Navigant Research Blog

What Is a Smart Home and How Will It Play a Role in the Energy Cloud?

Paige Leuschner — November 3, 2017

The concept of a smart home has the potential to revolutionize the way people interact with their homes. Homes that act intuitively and intelligently through smart home systems can enrich consumers’ lives by fostering increased comfort, awareness, convenience, and cost and energy savings. This concept also extends to the role that the home can play in transitioning the grid from traditional centralized generation to the Energy Cloud.

How Do We Define a Smart Home?

However, there is no set definition of a smart home. The industry often uses the terms smart, connected, and automated interchangeably when referring to the Internet of Things (IoT) in the home, though these terms refer to different (albeit related) ideas. Navigant Research believes the concept of a smart home goes beyond the individual devices of a connected home and involves integrated platforms where an ecosystem of interoperable devices is supported by software and services. A truly smart home should be able to act intuitively and automatically, anticipating and responding to the needs of consumers based on learned lifestyle patterns and real-time interaction.

Navigant Research’s View

Navigant Research believes the comprehensiveness and integration of such solutions are the keys to the success of the smart home, as homes that are embedded with smart technologies at their core are more suitable for playing a role in the Energy Cloud. Homes are expected to transform into dynamic assets that balance home energy production and consumption with distributed energy resources, shed load demand through the optimization of more energy efficient products, respond to signals that shift demand to times when the grid is less strained, and generally support a more reliable grid infrastructure.

Market Focus

Currently, the market is focused on the proliferation of connected devices, which are supporting more digitally enabled, connected homes. Consumers are increasingly aware of smart home technologies, with platforms like the Amazon Echo, Google Home, and Apple HomeKit spurring excitement about controlling devices in the home through voice activation and slowly but surely turning the smart home into a reality. These devices are demonstrating value, whether it be for entertainment, health, convenience, security, or energy. The figure below demonstrates the connected hardware in the home that establishes the backbone for comprehensive integrated platforms that support the development of smarter homes.

Connected Hardware in the Home

(Source: Navigant Research)

A Promising Future

There are many obstacles for the smart home market to overcome, such as interoperability, data privacy and security, a lack of embedded technologies in the home, advanced functionality, and connection between smart technologies and the grid. Yet, this market is gaining traction, and smart home solutions are becoming the future of the home and its role in the digital grid. To learn more about the smart home market, check out the recent Navigant Research report, The Smart Home.

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