awake and then wakes the computer up if anything important comes down the pike. Energy Star now provides an incentive for companies to include the feature in their product, and the program’s early support for the technology was critical to initiating the standards process.
Apple bought into it, as did some chip manufacturers. Unfortunately, Microsoft didn’t buy in. And, Apple now ships its computers with the capability turned off, though you can turn yours on – see here, it’s called “Wake on Demand.”
What are the general lessons about energy efficiency? First, we should encourage more teams like Nordman’s. How? We can’t rely on the market to support them because split incentives and information asymmetries are examples of market failures.
Public research and development funding is certainly one answer. Nordman and his team were funded by state and federal grants. And, while the network proxying story has yet to make much progress, they have had other successes, like encouraging Ethernet chip providers to change the standard to use 75-90% less energy.
A lot of people are championing energy efficiency. The recent Shaheen-Portman bill on energy efficiency had bipartisan support, though it eventually failed. Most carbon mitigation scenarios assume a hefty share of the greenhouse gas reductions will come from energy efficiency. But, figuring out how to unlock energy efficiencies’ potential will be difficult. And, it’s less exciting than developing a new solar panel or a new gizmo.
Fortunately, there are a lot of smart people, like Nordman, trying to tackle the organizational, as well as the technical, issues in order to solve the energy efficiency puzzle.
Catherine Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business, Co-Director of the Energy Institute at Haas and Co-Director of the E2e Project. She received an AB in Economics from Harvard University and a PhD in Economics from MIT. Before joining the faculty at UC Berkeley, she was an assistant professor of economics at Harvard University. Her ...
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