Navigant Research Blog

Smart Homes Coming, At a Gradual Pace

— January 19, 2012

The promise of smarter homes continued to make noise at this year’s CES, the world’s largest consumer electronics show.  But nothing really wowed me.  You might call this an incremental show – and that’s not necessarily a bad thing.

Keep in mind that CES is huge, with 1.86 million net square feet of space used by exhibitors, record crowds (upwards of 153,000 people) and a record number (3,100-plus) of exhibitors showing off their newest gear.  Among the products, companies and people I saw, these stood out for various reasons:

Devices

Nest (Nest Labs): It’s hard not to like what Nest Labs has done to the lowly thermostat.  The much-publicized Nest device combines the simplicity of an iPod (the company founders, in fact, helped develop Apple’s iPod) with the ability to “learn” how you use energy to heat and cool your home.  The device then aims to help consumers reduce energy consumption and thereby lower their costs.  Company co-founder Matt Rogers told me the catalyst for Nest was to help people “save a ton” on energy consumption with an easy-to-use device.  After launching online last November, Nest Labs quickly ran out of stock.  Orders are wait-listed now as manufacturing ramps up.

Belkin’s WeMo Home Control Switch: This Wi-Fi connected switch sits between a wall outlet and small home appliances.  You turn it on or off through an app on iOS, Apple’s mobile platform, and the switch can be paired with a motion sensor for more functionality.  Availability of these WeMo devices is expected in the summer of 2012.  Other related devices – such as garage door openers, door locks, and baby monitors – are expected to join the WeMo family as well.

Retail

AlertMe and Lowes’s: UK-based AlertMe has partnered with home improvement chain Lowe’s to provide a cloud-based home management system.  AlertMe will be the platform behind Lowe’s new Iris service for North America, which enables consumers to monitor and control their homes through a smartphone or a computer.  The Iris service will launch in mid-2012.  AlertMe CEO Mary Turner told me the goal is to provide consumers with not only an intelligent digital dashboard for their homes, but also the ability to put their homes on “cruise control.”

Technology

ZigBee, Z-Wave, HomePlug, UPnP, HomeGrid (G.hn): Many of the leading networking technology groups were present at CES, as expected, each vying for greater traction in the connected home space.  While each has something to offer, there isn’t room here to dissect them in detail.  Suffice to say, many vendors have interesting products on the market or coming soon based on these technologies, which is very encouraging.  But it all makes for a cluttered landscape in consumers’ minds, and that slows the emergence of mainstream solutions.

Throughout the show, I heard people say, essentially, “The technology is available for smarter homes – it just needs to be deployed.”  For that to happen, I was told, both utility operators and consumers need more education, which while true, means a slower rate of adoption.  Sure sounds incremental to me – and should be expected, given the sluggish economy and the mood of consumers to move cautiously at the outset of trends that involve something as complex as the modern, connected home.

 

China’s Cleantech Gap With U.S. Grows

— January 18, 2012

Following the announcement of a major renewables-plus-energy storage project in Hebei Province, the Chinese government has released its “Second National Assessment Report on Climate Change,” which concludes that “global warming fed by greenhouse gases from industry, transport and shifting land-use poses a long-term threat to China’s prosperity, health and food output.”

Among the consequences of climate change in China, the world’s largest emitter of carbon dioxide, will be declines in grain production of 5 to 20 percent by 2050, “severe imbalances in China’s water resources,” with catastrophic flooding in some areas countered with severe drought in other regions, and increased public health problems from air pollution, particularly in the country’s coal-producing regions.

“China faces extremely grim ecological and environmental conditions under the impact of continued global warming and changes to China’s regional environment,” concludes the 710-page report.

The United States released a similar report, Global Climate Change Impacts in the United States, in 2009, with an update scheduled for 2013. That report’s findings are equally grim, but have mostly been muted by a political environment in which a sizable components of the Republican Party, including all of the candidates for president save the front-runner, Mitt Romney, continue to deny that global warming is even real. We live in interesting times, when the leaders of a nominally Communist government that restricts its citizens’ access to the Internet are more candid and realistic on the issue of global climate change than the leaders of one of the two major political parties in the United States.

China’s efforts to slow climate change also contrast starkly with the near-complete inaction of the U.S. government. China’s struggle to limit the disastrous effects of its burgeoning coal power industry was detailed in this Atlantic feature by James Fallows. “In the search for ‘progress on coal,’ like other forms of energy research and development, China is now the Google, the Intel, the General Motors and Ford of their heyday—the place where the doing occurs, and thus the learning by doing as well,” Fallows wrote.

“You can think of China as a huge laboratory for deploying technology,” a U.S. official posted in China told the Atlantic. China has also moved to the forefront in developing new nuclear power reactors, including liquid-fuel reactors that use thorium, rather than uranium, as their primary fuel, as I detailed in this report on Wired.com.

The “cleantech gap” between China and the United States recalls the so-called “missile gap” between the Soviet Union and America in the late 1950s and early 1960s, a scientific and technological divide that was crystallized by the Sputnik launch. The missile gap turned out to be an invention. The cleantech gap becomes more real by the month. The reasons are manifold, and they include the capability of a command economy, which China’s to a large degree still is, to move quickly on major projects like clean coal and advanced nuclear plants. Free markets are, according to theory, more nimble and responsive than centrally planned ones. But when it takes a decade just to get a permit for a new nuclear plant (much less build one) in the U.S., and a couple of years to go from conception to completion in China, economic theory doesn’t hold up.

China’s climate change dilemma, particularly around increasing use of coal, is stark, and it may not be solved without wrenching environmental and social changes that could tear at the fabric of society. But at least they’re trying to do something about it.

 

A Tale of Two Utilities

— January 3, 2012

As the new year dawns, a look at two U.S. utilities paints a contrasting picture in terms of customer engagement during a smart meter deployment. San Diego Gas & Electric (SG&E) has traveled a relatively smooth road as it nears the end of its installation of 1.4 million smart meters. Meanwhile, Pacific Gas & Electric (PG&E) has endured a bumpy ride as it continues with its smart meter rollout which has involved upgrading more than 8.8 million electric and gas meters. The California-based operator plans to wrap up its smart meter program in 2012, when the total will reach nearly 10 million endpoints.

Focusing on just customer engagement, SDG&E has set a high bar in its efforts by putting customers first and not just in words alone. According to the Smart Grid Consumer Collaborative (SGCC), the San Diego operator:

  • Sent customer service representatives into the field to handle complaints
  • Trained entire staff on smart meters
  • Addressed complaints quickly
  • Identified old meters that were running slowly and called relevant customers one week later to explain potential bill increase
  • Sampled customer reactions with a door-to-door survey
  • Responded to emotional complaints with empathy as well as factual argument

As a result, while SDG&E received a few statements of health concerns, some high bill complaints, and requests for an opt-out option, the California Public Utilities Commission received far fewer complaints from SDG&E’s customers than PG&E’s.

By contrast, PG&E’s rollout was noted for the following, again according to the Consumer Collaborative:

  • PG&E was early to deploy advanced metering infrastructure (AMI), but did not initially take significant steps to educate or inform customers
  • After receiving complaints, the utility developed an AMI marketing, education, and installation notification campaign
  • PG&E hired 165 call center employees to handle AMI-related inquiries

Despite the operator’s revamped customer engagement policy, some customers have continued to oppose the smart meter program. PG&E recently asked the California PUC for permission to give customers an opt-out option, and the PUC is expected to issue its decision on the matter in the coming weeks. So, this shows some progress on the part of PG&E as it tries to be more flexible in its dealings with customers.

The point here is not to pile on PG&E – its own customers and the California PUC, among others, have done that well enough. PG&E deserves credit for being a pioneer with its smart meter deployment, and it has taken its share of arrows in doing so. But PG&E made a fundamental mistake early on: Not making customer engagement its top priority, and instead pushing ahead with its initial “our way or the highway” attitude. Not a good plan, especially as connected consumers have new online tools for organizing complaints, as we noted in our recent report, Social Media in the Utility Industry. PG&E seems to be on the right track for now, and we will continue to monitor this major utility as it moves ahead with its smart meter deployment in 2012. Other utility managers, meantime, should learn from past mistakes and keep customer engagement the top priority as they roll out smart meter projects.

 

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