Navigant Research Blog

As Future of US Energy Becomes Uncertain, China Moves Forward with Clean Energy Plans

— February 2, 2017

Cyber Security MonitoringChina is moving forward on its commitments to cutting back on coal generation. It recently announced that it was canceling the development of 103 coal-fired power plants. The announcement, made by China’s National Energy Administration on January 16, cites the goal of these cancellations as meeting a target in the country’s 13th Five-Year Plan to limit coal-fired power generation capacity to 1,100 GW by 2020. The plan includes canceling projects across 13 provinces, some of which are already under construction.

The cancellation of these plants comes in conjunction with another announcement made by the National Energy Administration stating that it intends to spend more than $360 billion on renewable energy resources, including solar and wind, through 2020. The plan includes creating more than 13 million jobs in the renewable energy sector, curbing the growth of greenhouse gas emissions contributing to global warming, and reducing the air pollution that hangs over cities like Beijing.

US Shifts Direction

These announcements come at a time when US President Donald Trump’s stated plans to revive the coal industry, scrap the Clean Power Plan, and focus on oil & gas have raised questions about the future direction of the US energy industry. Some experts claim that the Trump administration will only have so much power to change the fate of the coal industry; the economics behind the industry still point to a decline due to renewable resources becoming cheaper and natural gas proving to be a cost-competitive option in the United States’ current energy portfolio.

Based on statements in the first week of the Trump presidency, it seems unlikely that the United States will assume a leadership role in mitigating climate change. In fact, this shift in focus means that the United States risks losing ground to China in a race to lead the world forward in decreasing carbon emissions. This differs from the status quo just over a year ago at the Paris Climate Summit, where the United States and China both committed to fighting climate change.

Today, President Trump’s past claims that climate change is a Chinese hoax and suggestions of the United States’ withdrawal from the Paris Agreement could create a space for China to take on a leadership role in clean power. While the country still has a long way to go to prove its commitments to the environment, in the past few years it has made significant progress in terms of reducing its emissions, curbing coal generation, and ramping up investments in renewable energy resources. China has shown potential in its ability to lead the world toward a low carbon future.

 

CES 2017: The Year of Alexa and the Smart Home

— January 24, 2017

Home Energy ManagementAs my colleague Neil Strother put it, Alexa stole the show at CES 2017. Walking through the smart home exhibition at the Sands, it seemed as though every vendor with a device prominently featured the Amazon Echo and emphasized integration with Alexa. What struck me most about this phenomenon was Amazon’s ability to transition the smart home from an idea into a reality. The ability of device manufacturers to hone in on Alexa as the basis for the smart home, on which a whole ecosystem of connectivity and access can be built, is pushing a market that the average consumer can get on board with, as opposed to a Jetsons-style future that seems so far away. The Amazon Echo is not just the advertised Wi-Fi speaker, but an entire smart home platform.

Alphabet’s Google Home is also acting as a connected home platform and pushing the market closer to the mainstream. Google Home touts integration with many of Google’s beloved products and services, including its search engine, translation service, and mapping software, as well as a series of devices such as the Nest product line and Samsung’s SmartThings. However, Home still has a long way to go before it can catch up to the connected ecosystem that Amazon has created since the Echo’s release in 2014. This was made clear at CES, where Google Home took second place to Amazon Echo in terms integration with third-party devices and presence at vendor booths.

Comprehensive Solutions

Outside of the Wi-Fi speaker play, others in the market are providing comprehensive solutions that are pushing the smart home forward. Vivint Smart Home, which had a booth that looked more like a livable home than a technology demonstration, not only has a whole ecosystem of devices (yes, Amazon Echo among them), but is also partnering with sister business Vivint Solar to grant consumers more control over their energy. This all operates on one platform, which includes artificial intelligence for learning user patterns and making recommendations on how to better automate devices in the ecosystem, thus bringing the market that much closer to truly smart homes.

There are still major hurdles to creating a truly smart home, such as interoperability, security, and the technology required to make a home “smart” rather than simply “connected.” However, CES 2017 showed that the smart home is becoming much more of a reality than a concept, and  devices like the Amazon Echo are providing average users with a glimpse into the future.

 

Insurance Companies Expand into Energy Management to Mitigate Risk

— November 23, 2016

Home Energy ManagementInsurance companies are starting to get smart about the smart home and energy management. Though these companies are in the very early stages of participation in this market, interest has been piqued and insurers are starting to partner with vendors to offer consumer energy management and connected home solutions. For example, State Farm has partnered with ADT Pulse and Generac to offer consumers discounts for home energy products and services. SmartThings, before it was acquired by Samsung in August 2014, had partnerships with four of the 10 largest insurance companies, including American Family Insurance, which joined with SmartThings and Microsoft to create a smart home incubator in Seattle.

Homeowner Alerts

Insurance companies can find value in data from connected devices by detecting issues and alerting homeowners before catastrophe strikes, especially with large appliances and HVAC equipment. They can also use them to develop more informed policies and offer discounts for adopting these technologies. Energy management is especially appealing to insurance companies because it allows residential customers to remotely monitor and control a range of connected energy devices such as thermostats, lighting, appliances, and electronics, which can be useful in powering down devices during emergencies and even deploying backup power during outages.

Insurance providers in particular have an incentive to offer these types of solutions because it can avoid costly payouts. A monitored, controlled, and automated home that can better mitigate risk and avoid disaster can save insurance companies a significant amount of money in avoided insurance claims.

Emerging Opportunities

While insurance providers have reason to offer consumers these solutions, they are not the only non-utility companies interested in energy management. In recent years, companies outside the traditional energy industry have engaged in this space and found value in offering energy management solutions as part of connected home offerings. These include companies such as AT&T with its Digital Life platform, Comcast with its Xfinity Home offering, and Vivint Smart Home. As Alex Hawkinson, CEO of SmartThings, has said, “The number of services that could be spun out of this is limitless. You can pick industry after industry. The ramifications of making the entire world self-aware are simply massive.”

These new players are just beginning to unlock the possibilities of connected homes to provide increased energy efficiency, comfort, and control. There is something happening in this space, but it is still in a very early stage of development. Many major insurance providers are interested in the smart home, but most are still exploring where they can find value in energy management. Expect to see more engagement from insurance companies in the near future.

 

IoT Device Manufacturers Cut Prices, Making the Smart Home More Affordable

— November 7, 2016

Home Energy ManagementThe cost of setting up a smart home with Internet of Things (IoT) devices is an expensive endeavor, even with recent increased adoption among consumers. Average selling prices for basic IoT devices are steep; in North America, smart thermostats cost about $220, smart lighting networks cost $103, security-home management systems cost $300, and smart plugs cost about $53, according to Navigant Research’s Market Data: Internet of Things for Residential Customers report. These devices are expensive on an individual basis compared to their dumb counterparts, let alone when purchased together as a connected home bundle.

However, there is recent evidence of increasing affordability, as seen from the launch of the new ecobee3 lite smart thermostat. The company has ditched room sensor support and dropped $80 from the price tag of its flagship product. This makes ecobee’s newest offering a more affordable option compared to those from competitors such as Nest, which sells its smart thermostat for $249, and Honeywell’s second generation Lyric thermostat, which runs $199. This recent trend of undercutting the competition on price is not exclusive to the smart thermostat market. Google recently announced that its Home offering, a voice-activated Wi-Fi speaker hub, will be released to the market at a price $50 cheaper than Amazon’s Echo.

Competition Breeds Accessibility

Undercutting competing smart devices may not be the case across the board, as Google also recently announced its Pixel smartphone at a price equivalent to the new iPhone 7 from Apple, surprising industry specialists who expected the Pixel to be priced lower than both Apple and Samsung offerings. Nonetheless, the decline in prices of connected home hardware is expected to perpetuate as industry players try to grasp hold of market share and become leaders in this space. This level of competition is making the smart home concept more accessible and affordable to consumers. Price cuts are pushing the market that much closer to a mainstream reality instead of a futuristic dream.

What this means for the energy industry is increased adoption of energy management devices and greater engagement among consumers. Devices such as smart thermostats are increasingly being bundled as connected home solutions, and as these solutions become more affordable and mainstream, energy management is expected to see increased uptake. Consumers are now finding energy management devices available through connected home solutions framed as security, entertainment, automation, or telecommunications offerings. Utilities can take advantage of this shift in the market by partnering with vendors incorporating energy devices into their connected home solutions, and by using these devices to better engage customers with energy efficiency and demand response programs.

See Navigant Research’s recently published Market Data: Home Energy Management report for more information on the nexus of energy management and the connected home.

 

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