Deploying smart meters across Britain turned out to take longer than expected.  In a surprise move, on May 10, the U.K. Department of Energy & Climate Change (DECC) announced it will postpone the mass rollout of smart meters for another year.  The extra time is needed for vendors to work out technical issues associated with the new equipment and conduct further testing, the Department said.

Before the delay, the plan called for installing more than 50 million smart meters (both electric and gas) in about 30 million homes and businesses, beginning in 2014 and lasting through 2019.  Now the massive deployment will begin in the fall of 2015, with expected completion by the end of 2020.

Vendors for the most part welcomed the delay.  Angela Knight, chief executive of Energy UK, an industry trade association, said the delay was a prudent move, allowing the program to “be completed in a more efficient and cost-effective manner.”

Nonetheless, for vendors counting on 2014 deployments, this delay has to hurt at some level.  Companies like Landis+Gyr, a major meter supplier to British utilities, and Trilliant, which supplies smart meter communications gear to British Gas, will need to push back their manufacturing schedules.  They’ll have to find other business as they wait for clarity on technology issues in the United Kingdom.

For utilities, on the other hand, the delay brings relief.  They can now take time to better plan for the massive deployments and the logistical challenges they entail.  However, this delay does not signal a complete halt to new smart meters in the United Kingdom.  British Gas, for instance, has already deployed some 800,000 smart meters as part of the first phase of the national rollout, and a government spokeswoman said there is nothing to stop energy suppliers from installing smart meters now, even as there is a delay in the nationwide rollout.

Consumers won’t be able to manage their consumption with the latest technology as soon as expected, but the new metering system should have fewer glitches once it moves to the big rollout stage in 2015.

The delay shouldn’t come as a big surprise.  Reshaping the grid on a country-wide scale is a huge undertaking, and getting it wrong would set the United Kingdom’s smart grid back by years.

Nest Labs, maker of the Nest learning thermostat, wants to shake up the residential demand response (DR) market.  Nest is taking a three-pronged approach to drive adoption of residential DR services and, of course, sell more of its thermostats:

• Naming:  First, Nest is not describing its services as demand response, a utility industry term lost on most consumers.  Instead, its DR program is called “Rush Hour Rewards.”  It’s an opt-in procedure whereby customers agree to have their Nest thermostats adjusted automatically during times of peak usage – for example, on a hot summer afternoon when AC usage spikes.  Customers can override the auto-settings whenever they choose.  By naming DR something else, Nest aims to highlight the consumer benefits and ease of use, and shift away from a utility focus.
• Utility partners: Nest has formed key partnerships with major U.S. utilities that will offer Rush Hour Rewards and related services, including NRG Energy subsidiaries Reliant and Green Mountain Energy, National Grid, Austin Energy, and Southern California Edison.  Combined, these utilities provide service to some 12.3 million customers.
• Pricing: Finally, Nest and its utility partners have developed aggressive pricing schemes designed to drive adoption.  Rush Hour Rewards participants can earn $20 to $60 per season, depending on their energy provider and other factors.  Also, there are substantial rebates on the Nest thermostat itself, which is pricey otherwise; for instance, National Grid is offering a $100 instant rebate on a Nest thermostat purchased through its website, lowering the cost to $149; and Green Mountain Energy customers who sign up for its Pollution Free Efficient plan receive a Nest thermostat for free.

A related Nest service, called Seasonal Savings, is a program in which the Nest thermostat and its cloud-based calculating engine (called Auto-Tune, like the audio processor) combine to make slight temperature adjustments early in the heating or cooling season.  These fine-tuning adjustments take place automatically in the background, but they can also be overridden by the user.  Nest’s own studies show Seasonal Savings participants can reduce energy use by 5% to 10%, with 80% of trial members opting to keep the suggested schedules.

Can Nest and its utility partners move the needle on residential DR with these new offerings?  Navigant Research’s consumer survey data suggests it is possible, but there will be resistance.  Nearly half of the respondents in our most recent study say they are unwilling to give up thermostat control to their utility (49%), and only about one in five (23%) are prepared to do so.  The challenge will be in convincing enough of the willing to actually go along.  For many people this is completely new customer behavior.  For Nest and its partners to find success, they will need to spend time and money on a sustained marketing campaign that explains the customer benefits.

Willingness to Allow a Utility to Control Thermostat, United States: 2012

(Source: Navigant Research)

Subsidizing the price for the high-end hardware in exchange for some DR should sway some customers.  Another plus is having utilities endorse the product and support the related user-friendly services.  Customers may grumble about their energy utility, but they still view energy providers as a valued source of energy management options such as these.  In addition, the marketing muscle the utility partners provide is a key asset.  As a startup, Nest’s marketing has been good so far in reaching early adopters.  With deeper-pocketed utility partners along, the ability to reach reluctant mainstream users should be quicker and more sustained.

Competitors are not standing still.  Rivals like Honeywell and Carrier are likely to develop competing products and services, and will be looking to set up similar partnership deals with utilities if the Nest scheme proves fruitful.  Other startups in the DR-energy management space, such as EcoFactor, Opower, Tendril, and EnergyHub, have compelling products, as well.  Still, credit Nest for driving innovative outreach to give this segment some fresh momentum.

Carrier, the venerable heating-cooling hardware vendor, has partnered with startup ThinkEco to offer a new integrated smart thermostat that will enable consumers to register their central and window air conditioners with utility demand response (DR) and energy efficiency (EE) programs.

Carrier’s ComfortChoice Touch thermostat will combine with ThinkEco’s cloud platform, which is called “modlet” (stands for “modern electric outlet”).  The modlet platform can function without the need for a smart meter.  It also enables utilities to have access to real-time load data from window air conditioning (AC) units, and to control through DR programs all types of AC loads.

Because the platform resides in the cloud, consumers benefit by having access to their central AC systems through any web browser or mobile device using either the iOS or Android operating system.  So, for instance, a user could be miles from home on a hot afternoon but planning to arrive there in 45 minutes; thus, from a smartphone, the user could set the AC to start cooling the house now so it would be at a comfortable temperature upon arrival.  And though this functionality is not new (other vendors such as EnergyHub, EcoFactor, and Nest enable mobile-device access), it’s quickly emerging as a must-have feature for the latest energy management devices and cloud services.

For The DIYers

For now, Carrier and ThinkEco have yet to announce whether any utilities have agreed to offer their new thermostat-cloud setup.  However, given ThinkEco’s award-winning program with Con Edison last year in New York City that involved energy savings through window AC units, it’s a safe bet Con Edison is at least taking a look at a trial.  Carrier has no plans to sell the device through retail channels; the company will only offer it direct to utilities for DR or EE programs.  That is a choice worth reconsidering, in my view, as this thermostat would appeal to a wider audience of do-it-yourselfers.  Also, the HVAC-installer channel seems like a good fit for the device as well.   The selling price for the ZigBee-enabled thermostat was not disclosed, with Carrier saying only that it depends on volume.  However, it is likely to sell for less than $150, based on competing products in the programmable communicating thermostat (PCT) category.

The Carrier-ThinkEco alliance provides both partners with competitive advantages.  For New York City-based ThinkEco, it wins an expanded role in energy management and gains valuable branding recognition through its association with a household name.  It also provides ThinkEco’s utility partners more options for engagement with customers – to go beyond the meter.  For Carrier, the ThinkEco partnership enhances its product with new services that tech-savvy consumers like, and it fits with utility goals for EE and DR.  It also underscores an ongoing strategy by Carrier, which has struck similar deals with other energy management software providers in the recent past, namely Comverge and EnergyHub.

While this one partnership alone does not signal a giant step forward, it does have the potential to move the needle for home energy management.  This is the right kind of hardware and software innovation needed to drive the market, and shows that companies besides Nest can deliver new solutions, too.

Consumer engagement software provider Tendril and Tucson Electric Power (TEP) have concluded a residential demand response (DR) pilot program that yielded encouraging results amidst a U.S. home energy management (HEM) market that is still searching for some significant traction (see Pike Research’s Home Energy Management report for details).

Results from the pilot program among participating TEP customers produced a reduction of 2.3 kW per household for each DR event during the tests.  Additional findings from the pilot, according to Tendril, include:

• 72% of participants said they were either very satisfied or satisfied with their overall experience
• 31% logged in to the accompanying Web portal at least once a week, and an additional 31% logged in once per month
• Nearly all participants said they were either very satisfied or somewhat satisfied (53%), or neutral (38%) with the overall power reduction events

The program also yielded an increase in energy awareness of 2.35%, though awareness itself was not a stated goal of the program.

TEP officials were satisfied with the pilot and the capabilities of Tendril’s platform, which enabled the utility to more easily initiate and run the program.  So satisfied was TEP that it decided to extend its partnership with Tendril for a new energy awareness program that will use the software provider’s flagship consumer application suite called Energize.

While results from this type of DR pilot program are encouraging for utilities and their customers, the fact that it was a pilot points out one glaring problem: the slow pace at which utilities are moving to implement the latest solutions for HEM.  The risk here is “piloting to death” new technology.  At some point the pilots have to blossom into full-fledged deployments among a larger portion of a utility’s residential customer base.  I’m still waiting.

Tendril-Hitachi Partnership

Perhaps the bigger story for the HEM market and for Tendril was the recent announcement that Tendril and Hitachi have joined forces.  The two companies plan to deliver new smart energy applications to consumers by way of set-top boxes, wireless gateways, and other already-in-the-home devices.  Seen in its larger context, the Hitachi-Tendril deal adds important players to those already in the mix: Panasonic and smart meter manufacturer Itron are working together in Japan on smart home energy solutions, and Toshiba, which owns Landis+Gyr, has made it known it wants a piece of the U.S. smart home energy market.  This activity sounds like good competition and could become the needed catalyst for a more robust HEM marketplace.