Navigant Research Blog

Google Enters IoT World, Again

— June 18, 2015

The Internet of Things (IoT)—a much hyped, though somewhat ambiguous, concept about interconnecting devices to create a system of systems for user convenience and detailed in Navigant Research’s IoT (Internet of Things) for Residential Customers report—is not a new concept.

For years, IoT products have been available to consumers, including smart thermostats, smart meters, connected LED bulbs, and more. Today, the IoT is being implemented by big names like AT&T, ADT, and Apple. Finally, one of the largest and most well-known multinational technology companies in the world is joining the race—Google.

In late May, Google unveiled its new IoT platform, Brillo, at the company’s annual developer event, Google I/O. Brillo is an operating system that manages connected devices, streamlined specifically for use in objects other than smartphones and tablets, which allows the user to create a true IoT smart home.

Brillo is based on Google’s existing Android operating system, which is important for integration with already existing Google technologies, like Google Now voice recognition. Brillo will be paired with Google’s newly created IoT language called Weave. Weave is a communications layer, enabling devices to talk with each other, the cloud, and Android-based smartphones. Google will make Brillo available to developers in 3Q 2015.

The Second Attempt

Brillo is not Google’s first attempt at entering the IoT world. In 2011, Google introduced Android@Home, a service designed to turn the user’s home into a network of Android accessories, using Android as the home’s operating system. Similar to Brillo, Android@Home was announced at a Google annual developer event 4 years ago. However, the Android@Home concept disappeared almost as quickly as it was introduced. Today, the digital landscape is much different, and consumers and developers more readily accept the concept of a connected lifestyle.

With a vast expanse of competition for creating interoperability in devices, it is unclear how Google’s Brillo and Weave will fair. Google has the kind of brand-name recognition that could turn this small, new concept into something very big—the kind of big that exists in nearly every home in America. The fact that Google is leveraging its Android platform also means immediate scalability, so many device manufacturers can use Brillo.

Challenges Ahead

However, there are already standard, protocol, and communication layers out there, and it is unclear how Brillo will interact with these. Take, for example, ZigBee. ZigBee is a communications standard operating on IEEE 802.15.4 that has been around for over a decade. ZigBee already exists in millions of connected products, such as sensors and lights, and the next version (ZigBee 3.0, set to be released in 4Q 2015) is designed to unify and make an entire system of connected devices easier to use. This means that consumers may end up with Brillo/Weave devices and ZigBee devices that cannot communicate—a problem that will likely take some time to resolve. Regardless, Google and its entry into the IoT world is something to keep an eye on for years to come.


Pilot Sheds Light on TOU Rate Sign-Ups

— June 16, 2015

Shifting customers to time-of-use (TOU) pricing creates new challenges for utilities that are considering such moves due to regulatory pressure for greater efficiency and energy conservation. According to a recent Utility Dive report, lessons learned from a pilot program at PECO reveal some useful ideas that could be applicable to other utilities.

PECO, the Exelon subsidiary operating in Philadelphia, identified more than 120,000 residential customers who would be eligible for its Smart Time Pricing program and used direct mail, bill inserts, and email to promote sign-ups. Eventually, 4,882 customers agreed, approximately a 4% acceptance rate, with direct mail the most successful method and email a near total failure.

The TOU pricing was simple. The peak generation rate was nearly $0.16 per kWh on weekdays from 2 p.m. to 6 p.m., excluding holidays; the off-peak rate was just under $0.7 per kWh during the remaining hours. Results were somewhat predictable: the program yielded an average of nearly 6% reduction in peak electricity demand between 2 p.m. and 6 p.m. during the summer months; there was little load reduction in the winter months. For customers enrolled in the program, load reductions produced an average cost savings of 5%. Most of the savings came from people changing their use of large appliances and heating, ventilation, and air conditioning (HVAC) systems.

Program Surprises

One of the surprises from the pilot came from people’s perceptions, or in some ways, their misperceptions. While the average savings was 5%, many people thought they had saved more. In a follow-up survey, 46% of respondents said they saved more than $20 on their bills, when in fact just 5% had. Another eye opener from the PECO pilot involved demographics. Critics of TOU programs argue that the pricing is unsuitable for some groups such as the elderly, low-income, or disabled. But in this pilot, households that reduced usage the most were those with at least one senior citizen or someone covered by the Americans with Disabilities Act (ADA).

The PECO pilot contrasts with other attempts in recent years. For instance, the Sacramento Municipal Utility District (SMUD) in California chose to compare two groups of customers: those who were defaulted into TOU plans versus those who were given a choice to opt in. More than 90% of customers who were notified they were being placed on TOU rates at the start of a summer season stayed on the plan, compared with a participation rate of 15%–20% for those given an opt-in choice. SMUD also fund that many customers liked TOU rates, and the utility intends to make TOU pricing its default structure beginning in 2018. The rest of California is likely to follow suit, as regulators in the state are in the process of redesigning rate structures and considering proposals for implementing more widespread TOU rates by 2019.

There is no one-size-fits all when it comes to TOU pricing. Utilities and regulators can consider several methods for implementing these sometimes controversial programs. Two things are clear: if executed properly, both customers and utilities can benefit, and preconceived notions may not always be valid.


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