Navigant Research Blog

Home Energy Management Is the Tip of the Home Automation Spear

— April 27, 2017

Anyone who has recently swiped through the App Store could tell you that home energy management (HEM) apps have become as ubiquitous as instant messenger apps. While these energy saving apps can’t put your face on a cute dancing dog (and Millennials may not be as interested), they do have the ability to monitor, schedule, and reduce appliance energy consumption. Mobile solutions for HEM are continuously evolving and companies are trying to expand to new niches of the fledgling industry. But HEM is really only the tip of the larger home automation spear.

Power to the People

One of the core tenets of Navigant Research’s Energy Cloud framework is that the electricity industry of the future needs to be customer centric—which means access to data at any time from any device. The market for these applications has grown as customers have become increasingly aware of the capabilities, convenience, and savings the apps can provide. The global market for residential HEM systems has grown nearly 1300% since 2011, up to $2.3 billion in 2016.

Energy Management Giants Are Acquiring HEM Startups

But few companies are solely focused on HEM. Many smart home/home automation/security companies offer some energy management solution. It is increasingly common for small startups focused on HEM to be quickly acquired by larger companies looking to expand their reach across the Internet of Things (IoT) market. 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. Take, for example, the recent activity among several HEM companies:

  • Comcast recently completed its acquisition of iControl Networks, an IoT technologies and connected home security company. Comcast specifically went after the Converge business whose platform powers Xfinity Home.
  • As covered by my colleague Paige Leuschner, Google, Apple, and Samsung have all launched forays into devices that will give them a window into HEM and the full home energy automation market.
  • Startups are also getting involved in the energy app space. Eyedro, a software and electronics design company based in Ontario, Canada, offers an electricity monitor that provides real-time data via a web portal and mobile app called MyEyedro. Toronto-based Wattsly, a personalized energy butler mobile app, offers a tagging feature that allows users to tap a point on their energy usage Smart Graph. It also enables tagging activities like laundry, which helps the app generate advice for further savings and challenge homeowners to be more efficient.

Fortunately for customers, as HEM capabilities are expanding, the costs of HEM and home automation devices and solutions are dropping. Creativity and competition provide an optimistic outlook for the HEM market, and adoption is expected to continue to grow over the next decade as a result. Navigant Research projects the HEM market will reach $7.8 billion annually in 2025.

 

Who Will Lead the Lighting as a Service Charge?

— April 25, 2017

The rapidly evolving lighting industry has recently given birth to a new and exciting development—lighting as a service (LaaS). The manifestation of lighting controls services to optimize lighting use is helping customers save energy and money. The emergence of the LED system as a major technological player in the lighting world has opened the doors to countless opportunities for efficiency and cost reduction by tapping into the Internet of Things (IoT) world. These two stories have led to the development of a new industry: third-party management of lighting systems, otherwise known as LaaS. Management services include technical, maintenance, financial, and many other lighting services.

LaaS Revenue Is Expected to Triple by 2025

The underlying technological advancement that has made the new industry possible is connected or smart lighting. The ability to communicate with a lighting network allows users to control and optimize their lighting use on the fly. Opportunistic companies and startups have caught on to this trend and have begun to offer third-party lighting management services. The LaaS industry is just starting to make waves in the industry. However, it’s expected to become a booming business over the next decade. LaaS generated $35.2 million in revenue in 2016. By 2025, it’s expected reach $1.6 billion.

As the LaaS industry is still in its infancy and a clear market strategy has yet to be established, there haven’t been any companies that have emerged as LaaS-focused companies. Most projects to date have been pilots and test cases. Thus, it has mostly been the larger incumbents that have paved the way in this fledgling industry:

  • Current, a startup within lighting heavyweight GE, is wrapping data and digital solutions around lighting upgrades with optional financing to provide a full suite of LaaS possibilities. It recently partnered with AT&T on a massive smart cities venture.
  • Enlighted, a Sunnyvale, California-based startup, has developed a LaaS platform that combines sensors, analytics, and controls. Unlike other LaaS competitors, Enlighted does not use this platform to sell lighting hardware. Instead, the company partners with luminaire manufacturers, facilities management companies, and electrical contractors to create an ecosystem of lighting systems.
  • Several other companies are exploring the LaaS space, including Philips, Siemens spinoff OSRAM, and Acuity. Acuity has made a number of acquisitions in the last few years in order to facilitate its expansion into the IoT market. These companies are still just testing the LaaS waters at this point.

The Race for the Best Marketing Strategy Is On

It appears that the trail for LaaS will be set and guided by the larger lighting incumbents. The window for small startups to emerge as leaders in the growing industry is shrinking, but opportunities are still available. Lighting giants such as GE and Philips sell through the facilities department of a company. If a solution is found that goes beyond building operations and is sold directly to the IT department, that could certainly cause a large enough shakeup in the market to influence decision makers and unseat the incumbents.

This is more easily said than done. There are no signs that this is being taken on by any new or established companies. LaaS is a new and exciting industry that is still very much in flux. The first company able to hone in on an effective market strategy will have the chance to grab the LaaS industry by the reins and lead it in exciting new directions.

 

Builders Use Energy Efficient Technologies to Construct Better Homes

— March 31, 2017

Home builders today have many options for creating more efficient and smarter homes, and a survey says builders are actually using these products. According to a recent National Association of Home Builders (NAHB) survey, single-family builders in the United States are using an average of 10.2 different green products or practices, and 22% always or almost always have their home certified to a green standard. Energy efficient windows ranked at the top of the list, commonly used by 95% of builders, followed by high efficiency HVAC systems at 92%, programmable thermostats at 88%, and ENERGY STAR-rated appliances at 80%.

(Source: National Association of Home Builders)

At the bottom of the list are smart appliances at 16%, energy management systems at 11%, and passive solar design at 8%, among others. While these concepts are certainly growing in popularity, this survey is a reminder that in reality, energy efficiency in new construction still largely relies on more traditional energy efficient products. These more traditional products are not only tried, tested, and trusted by builders, but can also offer a clearer prospect for energy savings potential, as can be seen in the ENERGY STAR window savings estimates figure below.

(Source: ENERGY STAR)

A Step in the Right Direction?

The industry still has a way to go before smart home and Internet of Things (IoT) technologies become more viable options for home builders. Yet, the fact that energy efficiency products are being more commonly accepted and used among builders is a step in the right direction toward advancing the efficiency of newly constructed homes.

On the other hand, other builders are using much less practical methods for constructing more efficient homes. Apis Cor, based in Irkutsk, Russia, has developed a mobile 3D printer, which it used to print a 400-square-foot single-family home within 24 hours. The company argues that its printer not only produces more affordable homes, but is also more resource efficient. It uses geopolymer, which consists predominately of byproducts from other industries, and avoids the use of traditional materials like wood, which has led to extensive deforestation and environmental erosion. While this company’s methods are much less practical than utilizing energy efficient products in more traditional construction, it shows that the new home construction industry is moving forward in implementing more advanced technologies for building better, more efficient homes.

 

Lighting Solutions Leave Something to Be Desired, but Hope Is on the Horizon

— March 29, 2017

The residential connected lighting market is becoming increasingly popular as consumers adopt more voice-activated smart home devices, such as the Amazon Echo, Google Home, and Apple HomeKit, that enable them to interact with their lighting in a whole new way. Connected lighting shows significant potential as new use cases emerge for assisted living and elderly care, security, notifications, and health and wellness, to name a few. However, the industry has a long way to go before connected lighting is adopted by a greater number of mainstream consumers.

Something to Be Desired

Research for Navigant Research’s Residential Connected Lighting report revealed that there is no single complete, comprehensive lighting solution available on the market. It seems as though every product leaves something to be desired.

Many of the connected bulbs available are either connected and color-changing but do not have very intelligent features; are fairly intelligent but overwhelmingly expensive; do not require a hub but cannot be controlled outside of the home; can be controlled outside of the home but also require a hub; or are so new that it could be a risky purchase relative to more mature products (meaning the company or product itself may not be around in coming years).

And many of the connected bulbs available have tradeoffs when it comes to function and marketability:

  • Connected and color-changing but without very intelligent features
  • Fairly intelligent but overwhelmingly expensive
  • Do not require a hub but cannot be controlled outside the home
  • Can be controlled outside the home but require a hub
  • So new as to be a risky purchase relative to more mature products

Connected luminaires or fixtures such as table lamps are few and far between, and those available on the market tend to take on a more futuristic style than what average consumers might be used to and interested in having in their homes.

Most control products are offering connectivity through protocols like ZigBee and Wi-Fi, and capabilities range from dimming to occupancy sensing. However, many are simply not as smart or automated as consumers are led to believe. Compared to other types of lighting solutions, switches can be an affordable alternative to retrofitting an entire home with connected bulbs, though they require an electrician or experienced do-it-yourselfer to install.

Positive Progress

However, because the residential connected market is still emerging, there are many players entering the market with innovative solutions for solving these issues. For instance, companies such as Nuro Technologies, which will be offering a Wi-Fi-enabled light switch, are arguably positioned to offer the smartest lighting controls products. (In Nuro’s case, though, these switches are not yet available.) Qube Smart Lighting is offering an affordable Wi-Fi and Bluetooth-enabled bulb with smart capabilities like machine learning. Companies like these are expected to push incumbents and other players to continue innovating and developing their products, which will make for positive progress in the connected lighting market.

To learn more about residential connected lighting, look for Navigant Research’s Residential Connected Lighting Market Overview and Leaderboard reports.

 

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