HEMs Market Has Potential, But Remains Largely Untapped

February 7, 2013
Alarm.com mobile

Many people don’t know that it’s possible to control your thermostat and lights from a smartphone. Photo courtesy of Alarm.com

This is no surprise: A new research brief from Pike Research states a clear, yet unrealized potential for home energy management (HEM) systems from broadband service providers.

Service providers such as ADT, Comcast, Verizon, Vivint, Alarm.com  and others offer limited home control capabilities along with security and other features, including some energy management of wireless, connected thermostats. Verizon even offers some energy monitoring. And Comcast has partnered with EcoFactor for automated, set-it-and-forget it thermostat functionality.

“Most U.S. consumers (63%) say they are interested in HEM, according to a Pike Research survey, but most are not aware that BSPs currently offer HEM services,” states the executive summary of Home Energy Management from Broadband Service Providers.

Service providers could be a huge driver for the adoption of home energy management services, but as the Pike brief states:

This nascent market has yet to find much traction among consumers even though market drivers do exist: a desire by consumers to reduce their monthly energy bills; new-home construction and home remodeling activity that present opportune moments to install the necessary hardware; and increasing competition among BSPs that demonstrates some market validation. Despite these drivers, important market inhibitors, including significant initial costs for HEM hardware plus recurring monthly fees, contracts that require multi-year commitments, an uncertain return on investment, relatively stable energy costs, the lack of technology standards, and lukewarm utility support, have hindered widespread adoption so far.

Hurdles and Opportunities

In a related release, research firm Parks Associates  announced 60% to 80% of U.S. broadband home owners are willing to pay for energy-saving products such as smart thermostats, smart water-tank controllers, and attic insulation. However, the perceived value varies widely. Consumers will pay $109 for a smart water-tank controller and $77 for a smart thermostat that save them 20% on their energy bills, compared to $256 for attic insulation for the same savings. The research firm will present new energy research at the half-day workshop “Understanding Utilities and Consumers: Energy Management Markets” on February 25, 1:00-5:00 p.m. in San Antonio, prior to its fourth-annual Smart Energy Summit.

There are certainly hurdles to this market, such as costs and fees that hinder consumer adoption. However, we at GreenTech Advocates feel the biggest hindrance in the home market today is awareness—not only of the benefits of saving energy in the home but of the best ways to do so. Consumers simply don’t know the biggest energy users in their homes and what they can do about them. Service providers, utilities and others getting into this space need to do a better job of educating consumers on this.

This also opens an opportunity for other providers such as electronics installers, electricians, HVAC specialists and energy-efficiency professionals to sell communicating thermostats, energy monitoring equipment, home networking and lighting controls. And they should be able to provide more personalized service than large, broadband service providers.

Market Growth

Despite the problems facing this market, Pike forecasts that it will grow from its small numbers of subscribers today to almost 900,000 by 2020.

We at GTA don’t put a lot of faith in these projections, from Pike and other research companies, as all sorts of unexpected events could occur. The need for energy conservation could increase exponentially, for example, with continued severe weather, storms and drought.

Smart grid programs being rolled out by utilities could increase the need and awareness as well, and utilities could partner with service providers to supply HEMs to millions of homes. The adoption of electric vehicles could be huge, too, prompting smart charging of cars, variable Time of Use rates by utilities, smart appliances and automated cycling of those products.

Progress is being made in these areas, but until consumers really understand how they can save energy in their homes, growth in this market will continue to be a struggle.

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