OPOWER is about to save the U.S. $500 million in energy bills

OPOWER is a startup whose technology has saved users over $213 million kilowatt-hours of electricity and over $24 million in energy bills since it launched in 2007 with headquarters in Arlington, Virginia.

And it’s about to step it up, rapidly. OPOWER currently measures homes where its tech is employed, but it has an enormous backlog of homes that are about to be deployed. “The next three years we are looking at closer to $500 million in savings,” says Ogi Kavazovic, VP of Marketing and strategy for the company.

OPOWER made our list last year of 10 D.C. Startups You Need to Know About. Its “software-as-a-service” helps electric and gas utility companies understand how customers are consuming energy. At no cost to home owners, users can access OPOWER programs on a mobile friendly site that let’s users see their energy use in comparison to their neighbors. Voyeuristic energy usage? Yes, please.

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Utility companies typically perform readings 12 times a year. But with smart meters deployed around the country this is going up from 12 to 35,000; basically one every 15 minutes, which is a lot of data. OPOWER then turns that data into useful and insightful information for the customer. For the first time, people have an objective benchmark. Users can set goals to reduce their energy consumption after they receive alerts via SMS, web or e-mail like: “This $140 bill you’re getting is very low,” or “Your bill is average but your AC usage is high in comparison to neighbors, something is likely wrong.”

”We want to make energy efficiency as accessible and easy to understand and address as any other sort of normal consumer purchasing experience,” says Daniel Yates, CEO and Founder.

Typically the cost of the program is 4-5 times less than what the company ends up saving. While the order of magnitude differs from region to region, an average home saves $50 a year and the cost of deploying the program is $10 a year.

“With OPOWER, there’s no device you have to install. There’s a lot you can do by applying clever computer algorithms to this data. We take the utility industry, an industry that is traditionally NOT on the cutting edge, and we’re taking them closer to the cutting edge of technology with an extremely compelling reason. Not only can we provide cool insights to customers, but the overall effect of doing this on a large-scale is extremely compelling. People are making small adjustments and becoming better users of this energy in a more sustainable way. That’s what motivates us.” -Ogi Kavazovic

Most of OPOWER’s competition is from hardware manufacturers. A lot of companies in the space believe the best way to save money is for homeowners to have an in-home display, something like a small LCD screen mounted on your wall or on your kitchen table.

“We gambled and guessed correctly that in-home devices weren’t going to take off. They’re expensive and people aren’t interested in sitting at home and looking at their energy usage. Monday doesn’t look different from Tuesday, Tuesday from Wednesday, etc. Our approach is let’s forget that and use existing communication channels like SMS and Web and give them less frequent but more insightful feedback,” explains Ogi.

OPOWER services 50 utility companies in 22 states nationwide. Just last week, the Baltimore Gas and Electric Company (BGE) selected OPOWER’s Advanced Customer Engagement (ACE) platform as the front-end solution for its upcoming smart meter rollout, which will reach 5 million customers. While OPOWER doesn’t have an international plan yet, there’s been a lot of inbound interest for it, particularly in Europe, Australia and the UK.

So, what does the “O” stand for? “It stands for open, optimistic, optimal. OPOWER believes in an energy-efficient lifestyle and the circle is the most efficient geometric shape,” says Ogi.

At the end of November 2010, OPOWER closed a $50 million series C investment led by Accel Partners and Kleiner Perkins Caulfield & Byers (KPCB) and their earlier investors, New Enterprise Associates (NEA). OPOWER will be re-investing 20 million in R&D over the next 2-3 years. OPOWER opened up a San Francisco office last summer and currently employees 200 people in the U.S.