Navigant Research Blog

Samsung’s Home Energy Management System a Walled Garden

— May 6, 2014

Samsung launched its Smart Home service recently, hoping to expand into home energy management.  From a consumer standpoint, though, there is a stumbling block.  You can bring your own appliance – as long as Samsung makes it.

The new service aims to simplify home automation by using a single application for connecting and controlling home appliances, TVs, and mobile devices.  In the United States, compatible products include Samsung’s Smart French Door Refrigerator, Smart Front Loading Washing Machine, all 2014 Smart TVs, Gear 2 (watch-like wearables), and smartphones with operating systems above Android 4.0.  For the South Korean market, the compatible hardware includes a 2014 air conditioner (model Q9000), a washer (Bubbleshot 3 W9000), all 2014 Smart TV models, Gear 2, and smartphones with operating systems above Android 4.0.

Samsung plans to roll out the service to additional countries throughout the year and will add smart light bulbs and smart ovens in the second half of 2014, including the ability to control devices by voice recognition.  Further plans call for expansion into home safety and energy management.

Walled Garden

While it is laudable to try to connect devices in the home, especially large energy-consuming ones like heavy duty appliances, offering a proprietary solution poses a challenge to market growth.  Devices using other technology platforms or communication protocols won’t be able to join the system.  This walled garden approach is perhaps is a good strategy for Samsung’s business, but not such a good scenario for consumers.

Clearly, Samsung would like to establish itself as a leader with its own set of technology, aiming to set standards and outflank competitors.  But that will not work for consumers, especially those in the United States and other countries who combine appliances from different makers.  Consumers will want things to work together seamlessly, to interoperate, no matter the brand.  Thus, they will look to devices that are less restrictive and take advantage of different protocols like Wi-Fi, ZigBee, HomePlug, or Bluetooth.

The concept of plug-and-play resonates, particularly in the home.  As noted in Navigant Research’s Home Energy Management report, the lack of common standards is a barrier to wider adoption of products that can help reduce energy consumption.  With this move by Samsung, that barrier remains.

 

In Japan, Smart Meters Accelerate

— May 1, 2014

The deployment of smart meters in Japan is moving into a higher gear.  The country’s leading 10 utilities have announced plans to finish installing residential smart meters sooner than originally scheduled.  The speedup was prompted by a perceived need on the part of the incumbent utility monopolies to better prepare for expected competition once the retail sale of electricity is deregulated in 2016.

Tokyo Electric Power Company (TEPCO) is expected to complete its deployment first under the revised schedule.  The company is aiming to have the deployment of about 27 million smart meters finished in its fiscal year 2020.  TEPCO is expected to soon announce which five manufacturers have been chosen to the supply the utility with new meters for its first surge of installations set to begin this fall.

All In by ‘24

Meanwhile, Kansai Electric Power Company (KEPCO) and Chubu Electric Power will aim to have their smart meter projects finished in fiscal year 2022.  KEPCO, which has a service area that includes Kobe, Kyoto, and Osaka, has already deployed about 2 million smart meters.  Six of the remaining utilities intend to complete their smart metering projects in fiscal 2023, with the seventh, Okinawa Electric Power Company, moving up its expected completion date to 2024 from the original year of 2032.  By 2024, virtually all of Japan’s roughly 80 million residential customers are expected to have a smart meter installed in their homes.

The growing smart metering activity in Japan will have a positive impact on at least one U.S. company, Itron.  Itron’s smart grid software package, called OpenWay Collection Engine, was recently chosen by Mitsubishi Electric Corporation for deployment at Chubu Electric Power, Japan’s third-largest electric utility.  The OpenWay platform will be used to help collect and relay the high volume of data expected from field routers and the estimated 10 million smart meters Chubu Electric Power intends to install through 2022.  This Japanese win for Itron, which has struggled in recent quarters, as smart metering projects have wound down in North America, is its second major victory this year.  In March, FirstEnergy announced it had chosen Itron to provide 2 million smart meters and the OpenWay platform for deployment among FirstEnergy’s four Pennsylvania-based utilities.

As was seen during the boom in smart meter deployments in North America (and noted in Navigant Research’s recent report, Smart Meters), a similar situation is about to begin in Japan – with multiple projects commencing at about the same time.  Many winners and losers are about to be chosen among vendors of smart meters and grid hardware and software in Japan.  The stakes are high, and many in the utility world will be watching closely for new lessons that are likely to emerge from the Japanese effort.

 

Opower IPO Signals Growing Market for Energy Management Tools

— April 22, 2014

In its April 4 initial public offering (IPO), cloud-based energy software provider Opower raised about $116 million, resulting in a market cap of approximately $1.2 billion.  The successful IPO culminates a 7-year march for Opower, which has built a solid reputation with dozens of utilities that are being driven by regulators to encourage residential customers to use electricity more efficiently.

Opower’s technology analyzes utility meter data and then sends residential customers regular reports showing how their energy use compares to their neighbors.  Typically, Opower has delivered residential savings in the 2% to 3.5% range.  Last year, the company rolled out a behavioral demand response (DR) program now used by Baltimore utility, Baltimore Gas and Electric (BGE).  Despite its growth, Opower is still not profitable.  In 2013, it generated nearly $89 million in revenue, up from almost $52 million in 2012, but lost a little more than $14 million, greater than its 2012 loss of $12.3 million.

Still Seeking Profits

Other companies in the same energy management arena as Opower have found traction, if not yet profits.  EcoFactor offers a software-as-a-service (SaaS) platform that Nevada utility NV Energy uses to help its residential customers become more energy efficient.  Using EcoFactor’s cloud-based platform and smart thermostats, NV Energy customers who participate in DR events have been able to reduce their air conditioning use by up to 12% and whole-house electric consumption by 6% for a full year.  EcoFactor also has a significant deal with cable operator Comcast, under which its platform powers a service that discovers the heating and cooling patterns of a home and makes automatic adjustments to a smart thermostat based on occupant temperature settings, real-time weather data, and the house’s thermal characteristics.

Similarly, thermostat maker Energate and networking platform provider Silver Spring Networks were chosen by OGE for its home energy management (HEM) strategy.  By deploying Energate’s thermostats and utilizing Silver Spring’s DR capabilities, OGE has successfully launched a service that enables participating residential customers to reduce electricity consumption and save an average of $191 during a summer cooling season.

Slow But Steady

Google energized the HEM space in January 2014 when it announced its acquisition of Nest Labs, maker of the popular, though pricey, learning thermostat.  The $3.2 billion deal, now complete, signaled that Google was ready to get back into HEM (Google dabbled in energy management with its PowerMeter project but shut it down in September 2011 when it failed to attract enough users).  This move helps validate the HEM market.

Despite the slow adoption of HEM programs, these recent market developments portend at least steady market growth in the near- to mid-term, as noted in Navigant Research’s recent report, Home Energy Management. To gain more insight about this trend, you can view the replay of our webinar, Home Energy Management – New Players, Technology Update, and Market Outlook.  To see it, click here.

 

Nest Faces Lawsuit over Alleged Thermostat Flaws

— March 31, 2014

Nest Labs faces a new lawsuit brought by a dissatisfied Maryland customer who claims the Nest thermostat that he purchased is defective since the faceplate heats up and inaccurately measures a room’s actual temperature.  The suit, which seeks class action status, asks for more than $5 million on behalf of other Nest buyers.

The lawsuit was filed by Justin Darisse of Gaithersburg, Maryland and alleges Nest “increases costs because Nest heats up, which causes Nest’s temperature reading to be from 2 to 10 degrees higher than the actual ambient temperature in the surrounding room.”  The suit also alleges the company violates warranty and consumer protection laws.  Darisse also noted in his suit that he would have kept his $30 Honeywell thermostat had he known the Nest device, which retails for $250, would not help lower his energy bill.

Not the First Suit

Nest Labs, which is now owned by Google after a January acquisition, has declined to comment on the suit.  Nest is no stranger to lawsuits, though. There is a pending suit with Honeywell over alleged patent infringement and another patent infringement suit brought by BRK, maker of First Alert smoke alarms, related to Nest’s introduction of its Protect smoke alarm.

While the merits of this latest lawsuit will be debated for some time, the truth is that Nest and parent Google will need to fight the negative perceptions this suit is likely to generate, especially if it does attain class action status.

Mixed Bag

There is no question a Nest thermostat provides some very cool features: it has Wi-Fi to connect with a mobile device, and it learns the patterns of people in a home and can make adjustments automatically.  But my own experience has been mixed.  I installed one in my home last year to control my natural gas furnace, and so far, I have used the same number of Btus over the past 7 months as in the same months the year before.  And the installation was not easy, requiring me to hire an installer to come in after I spent many hours on my own and with a Nest tech via phone to no avail.  Also, two friends have had issues with the Nest thermostat they purchased.  One said his energy bill increased after installing his Nest thermostat.  The other also had trouble installing it by himself and later got so fed up after a software update went bad that he had it replaced with a more standard thermostat.

Now it looks like Nest could have some explaining to do in court. More to come on this, I’m sure.  And for more on the market for smart devices for energy management in the home, please sign up for Navigant Research’s webinar, Home Energy Management, on Tuesday, April 1 at 2:00 p.m. EDT.  To register, click here.

 

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