Navigant Research Blog

Multi-Family Market: An Opportunity for Smart Home Devices?

— May 12, 2017

Smart home devices are catching on in homes around the world. Nest has claimed installations of its Learning Thermostat in 190 countries, Google announced the availability of its Home in the United Kingdom, Amazon expanded Echo’s US sales to the United Kingdom and Germany, LIFX connected bulbs are selling in more than 80 countries, and Smappee is selling in 85 countries. However, most sales are occurring among consumers in single-family homes. The multi-family market is largely untapped, leaving opportunities for vendors to gain traction and market share.

Possibilities Abound

There are a number of reasons for this untapped market. First, ownership of devices in multi-family dwellings can get complicated. Should landlords or consumers install and own the hardware? Landlords and building managers have little incentive to purchase such devices because they do not enjoy the benefits of energy savings or remote access, though they do have the option of charging higher rent for the added luxury. For occupants, it may not make sense to own these devices if the property is a rental, especially since renters in the United Kingdom are moving 8 times more than homeowners and since surveys show that 56% of US tenants plan to move within the next year. When devices are installed in multi-family units, some are not used to their full potential. For example, smart thermostats often cannot participate in demand response programs due to the complexities of directly controlling load in multi-family dwellings, where each unit often does not have its own central HVAC system. In fact, many pilot programs that utilize smart thermostats are unavailable to renters or apartment dwellers. On top of this, it can be far more expensive for utilities to implement demand-side management programs in multi-family dwellings than in commercial or single-family residential buildings.

Despite the complexities associated with this market, renters are interested in smart home devices. According to a recent study conducted by Wink, 36% of renters would pay more in rent to have smart home products or amenities in their homes. Given that 37% of Americans are renters, this means the multi-family dwelling market has a lot of potential.

Some companies are beginning to tap into the opportunities available in this market. IOTAS is a company approaching the market with a business model focused on selling landlords and building managers hardware packages that are installed across from apartment complexes. The solution includes tenant accounts that store personal device preferences and follow tenants between apartments as they relocate. This reduces issues surrounding device ownership and creates an opportunity for landlords to charge more in rent for the devices as well as a monthly fee for ongoing services—like monitoring and controlling. While these types of solutions are just emerging, the trend shows hope for Internet of Things and smart home solutions in the multi-family sector.

 

First (Nearly) Nationwide LPWA Network Now Available for Utility Applications

— April 4, 2017

On March 31, Verizon launched the first commercial LTE-Cat-M1 network across 2.4 million square miles in the United States. LTE-Cat-M1 is a cellular-based, low power wide area (LPWA) network designed to support the burgeoning Internet of Things (IoT) industry. Other LPWA solutions include ultra-narrowband systems such as SIGFOX, RPMA technology from Ingenu/Trilliant, the LoRA standard, and others.

Verizon said that the service will run at $2 per month per device (or less for large-scale deployments)—less than existing 2G or 3G cellular services that may be in use today by electric utilities. Chipsets and modules are available from Sequans, Telit, Qualcomm Technologies, Encore Networks, Link Labs, and NimbeLink. Modules from Qualcomm are also available with Verizon’s ThingSpace IoT cloud platform integrated.

In addition to low cost, LPWA solutions such as LTE-Cat-M1 are also known for very long battery life (10-20 years), as well as improved in-building/underground penetration. Click here to see an infographic highlighting the features of Verizon’s LTE-Cat-M1 offering. Rival AT&T has been trialing LTE-Cat-M1 in San Francisco since last fall and said in January that it would deploy to “most” of its network by mid-year and nationwide by year-end.

The LTE-Cat-M1 standard, along with the yet to be launched narrowband IoT (NB-IoT) and the GSM-based Extended Coverage-GSM-IoT (EC-GSM-IoT) standards, will be deployed via a software upgrade to existing LTE or GSM cellular networks. LTE-Cat-M1 is expected to be popular across North America, while many European cellular operators are more focused on the NB-IoT standard, which is expected to launch in 2018 along with EC-GSM-IoT.

IoT Comes of Age – for Utilities Too?

For power utilities, LPWA technologies promise to make widespread sensor networks an economic reality throughout the distribution grid. With costs as low as a dollar or two per year for some standards (SIGFOX and LoRA), depending upon data volume, utilities may finally be able to make a sound ROI argument for ubiquitous sensors.

As described in Navigant Research’s report, Low Power Wide Area Networks for Power Utility Applications, the LTE-Cat-M1 service may be appropriate for utility applications such as smart metering, distribution line monitoring and control, fault location, isolation, and restoration (FLISR), Volt/VAR optimization, smart solar inverter connectivity, and wide-scale asset management and monitoring functions.

Navigant Research expects the market for LPWA services and equipment among power utilities to grow by more than an order of magnitude over the next decade, from $23.4 million this year to nearly $280 million in 2026. The market is projected to be valued at more than $1.5 billion over this timeframe.

Total Utility LPWA Revenue by Region, World Markets: 2017-2026

(Source: Navigant Research)

 

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.

 

European Utilities Are Moving toward New Energy Platforms at Different Paces: Part 3

— March 29, 2017

The energy industry is experiencing a profound transformation as the sector moves toward more intelligent, more distributed, and cleaner use of energy. Utilities’ traditional business models are being challenged by disruptive firms offering new services that leverage more advanced technology, as described in Navigant’s Energy Cloud analysis in its Navigating the Energy Transformation white paper. In the first post of this blog series, I described six new energy platforms underpinning the energy transformation. In the second post, I showed that some European utilities have been more active than others in partnering with, and investing in, companies offering new energy platforms. In this post, I focus on the geographical distribution of activity to show that the majority of partnerships are with companies located in Europe, while most of the investments are made in organizations based in North America. In the next and final post, I will argue that in order to be successful in the transition toward a smarter, more digital energy future, utilities will need to strategically adopt the most relevant new energy platforms.

(Source: Navigant Consulting)

In terms of geographical distribution, while the majority of partnerships are with companies located in Europe, it is worth noting that most of the investments that eight major European utilities have made over the last 2 years are concentrated in North America—and California more particularly (see above figure). This is not surprising, when one considers that most startups offering services in Distributed Energy Resources (DER) Integration were created in California. These include AutoGrid (which raised funds from both E.ON and Total), Stem (in which RWE and Total invested), and Green Charge Networks (acquired by ENGIE). French utilities ENGIE and Total and German utilities E.ON and RWE have been the most active investors in California-based companies. While both French utilities have been focusing on companies offering DER Integration services, the German utilities’ activities have been more diversified across multiple platforms, such as Internet of Things (IoT), Electric Mobility, and DER Integration.

The majority of partnerships have been signed with companies located in Europe. An obvious reason is the ease of having operational teams able to work closely together across European countries and time zones—rather than across continents. In the Electric Mobility sphere, Enel has been partnering with automaker Nissan to offer a bundled product consisting of Nissan’s EV and Enel’s home charging point and smartphone app locating charging points across Italy. In the DER Integration field, E.ON and solar PV system provider SOLARWATT have signed an agreement to jointly offer a solar PV and battery storage system, an energy monitoring app, and a green electricity tariff to their German customers.

Lastly, utilities that are competitors in their home European markets sometimes invest in the same startup, while other times betting on competitor companies. Both E.ON and RWE have invested in Bidgely, which provides real-time appliance-level energy consumption applications for residential customers. The California-based startup will use both German utilities’ funding and customer bases to expand from North America to Europe. On the other hand, ENGIE acquired battery storage system and platform provider Green Charge Networks, which is a direct competitor of Demand Energy—the company acquired by Enel in early 2017.

In the next and final post of this blog series, I will argue that in order to be successful in the transition toward a smarter, more digital energy future, utilities will need to strategically adopt the most relevant new energy platforms.

 

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