 This is the first time we've given a joint talk. It is basically an infomercial for a course that we teach that I was here this morning with the deans where they were really encouraging everybody to mix it up when you're on campus thinking about going outside your own area of research and focus. So that's what we're doing. We've crossed the street. We've crossed the street that Steve has walked all the way here from GSB. And our meetings are really good. I have my fit fit because we alternate that I go to his place. He comes here. But on a serious note we developed this course last spring. We did a test drive. It is a graduate level course. We're happy to say that it was very successful and we're going to be offering it again next spring. And what we tried to do with it is to really think through how can we take a specific discipline, energy efficiency and have students look at it from the perspective of technology, policy and markets and investment. And so you do have to be a graduate student. You do have to have some background in energy. But you don't need to have any deep background or really any familiarity with energy efficiency because it's trying to take it as an example of how do these different areas of technology, policy and markets intersect. Steve? All right. So with that then let's we're going to as Diane said this is the Steve and Diane show or the Diana Steve show. And essentially we're going to have a conversation. You're going to listen in on it and by the end you can ask some questions. So my first question to you then is what is energy efficiency and why should I care? Oh we did a prep though. You were going to ask the students. You had a question to them. The students who here has studied energy efficiency before? Okay as part of a course or it's a course onto itself? Part of a course. So no one has done an energy efficiency course. Who's not sure if they have studied energy efficiency? Whose parents have told them to turn off the lights when they leave the room? There we go. That's energy efficiency. Okay oh that's my first question. We're going to go back and forth with questions. So Steve has just asked me so what is energy efficiency and why should I care? This is energy efficiency. I think you're all old enough to know that we have had lighting for years and years was incandescent light bulbs and now we have many new technologies primarily LED. So the easier easiest explanation of what is energy efficiency it is new technologies that provide the same service but use less energy. So in one sense energy efficiency is all about technologies and bringing them into use inside buildings inside vehicles inside factories etc but we also have another part of energy efficiency that is oftentimes called energy conservation and that is changing behavior to use less energy and so sort of that is what I asked just a moment ago. Switching off the lights if you're not in the room there's absolutely no reason in the world to have lights on in a room if nobody's in the room. There might be a couple of reasons but in general it's not a you know you don't really need to just have lights on a room hotel rooms etc but this is an area where we see new technology and what's so exciting that's what we want to get you all excited about is that we all have smartphones and so there are apps on smartphones that can alert you if okay the air conditioning has gone completely out of whack and you can either have it do an automatic turn down or you can be alerted or whatever but again energy efficiency is both the technology side but it's also behavior and those two combined is what allows less use of energy. So why does it matter? This is an example from California as Richard said I was a commissioner with the California Public Utilities Commission which is a state agency all the states in the U.S. have them that regulate utilities and very very involved in energy efficiency. California basically discovered energy efficiency 40 years ago literally the concept was was first developed here and so we are considered the international leader on energy efficiency though there's a lot going on elsewhere in the world now. So this is just taking California. We have had flat electricity demand per capita despite the fact that we all have a whole lot more devices than we did and we've done that for 40 years now whereas in the rest of the United States the usage per capita has increased 50 percent so that is a huge success story with energy efficiency. Environmental savings at this very focused effort on energy efficiency in California has allowed us to avoid building 30 major new power plants which has translated into tremendous savings in terms of both air quality water usage etc. Cost savings on the way that you can think of energy efficiency again very simplistically is that again you I don't know if you how many people actually have received a bill from a utility and paid it. Okay so you get the general concept you know that you physically got it can be online but basically when your energy is used as either an individual or as a business or as industrial owner the local utility in some fashion sends a bill that says here's the cost of your electricity and natural gas usage so if you are using less energy very simplistically your bill is less and over this 40 years because of the activities we've had with codes and standards and just getting more equipment out there it has been 100 billion dollars in avoided payments for electricity and natural gas. I oftentimes say it's not recognized but this is probably the single biggest economic development program in California and then the last one are carbon savings that we've had 30 million tons of carbon dioxide avoided since 2003 equivalent taking six million cars off the road because we didn't build those power plants and therefore we avoided the emissions. Okay Steve what's the energy efficiency market how big is that opportunity? Well I'm glad you asked. So across the street we talk about markets and economics and I always like to break down what I'm talking about so let's imagine and we're going to focus everything that we've been seeing has to do with buildings we're not talking about industrial efficiency and we're not talking about transportation efficiency we can talk about in the Q&A but for for now let's just focus our attention on the built environment so the built environment essentially you can segment the market okay and you segment it by kind of building and who owns it so you have the mush market which is municipal university schools and hospitals those are all civic buildings and they have public owners sometimes you have private owners as well then you have large commercial an industrial and you have small medium commercial and then you have residential so that's essentially how you break out you know who is the customer and the kind of building that you're dealing with and then you think about the interventions which are the categories and these are you can think about them as the hardware and the software that bring about energy efficiency and so you have things like the building envelope the HVAC system water heating and lighting and just to give a sense for in the U.S. how much spend there is well if you think about in 2016 you had a total about 68 billion dollars and you can see that building envelope and HVAC system are quite large lighting is still a thing people are still essentially replacing their light bulbs and also installing ballast to essentially have control across the entire lighting system you hear a lot about lighting as a service I'm dubious of that type of moniker but one thing to actually understand about this it's the demand response and enabling IT low spend high opportunity that's essentially where the future is going to go I'm not going to take away your thunder because we're going to talk a lot about that but don't don't be alarmed that essentially high dollars leads to high savings that may be in the past and that may be in developing economies but in the future you're going to see a lot in the ICT industry 68 billion dollars pretty good given that we came from 35 billion only a few years ago so that's the U.S. what about in terms of the globe 388 billion dollars to put into context though that's only 8% of the actual spend in the built environment and again the majority of this is in the building envelope and I'll just stop back once in civil engineering does everyone know what the building envelope is who does what is it it's basically the shell it's the outside right it's whatever touches the external environment that's right so all the glass all the fenestration as it's called all the interfaces with the external environment all the cladding that's on the outside that's essentially your first line of defense and essentially your best line of defense when it comes to energy efficiency so that's on the again this is on the things side the hardware side and then and the software side and this is on the services side much less but what do services actually mean essentially it's a guaranteed way these are provided by energy service companies it's a guaranteed way to ensure that you have savings over a long time when you install an intervention either it's hardware software you want to have that savings you you want that savings to accrue over time and one of the biggest things you can do is essentially ensure that the system that you install is working perfectly over time because that's essentially where the efficiency gains are going to happen it's not good enough to install it once and then it's never maintained or it's never used properly so those services companies they basically make their money on ensuring that the efficiencies that are promised are actually delivered and why are we spending all this money on energy efficiency right well here's here's something for a gut feel and apologies like seems like there's some efficiency on this slide here well what we have here is essentially there you go no no no I got it it's so these are supposed to be barred grass here and does everyone know what the levelized cost of electricity is who said yes you did so what how would you describe the lcoe that's right so put another way it is the constant dollar amount on average per unit that you need to receive to make sure that all your capital all your operational and all your investor costs are paid off okay and so you've probably heard that you know solar is something like six cents a kilowatt hour or $60 per megawatt hour and wind is given its increased capacity factor maybe around 30 but energy efficiency and this is terrible it took my thunder away but essentially it's from zero to 50 but if anyone has actually looked at things like the McKinsey curves and so forth of energy efficiency you'll notice that there's actually a negative cost so what's another way to interpret a negative cost savings right savings so this is one reason actually if there's basically money that's on the floor and it's right there and we should be picking it up why aren't we I think we need some policy right why is government involved in energy efficiency thank you Steve do we have a hard stop in seven minutes okay we're going to try and whip through this um so this is why we teach the course to try to include policies as well because basically everywhere you look there are market failures and while Stanford is very much in favor of markets we really like them they deliver competition they deliver lowering prices this is an area where you actually have to think through and understand if you're bringing in new technologies what's the policy basis that's going to support those new technologies so the four major barriers um energy prices unfortunately they don't reflect full costs much less societal costs even here in California we're just now putting in place a policy that will actually put in every single sort of government decision on energy a greenhouse gas adder and it's taking us a long time to get there and really we don't have that elsewhere consumers lack information about the opportunities the benefits that you know your average person is not walking around saying oh I guess I know how much insulation there is in my home and I guess I know that I could improve it etc so there's just a general lack of information because energy efficiency in some ways is invisible as compared to the windmill the wind turbines the solar pb etc um split in sentence we have just a gigantic problem throughout the world um where you have the owner of the building who makes investments in putting in a new lighting system a more efficient air condition etc but the tenants pay the energy bills and so the tenants are incentivized to lower costs but they don't control that building so there's huge efforts that go on in the policy arena to try to make this win-win and the hassle factor that you have a lighting contractor you have an h-back contractor etc and how can you organize things so all of this can work together so we don't want to scare you off I mean it's you know these problems have been overcome they are being overcome but in this area in particular understanding how government and policy tries to address these is important um this is from a report last year the international energy agency that really does bring out that policy is fundamental for energy efficiency we now have 30 percent of final energy demand globally is covered by energy efficiency policies which can be mandatory codes and standards if you're going to build a building you might as well build it efficient if you're going to sell a refrigerator you might as well use the latest technology so it's efficient etc and we see increasingly focus on transportation and cars again with our tremendous concerns about carbon we want to have our vehicles as efficient as possible and because of many barriers in the market if we have the technology to make those vehicles efficient that's what governments say we can have a role of requiring a certain level efficiency we now have more than 2.3 million barrels a day that is being avoided because of our standards this is my last one on policy this is just a slide showing about 25 years of what's happened in terms of savings with our utilities utilities are often times a vehicle uh not just in the United States but in the world because they collect money through their bills so you can put small charges to finance these programs as well as they can have actual outreach to their customers and talk about energy efficiency and this again is a very bright spot that you tend to hear more about you know pbs and wind um but the what's been happening in energy efficiency is very very encouraging in terms of the actual savings which translates in into avoided environmental impacts carbon savings etc so are we all done Steve clearly not um so we've all heard about LEDs and we've all heard about refrigerators does everyone know about refrigerators why what's the big deal about them yes yes so they use a lot of energy but do they use less now okay and have they gotten bigger or smaller there you go right so you're getting the same or a better service for less input right and these are the two golden children of energy efficiency things right LEDs and refrigerators but that's there's so much more to to go and we only have five minutes are you saying I'm slow uh so according to IEA thinking about a mid-level scenario by 2015 what that basically means is can we reduce emissions by 50 percent from 207 um 207 levels by 2050 globally okay and what would be uh required from a building's perspective to do that well they've calculated that about 1,509 million tons of oil equivalent in aggregate between 2015 and 2050 would be saved and just to put that in perspective that's more than China the US the EU India Russia and Japan cumulatively all of last year produced in terms of electricity so it's a lot and if you look at this graph and this basically breaks down where the opportunities are what do you see a lot of you see a lot of heating and cooling and that's really from a hardware perspective that's the next frontier heating and cooling if you're able to make people comfortable in hot environments or make them comfortable in cold environments that's really where the opportunity lies and if you guys are going to stick around on Friday you're going to see a few startups or projects innovative projects around here that deal with that sky cool is is one of them but that's just hardware software okay um we have a new this is sort of another infomercial um we have a new professor here Dr. Rishi Jane who his specialty is data analytics and what has happened in the world of energy efficiency is that if you go back 10 years you had a building and you would have to guess basically is it efficient is it not efficient what should we do inside of it um or you would spend a lot of money to get an on-site auditor who would go out and spend a day disrupt whatever is going on in the building to try to say here's the potential um and that's what to me is amazing despite the lack of really good tools we've made a lot of progress but this is where I am particular and really excited I've been in this for close to 40 years and we are really at a new frontier because what we have is we have the smart meters that have gone into many many buildings so instead of getting just energy usage once a month we get it 50 every 15 minutes or even greater at some points in time the cost of sensors to know what's actually going on with different equipment in the buildings has also gone down and we have a number of cities and actually in California it's going to become a law next year for the entire state where information about the usage in those buildings is collected by the governmental entity um and then is made available in various databases back to the building owners and occupants but more importantly back to the public and back to the market which is why we see companies coming in so what we have is an explosion of data that with really great analytics you can understand what's going on in buildings you can um professor Jane for example helped the New York City had enacted one of these benchmarking they had just millions billions of pieces of data but they didn't know how to analyze that so he developed some very sophisticated algorithms machine learning to really identify where were the opportunities so he has a great lab and i'm helping him on sort of taking the technical side and translating it into what can be new policies put in place that's looking at entire cities and understanding that a building is not by itself but it may be providing shading to another building it may be completely unshaded it may be in what we call heat islands and that that really impacts what's the usage in the building beyond the simulated to the actual and the hidden inner dependencies so this is another area if you get interested in it that really looks at data analytics and how we can um be accomplishing more so this is i believe our last question what do we do about developing come countries so china china china china and then india okay um you have this mass migration for urbanization in china between now and 2035 we're going to have 67 more residences on the globe china has taken it within their five-year plan to decrease their energy intensity by 45 percent between from 2005 number 2005 levels to 2050 their will on their way they have a top-down government they had some trouble a few years ago but they're well on their way as they're doing that the next country that is of significance will be india simply because they are going to go through their own building boom they have all they're coming from a further depreciated level of energy demand and that is destined to increase so essentially between china and india that's where that's where the energy efficiency market is going to grow and that's where new technologies are going to be deployed but they alone are not going to make um they're not going to save the day essentially the oecd countries who have started from a relatively better position um whereas these folks are designing starting new all of these interventions will be retrofits so this will be a little bit tougher but it cannot be ignored because that's about we're about 30 to 40 percent of the gain is going to come from so if you want to learn more about all of this take our class in the spring and in the meantime if you can't wait till the spring if you um are at all intrigued we know this isn't their area of focus probably but if you'd like to learn more we do have some quite interesting research projects that are going on and we're always interested in having students come and learn so maybe one or two questions okay what are your opinions on this thermostats? um i think that it's an example of new technology it's really good because it's gotten people excited honeywell had thermostats for years and believe me nobody went to a cocktail party and said wow i just got my new honeywell thermostat and so it to me part of this is instead of really boring things that people design um if you can make energy efficiency sexy and interesting to people because it's a lot of individual decisions go into this so that's one of the really great things about nest is it's got people interested in it um but it's just one component i mean the nice thing is that within it it can be sort of a hub for doing other things but that alone doesn't change out inefficient lighting that alone doesn't put insulation in a building that alone doesn't have a more efficient air conditioner put in the day the air conditioning breaks down so it's one tool i like it a lot but it's just one tool probably one more question she's ready to let us continue all afternoon you mentioned at the beginning that behavior change is a big part of energy efficiency what are the tools you've seen in the most effective at changing behaviors and what percentage of the problem of behavior change is well the company that sort of created the world of behavior change is opower so this is another commercial for our course that we had um we ran a series of lectures of just bringing folks in um so we had alex alex laski the founder of opower come and talk and opower is a he he just came up with this idea literally of what if we could give people reports about their home energy usage that would compare you to your neighbor he had a lot of science behind it that said nobody wants to look worse than their neighbor especially if the report has you know the unhappy face on it and then added in you know here's three things that you can do so that probably is the biggest intervention that's happened and now what's going on is um when he first started it there was no data analytics there were really no smart meters it was just a very crude tool so this is where we're really looking at much better understanding of how to change behavior with much better information about usage yeah gamification ohm connect and simple energy there's a lot of interest in utilities around the world as that is the because utilities have basically been looking at uh customers as just meters or rate payers and now due to competition uh they want to get closer to the customer they're seeing this as essentially their entrance into being closer to the customer and learning more about them and then offering more services we get