Navigant Research Blog

Service Providers Capitalizing on Smart Home Opportunity

— October 17, 2017

The smart home is a concept gaining hype and excitement with its futuristic promises. This market is projected to see significant growth, as Navigant Research expects smart home platform revenue to increase from $4.2 billion in 2017 to $39.5 billion in 2026. As discussed in our report, The Smart Home, a range of companies are vying for market share in this hotbed of opportunity, from startups to large tech incumbents.

Recently, I had a chance to attend the Service Delivery Innovation Summit, a conference bringing together a range of service providers to discuss innovations in the service business. Service providers are increasingly looking toward the smart home as a way to create new revenue streams as existing business models are challenged by newer offerings, such as traditional cable TV versus streaming services.

Who Can Take the Chance?

Service providers are arguably the best positioned to seize opportunity in the smart home. These companies are already trusted by consumers and have existing touchpoints and technologies deployed in the home, making it convenient and easy to go to market with smart home technologies. Because service providers are already in the home, they also have the unique position of being the gatekeeper for technologies that enter the home. Thus, service providers can profit from becoming smart home technology aggregators and can assist in solving many of the issues that exist in the smart home, such as technology interoperability, the comprehensiveness of solutions, and data privacy and security.

Additionally, broadband service providers and telcos offer products and services that support the development of smarter homes, such as cellular and broadband connectivity (which allows for the communication of connected devices and smart home data transmission). They can also use existing networks and infrastructure to offer new smart home-related services, such as professional installation and customer support.

Early Smart Home Investors

Some service providers are already making big investments in the smart home space. Comcast has been in partnership with EcoFactor to offer its EcoSaver thermostat-based energy management service to Xfinity Home customers since 2013. In 2016, the company partnered with Earth Networks (which has since spun off its home sensing and software company Whisker Labs) to bring big data and analytics to the EcoSaver service. In 2017, Comcast finished its acquisition of iControl, a home automation company. It will use the acquisition to build a Center of Excellence in Austin, Texas to wholesale its home automation and security services.

Service Providers Are Paying Attention

Comcast is just one example of a service provider ramping up activity in the smart home industry. Others such as energy providers Centrica and Vattenfall, as well as Telefonica, AT&T, Verizon, and Cox, are also offering home solutions. Service providers are increasingly recognizing the opportunity in this market and can help the progression of smarter homes.

 

Data – The Foundation of Value in the Energy Market Transformation

— October 17, 2017

I attended GreenBiz’s annual Verge Conference in mid-September and found a unifying theme throughout the diverse discussions on the intersection of technology and sustainability: data is the key to market transformation. The topics of the conference’s sessions spanned from environmental justice to grid modernization, but in every conversation and demonstration, it was clear that access to, and use of, good data is the foundation for innovation and value creation. An unwavering commitment to environmental justice was the undisputable, yet unofficial, secondary theme of this year’s event. I would argue this important societal goal can be tackled alongside the transformation of the energy industry by using data and technology.

Decentralization Is Coming

Panelists on the plenary session roundtable for day 1 represented the major contingencies in the US utility landscape—a municipal, a retailer, and an investor-owned utility. From three points of view, these industry leaders agreed that decentralization is coming and “the traditional utility business model is obsolete, if not dead.” At Navigant, we have been articulating this time of market disruption as the emergence of the Energy Cloud. We are exploring how various platforms are creating value through business models built around a more dynamic relationship between energy supply and demand. The foundation of this new energy reality is digital transformation, in which data fuels business opportunity. Buildings2Grid (B2G) integration is just one of the platforms that illustrates the power of data in creating new business opportunities for utilities, as discussed in Navigant Research’s Building-to-Grid Integration report.

As one panelist put it, “Markets move at the pace of innovation, grid moves at the pace of regulation,” which can place a significant hurdle in front of a large proportion of our energy providers. So, how can utilities take a seat at the table in a new energy reality? It starts with data. Navigant Research took another look at utility opportunities in the Energy Cloud with a complementary report, Intelligent Building Technologies for Value-Added Services. The connectivity and data-driven insight of intelligent building solutions create the roadmap for redefining how commercial buildings operate and opportunities for new services to optimize energy use and generation. Or, as one of the more memorable lines from that Verge utility plenary put it, “great innovation is where megabits meet megawatts.”

Across the board, electricity suppliers are unified by a fundamental goal to keep lights on—to support reliable and resilient power. Intelligent building technologies provide a digital lens into commercial customer operations and a pathway to new engagement models for ensuring that power is reliable and resilient but also supports broader customer goals such as sustainability and operational efficiency.

 

Innovative Business Models Required to Drive Microgrids for Resilience

— October 17, 2017

The devastation caused by recent hurricanes in the Caribbean and southern United States has focused attention on the potential benefits of microgrids and local power generation. With widespread power outages and major damage to grid infrastructure, the opportunity to rebuild electrical systems with a more distributed and resilient architecture has never been clearer. Navigant Research’s new report Energy Storage for Microgrids highlights some the developments taking place in this emerging market along with the challenges that must be overcome to capitalize on the full potential of these technologies. The report explores innovations in business models that will be key to the growth of microgrids and distributed energy over the coming years, particularly in markets with significant financial constraints.

Protecting and Improving

Microgrids equipped with distributed energy storage, solar PV, and other forms of distributed generation can greatly enhance the resilience of the electrical system by preventing damage to a single portion of the grid from causing massive outages. This capability would be especially beneficial for islands such as Puerto Rico and the US Virgin Islands, which face frequent hurricanes capable of destroying transmission and distribution lines. In a centralized grid system, although power plants may still be operational after a storm, the energy they generate will be unable to reach customers. Microgrids with localized energy storage and generation are less susceptible to storm damage and can be brought back online more quickly, without damage in one area preventing service from being restored elsewhere. Furthermore, under normal conditions, microgrids provide numerous benefits to the grid by operating both independently and in a coordinated fashion to maximize the use of renewable energy without affecting grid stability.

Leveraging Financial Innovation to Drive Growth

Since microgrids are a relatively new technology platform, two major challenges that hold back new projects are the limited number of standardized solutions (despite some early plug-and-play offerings) and the limited financing options that reduce upfront investments and risks for customers. In the case of Puerto Rico and other islands with significant financial constraints, innovative business models will be critical for microgrids to spread.

Business model and financing innovations have been key drivers of growth in the solar PV industry over the past decade. Many of these same concepts are being applied to microgrid and distributed energy storage projects with the goal of negating the perceived risk of investing in new technologies. Some of the new models shifting risk and upfront investment away from customers include: power purchase agreements and leases with owner financing, software, energy as a service, and design, build, operate, and own models. New business models are being driven by the growing number of companies that leverage their backgrounds to provide microgrid solutions, including utility subsidiaries, energy service and technology providers, solar PV developers, and building energy management and controls providers.

Creating Opportunities

While the distributed energy industry races to help communities recover from recent disasters, it is critical that new technologies capable of reducing the effect of future storms be implemented. However, overcoming the lack of familiarity with these new systems and relatively high upfront costs will be a major challenge. The most successful companies in this industry will be those that can unlock the potential of new business and financing models to reduce the risk and upfront costs to customers. This ability to leverage private investment in infrastructure will be particularly important as countries with limited resources look to recover from massive damage while preventing similar issues in the future. In a webinar later this month, Navigant Research will explore the role of microgrids for improving resilience in another high profile area: data centers.

 

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.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"2017 October","path":"\/2017\/10?page=3","date":"12\/11\/2017"}