Navigant Research Blog

Cybersecurity Threats Mount, but Overall Picture Not So Bleak

— November 16, 2017

Cybersecurity threats keep mounting against the grid, corporations, and individuals. The known attacks and security holes revealed in the past year are real and cause for serious concern. The whole picture, however, might not be as bleak as it first appears if utilities focus on getting ahead of cybersecurity threats. The good guys are in this fight and they have solid tools to keep us safe. Among grid-related threats, at least three incidents stand out as examples of how grim the situation could become if utilities do not proactively address cyber attacks.

It was revealed in August that a foreign power had compromised the state-owned Irish power grid company EirGrid, according to a report by Ireland’s Independent newspaper. When the hack was first discovered, experts said the breach occurred more than 2 months beforehand. At the time, the newspaper’s sources said it was still unknown if any malicious software had made its way into EirGrid’s control systems. Though it is unclear which foreign power was involved, the hackers used Internet Protocol (IP) addresses sourced from Ghana and Bulgaria.

In July, US officials revealed that hackers had penetrated computer networks of companies operating nuclear power stations, other energy facilities, and manufacturing plants. Wolf Creek Nuclear Operating Corp.’s power plant near Burlington, Kansas is one of the nuclear facilities specifically named. The nefarious activity caused the US Department of Homeland Security and the US Federal Bureau of Investigation to issue an amber warning, which is the second-highest rating level. It turns out the hackers were unable to hop from victims’ computers into control systems, and officials said there was no sign of a threat to public safety.

In mid-October, millions of people found out that nearly all Wi-Fi devices were at risk of hijack and eavesdropping because of a bug known as KRACK that exposes a flaw in the common security protocol WPA2. If exploited, a hacker could use a skeleton key to access any WPA2 network without a password. Patches for thwarting the threat have been made available from some vendors, while others are still pending.

Grid Cybersecurity

So, how high are the overall risks? Potentially rather high, but perhaps not as high as one might think for the grid in particular. According to Philip Propes, chief security information officer for the Tennessee Valley Authority (TVA), the situation is not doom and gloom in the electric utility sector. During a recent webinar, he said officials in the utility industry are well aware of cybersecurity issues and many have taken appropriate steps. In TVA’s own case, he says his team is moving from a reactive approach to a proactive approach around security and getting ahead of attacks before an event occurs.

Furthermore, private experts and researchers at the US Department of Energy’s national labs are working on new methods to reduce the threat from cyber attacks. One project at Oak Ridge National Laboratory would set up a private communications and control system for the grid, called darknet, that would operate separately from the public internet. Also, the use of quantum encryption capabilities could add enhanced security for the grid.

Cybersecurity risks should not be taken lightly, but there is no reason to panic. There is a growing sense of urgency among experts and officials to collaborate on robust solutions and progress is being made quietly, despite the mounting threats. For a more in-depth look at how utilities are responding to these threats, check out Navigant Research’s Cybersecurity for the Digital Utility report, written by my colleague Michael Kelly.

 

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

— 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.

 

Security Proves to Be a Strong Proposition for the Smart Home

— October 17, 2017

Nest has long been known as the Google-backed consumer products company responsible for the innovative and sleek Nest Learning Thermostat. The company has had a fairly limited selection of consumer products for years. It only expanded upon its original thermostat with the Nest Protect smoke detector in 2013 and the Nest Indoor and Outdoor Cams in 2015 and 2016 to bring its total portfolio to four wholly original devices.

Because the company is slow to unveil new products, any hardware releases from Nest are major news. So when Nest announced six new products last week, it made a big splash in the consumer electronics industry. However, the sheer volume of products in this latest announcement is not the most significant part of this news. Rather, it’s the fact that these products are all security related.

Smart Technology Adoption Is Increasing

Nest’s new product rollout emphasizes the growing importance of security as a value proposition for the adoption of smart home technologies. In the United States, consumers are adopting smart technologies through security providers to help increase awareness of what is going on in their homes and feel more secure and protected.

Security systems no longer include only an alarm system and sensors that monitor when a home’s perimeter is breached, but also include connected cameras, door locks, door bells, and garage door openers. These devices create an ecosystem that monitors the home in and out and can help optimize and automate the operations of a home.

Comcast’s Security Offerings

Nest isn’t the only company engaging in the smart home space through security. Comcast has increasingly become involved in the smart home space through its Xfinity Home security service. The company has invested in home automation through its acquisition of iControl and its partnership with Whisker Labs and is utilizing its existing infrastructure and resources to move further into the security and home automation business.

These moves allow Comcast to create new streams of revenue as some of its traditional business models come under threat, like its cable TV business. Vivint Smart Home is another company offering home security and automation products and services, and already has a video monitoring package similar to what Nest has just announced, alongside a suite of other smart technologies likes its Element smart thermostat.

Value Propositions and Consumer Benefits

There are many different value propositions for the smart home outside of security, including energy, comfort and convenience, automation, and health and wellness. The home energy management space was one of the first to introduce smart home technologies, including smart thermostats, but now there are different value propositions for smart home technologies by region. In the United States, security has prevailed, while energy is still the most popular in Europe.

These value propositions help demonstrate to consumers the benefits of smart technologies and how they can significantly affect their lives. Smart technologies for security can help consumers protect themselves and their families, and energy devices can help consumers save money on their energy bills and contribute to a greener planet. This helps drive the adoption of smart technologies and push the concept of a smart home closer to reality.

 

Installation and Customer Support Play Vital Role in Creating Smarter Homes

— August 10, 2017

The novelty of having a smart home is driving connected device adoption among consumers, but the novelty is wearing off as the concept of a smart home becomes a reality. The smart home market, however, still has a long way to go before it reaches mainstream adoption. One of the major issues this market faces is that many consumers do not understand the value of connected devices. Many customers avoid the market entirely or exchange smart devices for dumb counterparts due to premium prices and installation challenges.

Providers Exploring New Methods

This is an issue that smart home technology providers are trying to tackle by providing additional support to customers. For example, Vivint and Best Buy recently announced a partnership to roll out Vivint employees in more than 400 Best Buy stores around the country. The Vivint employees will be able to give customers advice about smart home devices and even provide installation services. Vivint has traditionally sold its solutions through a direct-to-home approach. The company believes its partnership with Best Buy further develops this approach and its core belief in consultative sales—or human interaction to explain how smart home technologies actually work in the home. This move may help increase adoption by not only providing customers with more support and information, but also making smart home solutions more visible and accessible through availability at a large retailer.

Vivint and Best Buy are not the only companies exploring this method. Amazon is taking a similar approach to increasing smart home customer support by preparing an in-house fleet of experts to offer free Alexa consultations, professional in-home installations of smart home devices, and Wi-Fi networking systems. The fleet, which is part of Amazon Home Services, has been compared to that of Best Buy’s Geek Squad and is currently available to consumers in Seattle, Portland, San Francisco, San Diego, Los Angeles, Orange County, and San Jose.

Professional installation is not an entirely new concept in the smart home space. For example, Comcast requires its Xfinity solutions be professionally installed. It has expanded further into the space with its recent acquisition of iControl, new combination Wi-Fi router smart home hubs, and voice-activated remotes, which can control connected lighting.

Installations Are Key to the Integrated Smart Home

Professional installations and enhanced customer support are key to transitioning the smart home from an early adopter’s market to mainstream. They will also play a role in creating more dynamic, integrated homes that can play a role in a more digitized grid. Though there is no specific definition for a smart home, Navigant Research believes the more integrated connected devices become with the home, the more likely the home can be used for additional purposes like shedding load and stabilizing the grid.

Currently, the market is focused on standalone systems, point solutions, and further developing interoperability between devices to form greater connected ecosystems. However, players like Vivint, Best Buy, Amazon, and Comcast are progressing the reality of the smart home by offering more comprehensive, integrated solutions with professional installations and enhanced customer support.

 

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