Navigant Research Blog

Home Energy Audits, Version 2.0

— March 5, 2012

Ecova, an energy and sustainability management company, is teaming up with smart meter and consumer engagement vendor Aclara to offer a novel approach to getting consumers to reduce energy usage.  Called the Home Energy Plan, the service will help utility clients drive longer-lasting consumer engagement with in-home visits that leverage the power of comprehensive energy-use data.

Essentially, these are in-home energy audits on steroids.  Here’s how it works:

  • Before an auditor visits a home, Ecova and Aclara pull the consumer’s energy usage data from utility records
  • From this data the two vendors use “proprietary algorithms” to create a detailed energy-use profile called My Energy Insights that highlights the home’s energy use for the past year, compares energy consumption with neighbors, and shows the largest energy end uses
  • Armed with this data via mobile devices, the auditor discusses details of the energy profile with the consumer, installs appropriate products such as efficient light bulbs, and performs an on-site assessment to explain the potential savings from the installed products
  • The auditor also gathers the consumer’s contact information as a means of opening up communications channels such as email and the utility’s web portal
  • Later, Ecova crunches the data gathered before and during the visit to make follow-up recommendations for efficiency programs
  • Ecova can also take data from the in-home audit and upload it to Aclara’s online tools, leveraging real data to ensure greater accuracy and improve the value of online services

This type of audit is not without precedent.  Previously, Ecova formed a joint venture that enabled DTE Energy in Detroit to help residents in lower- and middle-income neighborhoods save energy and money.  More than 100 full-time employees were hired locally to conduct audits and install basic energy efficiency products.  In the first eight months of the program, 16,513 DTE customers were served, and they achieved an accumulated savings of 45,337 megawatt-hours of electricity and 177,862,000 cubic feet of natural gas.  People who took part “were thrilled,” according to Andy Zetlan, vice president of product management for Aclara, as they were able to save money and conserve energy.

Other companies, including Opower, Tendril and EcoFactor, provide energy audits as well.  Home Energy Plan is unique in providing workers who make in-home visits armed with data and tools that provide meaningful face-to-face customer engagement, which helps change energy consumption behavior.

Clearly, with the right mix of manpower, data and engagement focus, people will change their energy consumption habits.  But will this have a material effect in the long run?  Can it scale across millions of utility consumers nationwide?  Perhaps, but I have some doubts.  This amped-up in-home audit has potential, but for the majority of consumers in North America a few efficient light bulbs or a water-saving showerhead won’t mean much.  It will take something bigger – like a big spike in energy prices – to get many of them to take serious action.


Honeywell Stirs Up Nest Over Patent Claims

— February 22, 2012

Thermostat giant Honeywell is not sitting back in the fight for the future of the thermostat. The company recently filed a patent infringement suit against Nest Labs – the startup thermostat maker launched by former Apple execs.

Honeywell’s suit, filed with a U.S. district court in Minnesota, also targets retailer Best Buy, which sells the Nest Labs thermostat. Honeywell claims the Nest product infringes on seven patents (details here), and seeks to recover unspecified damages. Honeywell has also recently filed patent-infringement suits against Venstar and ICM Controls for alleged infringement of patents covering thermostats and combustion controls.

Though the legal outcome of this suit is unclear, the immediate impact will be to force Nest Labs and Best Buy to defend themselves at a time when the product is just getting off the ground. The legal costs will hurt Nest much more than Best Buy, of course, given the difference in company sizes. And the negative publicity will be hard to swallow as well. Beyond the legal costs, Nest will have to shift some focus and resources away from marketing its product, and that will damage its market potential, at least short-term.

In the longer-term, this type of patent spat could be a harbinger of future legal fights as new entrants try to disrupt older players with in-home smart grid technology solutions that may or may not have patent protection. For disrupters the message is clear: Have your patents fully vetted, or risk similar legal action.

The wider impact could end up on a more positive note for consumers. Why? Because if the lowly thermostat can be tweaked and a giant like Honeywell is feeling heat from an upstart, then better products and services are the likely outcome. Even if Honeywell prevails with its suit, the notion of a smarter thermostat has created new buzz in the marketplace – and consumers usually benefit when competition is in the air.


Itron’s SmartSynch Acquisition Bolsters Cellular Tech for Smart Grid Communications

— February 16, 2012

Itron’s deal to acquire cellular-networking company SmartSynch is a smart move by the big meter maker, helping bring an increasingly important communication technology in-house.  Besides helping to validate cellular as a supplement to various RF mesh technologies, it also reflects market reality.  Cellular technology is now an efficient and cost-effective alternative to RF mesh in some cases, and utility operators now recognize this.

Moreover, Itron is not alone in seeing the value and future of cellular solutions.  Recently, Silver Spring Networks launched its latest version of smart grid network technology, Gen4, which allows a utility to mix in cellular if it wants.  And Cisco recently unveiled its latest network architecture that encompasses cellular, RF mesh and WiMAX.

The major communication suppliers in this space – including Itron with its OpenWay RF mesh technology – naturally want to promote their own RF solutions.  But cellular got a big lift last year when Consumers Energy (an electricity and natural gas provider in Michigan) chose SmartSynch’s cellular-based AMI system for 1.8 million electric customers.  That got people’s attention.

Now with SmartSynch under its wing, Itron can tell its utility customers, “We’ve got you covered.  If you need to build a private RF network, fine, we’ve got that.  But if you also need a cellular solution, we’ve got that, too.”

The purchase doesn’t come as a big surprise.  The two have been partners for more than a decade, and have contemplated a tie-up in the past, but could never agree on terms.  This deal, valued at $100 million, finally worked for both sides.  Over the years, privately held and venture-backed SmartSynch had raised an estimated $91 million.  But its prospects for an IPO were dim, and barring an acquisition, it was likely faced with having to go back to VCs for more funding.  The choice was fairly clear: take the Itron deal and play with the big boys, or shuffle along.

The deal also highlights the following:

  • The growing importance of cellular for AMI, supplementing its traditional strength in commercial and industrial market and “hard to reach” meters
  • Industry consolidation in the face of a shrinking North American AMI market
  • The potential to leverage SmartSynch’s technology outside the U.S. with Itron’s global reach
  • An interesting overlap between SmartSynch GridRouter and the Cisco router developed in partnership with Itron (and used at BC Hydro)

Itron CEO LeRoy Nosbaum, who came out of retirement last September to get Itron’s house in order, has put another arrow in his quiver as he moves the company forward.  And, quite clearly, this deal moves cellular up the food chain.


Latin America Ready to Break Out With Smart Meters

— February 13, 2012

Latin America is on the verge of breaking out of the smart meter doldrums.  Up until now, the region has lagged behind North America and Europe in the deployment of smart meters, but that is about to change, and 2012 looks to be a launch-pad year.

Here are some recent signs that things in the region are heating up for smart meters:

  • In Ecuador, Eléctrica de Guayaquil has completed the installment of Latin America’s first meter-to-cash system, according to Itron, which provided the technology; the communication system now collects meter data and feeds it to Itron’s meter data management (MDM) system.  The new system enables the utility to better manage energy losses with more precise tamper-proof meters that feature accurate measurement and sensing capabilities.
  • In Brazil, ANEEL, the nation’s electric power regulator, is planning for a nationwide deployment of some 63 million meters by 2021, with large-scale meter deployments starting in 2012.
  • Also in Brazil, anticipation is growing for a possible new smart meter factory to be built by ATC International Group, a Chinese manufacturer.  ATC intends to build the plant to meet Brazil’s growing demand for smart meters, and the company is waiting for Brazil’s government to finalize rules for the minimum technical requirements before moving ahead.  Those rules are expected to be announced in early 2012.
  • DistribuTECH, the noted North American electricity transmission and distribution show, will launch its first South American version of the event in 2012.  Called DistribuTECH Brasil, it will take place in Rio de Janeiro from September 25 to 27.  The show “will be a game changer,” says Teresa Hansen, DistribuTECH’s chairwoman for both continents, who adds in a release that “we’re about to see a huge boom in Brazil’s electricity transmission and distribution industry.”

Beyond the event hype, you know an industry is gaining traction when a trade show of this magnitude makes a move to a particular territory.

Clearly, Brazil is at the forefront of the coming growth for smart meters in the region.  It has the population base and a rapidly growing economy that can support deployments of this scale.  In addition, the country is trying to boost its reputation as an economic force, especially as it will host two major sporting events that will bring worldwide attention: the 2014 FIFA World Cup and the 2016 Summer Olympics.  A smart meter deployment fits nicely with its image-polishing efforts.  We expect other Latin American countries to make announcements about smart meter rollouts over the next several years as well, as they follow Brazil’s example, and learn from its mistakes.  Certainly, it will be an interesting time for smart meter vendors as they compete in this region.


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