Navigant Research Blog

In the Real World, Smart Grid Programs Proving Themselves

— March 4, 2014

Two utilities on two continents are demonstrating the value of the latest technologies for helping residential customers reduce energy consumption and lower their costs.  This is important because often the benefits of smart grid technology have gone unnoticed or under-reported while stories highlighting the negative aspects of smart grid deployments gain attention.

In the United Kingdom, British Gas says that 9 out of 10 customers report that smart meters have helped them better manage their energy consumption, according to a survey.  Results of the survey also show that 54% of respondents with a smart meter are saving money, in some cases up to £75 ($125) per year.  Also, data from smart meters has motivated 40% of customers to take some type of energy efficiency steps, such as adding insulation.  British Gas has deployed smart meters to about 1 million of its customers so far.  The mandated widespread deployment of smart meters is set to begin in the fall of 2015.

Low Overrides

Here in the United States, Nevada’s NV Energy says customers enrolled in its mPowered program reduced air conditioning use by 12% and whole-house electric consumption by about 6% per year.  Program participants receive an EcoFactor smart thermostat that connects the home’s AC system to a cloud-based efficiency and demand response (DR) service.  Participating households reduced their load by 3 kW to 3.5 kW in the first hour of DR events last year.  Customers can override a bump in temperature settings during a DR event if they want to not take part, keeping the home cooled at a level they prefer.  However, the rate of overrides has held steady at about 11% in the first hour and 7% in the second hour since the utility has been tracking this metric since 2008.

These examples represent the latest evidence of smart grid technologies making a difference to customers after years of utility deployments and somewhat murky results.  Pilot programs and eager vendor hype have indicated savings of up to 20% on a given customer’s bill.  These two examples are noteworthy for being more realistic.  They’ve been normalized over time and over a wider customer base – plus, they’re similar to results from OGE and BGE.  What’s missing are similar normalized results from dozens of utilities that are using smart grid technologies to create greater efficiencies and provide ways for customers to control costs.  Those results will eventually come, but until then, many customers will remain skeptical.

 

Growing in Tough HEM Sector, Opower Files for IPO

— February 19, 2014

News of Opower’s filing for an IPO comes as little surprise.  The privately held company hired investment bankers months ago, and speculation about going public dates back several years.  Nonetheless, it is worth noting what Opower has done right to survive what has been a rocky road for other companies navigating the home energy management (HEM) sector – and what the competition will look like.

Opower offers software-as-a-service (SaaS) to utilities to help customers reduce their energy consumption.  In essence, Opower combines customer data and behavioral analytics into tools that encourage residential customers to reduce their energy use in part by comparing their energy habits to those of their neighbors.

What’s noteworthy is how Opower has sustained measurable growth.  In 7 years, the company has gone from a small startup to employing more than 400 people.  It also counts more than 90 utilities as customers and its software connects with 22 million homes, most of them in the United States.  One of the keys to this growth has been Opower’s investment in research and development (R&D).  The company has invested some $25 million annually on R&D, which has enabled it to adapt to the changing needs of utility customers.  In its confidential IPO filing, the company is taking advantage of the Jumpstart Our Business Startups (JOBS) Act, which permits companies with less than $1 billion in revenue to begin the IPO process with the Securities and Exchange Commission (SEC) without having to divulge financial details.

Market Savvy

Another factor in Opower’s success has been the quality of its analytics.  The company’s methodology and the insights it provides get high marks from a variety of independent sources, including the American Council for an Energy-Efficient Economy (ACEEE), The Brattle Group, Navigant Research’s parent company Navigant Consulting, and public utility commissions (PUCs) across the United States.

What’s more, Opower has been a savvy marketer, promoting its wins and casting doubt on results from competing vendors.  For instance, the company makes a strong point of highlighting its randomized control trial (RCT) methodology to distance itself from the competition.

For these and other reasons, it was no surprise either that Opower topped Navigant Research’s recent study, Leaderboard Report: Home Energy Management, which ranked suppliers of HEM software.  But Opower cannot stand still.  Plenty of competitors are poised to challenge that company’s dominance.  Firms like Google (now in control of Nest Labs), Silver Spring Networks, EcoFactor, and C3 Energy will battle for market share in the coming quarters.  The IPO only means that the target on Opower’s back just got larger.

 

The Smart Home and the Invisible Hand

— February 7, 2014

So many activities in our lives have shifted from a specific location to any location, and smartphones are largely responsible.  Phones used to be a fixture in a home, now they are an appendage.  Turning on lights, heat, and the stereo used to mean that one had to walk over to that appliance and interact with it.  Now, of course, the line “there’s an app for that” has entered the home, with more and more smart devices being accessible through branded apps.

Apps that can control lights, stereos, door locks, home security cameras, and even individual outlets have been reported on in this blog before.  Together, they embody the emerging Internet of Things.  The biggest play is in energy management for consumers, which makes energy conservation and comfort staging (i.e., the preparation of a home’s temperature, lighting, etc. in time for its inhabitants’ arrival) easy.  Navigant Research’s recent report, Home Energy Management, provides an informed look at trends in this growing market and the challenges it faces.

Enough Already

There are two main challenges.  First is the wild west of wireless communication standards.  From Wi-Fi to ZigBee and Z-Wave, there is no uniform standard or consortia of participants zeroing in on one protocol or pathway.  (This is unlike the automotive industry, which has recently embraced the Android OS for the Open Automotive Alliance by leading car manufacturers, including GM and Honda.)  In the absence of a single or even a consistent set of communication standards, individual appliance makers will have to choose a standard to pursue.

The other challenge is the interface.  Simply put, there are just too many apps.  From the consumer’s perspective, there could be some app fatigue, as users who admittedly embrace these devices have to find each individual app on their phone to control each device.

A few new players have entered the market to address these challenges.  The most notable is Revolv, which has made a physical hub (in an attractive cherry color) that can communicate with seven different wireless signals in 10 different languages.  Accompanying the hub is an app that integrates all of the wireless devices in the home in a single interface.  This makes home automation much easier from the start.  Added features include a proximity indicator that aids in comfort staging and profiles that incorporate a suite of settings for specific occasions (including song choices, lighting, and temperature.)

Now You See It

Other interesting approaches include Insteon, which has essentially set up its own communication standard, and Arrayent, which has created a common platform for the most common communication platforms.  The cable and ISPs have also jumped in the game.  Comcast (Xfinity) and Time Warner are bundling digital home management into triple-play offerings.  It makes sense; they already supply the cable and wireless for the home.

Where is all this home app explosion headed?  First, the consumer demand for smart meters is growing, and a recent Navigant Research survey indicates that consumers view these technologies favorably.  Clearly, the standards must coalesce to make using and installing smart devices easier for the consumer.  The apps will no doubt improve as well, and be corralled in platforms like those provided by pure-play companies, like Arrayent or Revolv, or by Internet/cable/telecom providers.

But the secret sauce may lie in making these devices smarter.  The Nest thermostat purports to learn the patterns of home heating and adjust its settings accordingly.  And with Nest’s owner, Google, purchasing the artificial intelligence and machine-learning firm DeepMind, we can expect those predictions to become more profound, or at least seem that way.  The irony is that the ultimate vision of the smart home lies in making these apps, platforms, standards, and devices all invisible to the consumer.  A truly smart home needs no interface or no manual.  It just performs optimally, according to its users’ current and anticipated needs and behaviors.  So, in the end, for the ultimate smart home, you might say, “There’s no app for that.”

 

Silver Spring Launches First Utility App Store

— January 30, 2014

As utilities strive to inexpensively increase the benefits and functionality of smart grid deployments, IT developers are being pressed to develop innovative solutions.  Silver Spring Networks has just introduced its SilverLink Sensor Network, a cloud-based analytics and networking platform that represents the first ever utility app store.  Based on an open API, the platform can be overlain on existing communications networks.  Silver Spring is positioning it as a low-cost but highly customizable option for utilities that want to unlock the value of data gathered by smart meters, or advanced metering infrastructure (AMI).

The modular selection and development of SilverLink’s smart grid apps will allow utilities to customize smart grid functionality that’s enabled by meter data.  For example, customers can view and adjust current home energy use, utilities can monitor and manage assets, and managers can oversee operations and workforce planning.  Silver Spring is putting significant effort into developing strategic partnerships with analytics developers, such as Plotwatt, ONZO, Sentient, and AutoGrid.  The results of these partnerships will vastly expand the choices available for specific applications— the utility version of having numerous options when seeking out an app for editing photos on your smartphone.

Crawling through the Data

An interesting development in data collection and analysis is the platform’s “crawling” method of sorting through data to recognize (and potentially automatically respond to) unique grid events.  While Silver Spring does not disclose proprietary details on its data search, it has likened it to Google Search and Twitter Trending, both of which index sites and posts based on frequency and credibility gained from associated links and mentions.

For utilities, this means the establishment of a meter data search that can prioritize information based upon the applications selected by the individual organization.  For example, if a utility wants to use the platform for real-time condition monitoring, smart meter data can be accessed and automatically filtered to gain insight into substation health through the analysis of voltage and load from individual endpoints.

The SilverLink technology illustrates the convergence of IT and operational technology (OT) by using the smart meter as a networked sensor that transmits data directly into the IT platform.  It also meets growing demand from utilities that invested heavily in smart grid upgrades after receiving federal funding through the American Recovery and Reinvestment Act (ARRA), but have yet to effectively leverage these new AMI systems to meet diverse system and organizational needs.  (Navigant Research discusses these trends in depth in three recent reports, Smart Grid IT Systems, AMI and Distribution Automation Integration, and Smart Meters.)  One key question raised by the release of this platform is whether such technology developments will reduce utilities’ hesitation to deploy new AMI systems, a smart grid market segment that has seen a significant slowdown over the previous year as many systems have struggled to produce significant cost benefits.

 

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