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Who controls the future of home energy management systems?

Who controls the future of home energy management systems?
June 14
08:30 2016

by Leo Sommaripa

When activating the security system motion detectors also tells the smart thermostat to go into “away” mode, home energy management system becomes integrated into the broader field of home automation. As home automation achieves this kind of system integration, customers may stop thinking about energy as separate from other home services like alarms and cable. Customers will instead think about the resulting benefits of security, comfort, and convenience, which are achieved by drawing on integrated services across traditional industry delineations. Bundling of services is likely to be a key element of the consumer experience.

The consumer touch point for energy will no longer be the electricity and gas supplied to the meter, but rather how that energy is used in the home. Consequently, the consumer’s energy brand loyalty will no longer be the external provider of the energy commodity through generation, transmission, and distribution. Brand loyalty will likely move across the divide of the meter, to the in-home service provider who helps the customer manage their energy use.

With important residential energy management opportunities occurring behind the meter, the utility is not necessarily the primary service provider who comes to mind when a residential customer thinks about their energy use. Other industries have a foot in the door because energy management shares infrastructure with information, communications, entertainment, and security services. The tools of home energy management are already developed in industries outside the utilities: broadband connections, cloud-based analytics, sensors, and user interfaces. This dynamic of integrated, bundled services using products from other industry sectors is at the crux of the disruption created by home automation to the provision of energy services: other services can be integrated with energy and other industries are well positioned to do so.

Key strengths needed to make inroads in the market include:

  • Marketing Power, to understand consumers’ underlying wants and capabilities, translate those profiles into design features, and introduce consumers to an unfamiliar product with benefits they have not considered
  • Technical Sophistication, to take advantage of artificial intelligence, big data, and enhanced communication potential
  • Integrated Services, if the objective is to build a product with broad appeal
  • Energy Expertise, so that the core potential energy benefits are realized

The main stakeholders in the market for home energy management systems come from a diverse variety of sectors, generating a market with widely different products. No single stakeholder in the market is likely to have all the key strengths to introduce a broadly successful product (see Figure 1). Consequently, partnerships will be essential to developing a complete package that can consolidate market share, and should be made based on an understanding of how to leverage complementary strengths. Many utilities are evaluating the role that they play in this competitive value chain.

Figure 1: Partnerships Between Industry Sectors Are Needed to Capture All Key Strengths

















Source: Illustrative presentation using qualitative and quantitative analysis by DNV GL

Utilities and competitive retail providers have strong channels to engage consumers on energy related topics. They focus less on understanding market potential for and introduction of new products, though competitive retail providers have some relevant strengths, including being able to react more nimbly to develop products and services. Regulated utilities tend to have more technical sophistication in energy management and have superior access to generation, transmission, and distribution data, which is needed to derive some forms of energy value from HEMS, especially DR value.

DNV GL offers a wealth of experience to help align home energy management strategies with these disruptive, technology-driven changes in the energy marketplace. Learn more about our services here.

Leo Sommaripa, PE, is an energy consultant with DNV GL, where he provides strategic analysis of technology and policy issues with a focus on clean energy, environment, and climate change. He has analyzed, planned, and implemented the introduction of new energy efficiency and climate programs and technologies including: web-based tools to increase participation in energy efficiency programs, an assessment of the potential economic impact of energy efficiency policies in Palestine, and the first comprehensive strategic plan for US climate change assistance to developing countries. He has a Master of Science in Technology and Policy and in Civil and Environmental Engineering from the Massachusetts Institute of Technology. To join Mr. Sommaripa’s professional network on LinkedIn, click here.

Originally printed here.


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