Navigant Research Blog

Businesses Say Bring On IoT Regulations

— November 28, 2017

Most businesses do not seek new regulations from governments or regulatory agencies. They already have enough rules to play by. But when it comes to the Internet of Things (IoT), many take a different tack and are quite open to strong regulations since they are acutely aware of the many reported hacks or known vulnerabilities in things like webcams, baby monitors, and cardiac devices.

A new survey underscores this sentiment. 96% of business respondents saying there should be IoT security regulation, according to the study of 1,050 global IT and business decision makers conducted by Gemalto, a global digital security vendor based in the Netherlands.

Not only do business people see the need for enhanced IoT security, consumers do as well. The same Gemalto survey finds that 90% of consumer respondents (out of 10,500) believe there should be IoT security regulation. 65% of the same consumers are concerned about a hacker controlling their IoT devices.

Challenges Businesses Face

The leading challenge for companies trying to secure IoT products or services is the high cost of implementation (44%), according to the survey. That means companies either bite the bullet and invest in greater security for products or services or cut corners. The latter is obviously not a wise approach. It leaves customers too vulnerable to shoddy security in the IoT products or services they purchase. If spending remains a barrier, it could spell trouble for the emerging IoT market as a whole. With no baseline of security, IoT technology buyers will remain leery and unlikely to make purchases.

Another concern the study revealed is that only 6 out of 10 businesses encrypt all the data they capture or store via IoT devices. That means 4 out of 10 (or 40%) businesses do not, a major red flag. Not all data flowing from IoT devices is that valuable; the number of times someone turns on or off a connected light bulb is minor. But health records or personal financial details is another matter altogether.

Energy Sector Relatively Secure, So Far

So far, the energy sector has a fairly good record of thwarting attacks against devices, with some exceptions. Things like smart meters, substations, and other grid assets have remained safe for the most part. But there are many attempts to penetrate the grid, like earlier this year when nuclear facilities came under attack. Those attempts are likely to increase as more things connect to the grid through distributed energy resources and behind-the-meter devices like smart thermostats or EV chargers. Without stronger rules and incentives, the risks will rise significantly.

One can understand the desire for more stringent regulations for the IoT. The number of things connecting to the grid and other systems is growing exponentially, and so too the number of potential threats. A strong set of standards throughout the IoT value chain is needed to keep data, systems, and people safe. Strong rules will force vendors to devote the needed resources and money to make it happen sooner rather than later.

 

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.

 

Insurance Companies Expand into Energy Management to Mitigate Risk

— November 23, 2016

Home Energy ManagementInsurance companies are starting to get smart about the smart home and energy management. Though these companies are in the very early stages of participation in this market, interest has been piqued and insurers are starting to partner with vendors to offer consumer energy management and connected home solutions. For example, State Farm has partnered with ADT Pulse and Generac to offer consumers discounts for home energy products and services. SmartThings, before it was acquired by Samsung in August 2014, had partnerships with four of the 10 largest insurance companies, including American Family Insurance, which joined with SmartThings and Microsoft to create a smart home incubator in Seattle.

Homeowner Alerts

Insurance companies can find value in data from connected devices by detecting issues and alerting homeowners before catastrophe strikes, especially with large appliances and HVAC equipment. They can also use them to develop more informed policies and offer discounts for adopting these technologies. Energy management is especially appealing to insurance companies because it allows residential customers to remotely monitor and control a range of connected energy devices such as thermostats, lighting, appliances, and electronics, which can be useful in powering down devices during emergencies and even deploying backup power during outages.

Insurance providers in particular have an incentive to offer these types of solutions because it can avoid costly payouts. A monitored, controlled, and automated home that can better mitigate risk and avoid disaster can save insurance companies a significant amount of money in avoided insurance claims.

Emerging Opportunities

While insurance providers have reason to offer consumers these solutions, they are not the only non-utility companies interested in energy management. In recent years, companies outside the traditional energy industry have engaged in this space and found value in offering energy management solutions as part of connected home offerings. These include companies such as AT&T with its Digital Life platform, Comcast with its Xfinity Home offering, and Vivint Smart Home. As Alex Hawkinson, CEO of SmartThings, has said, “The number of services that could be spun out of this is limitless. You can pick industry after industry. The ramifications of making the entire world self-aware are simply massive.”

These new players are just beginning to unlock the possibilities of connected homes to provide increased energy efficiency, comfort, and control. There is something happening in this space, but it is still in a very early stage of development. Many major insurance providers are interested in the smart home, but most are still exploring where they can find value in energy management. Expect to see more engagement from insurance companies in the near future.

 

Which Voice to Rule Them All? New Google Device Enters Virtual Home Assistant Fray

— June 3, 2016

Computer and TabletWith Google’s recent announcement of its Home product, a voice-activated virtual assistant for your home to control devices, provide information, and manage energy might be closer than you think. The device will compete directly with Amazon’s popular Echo, and consumers are likely winners.

Home won’t be available until later this year, and its cost has not been revealed, though it’s expect to sell for around $180 to match the Echo’s price point. If the Echo’s history is a guide, I anticipate Home will be a hit with consumers, gaining relatively wide and quick adoption. Amazon has sold an estimated 3 million Echo units since its launch in November 2014.

Home will answer questions and hold two-way conversations in addition to executing tasks like playing music or controlling connected smart home devices, such as a Nest thermostat or LED lights. Essentially, it will do what Amazon’s Echo does.

A Step Forward for Voice Activation

So why is this a big deal? Because Home represents another step toward mass adoption of voice-activated interfaces in homes. Instead of pulling out a smartphone or a tablet, firing up an app and using fingers on a touchscreen to control something in a home, using one’s voice is a more natural and simple process. For instance, while cooking in a kitchen with your hands occupied, calling out to Home or Echo to set a timer is quite convenient, as is commanding a TV to mute itself from across the room as you answer a call. Seemingly small applications like these are the future.

From a utility company perspective, the Home device and other smart home (i.e., Internet of Things [IoT]) products represent a small revolution. Nearly half of utility industry executives say the smart home will revolutionize the industry, according to a survey by public relations firm Antenna. The PR firm does note a separate study about current barriers to adoption among consumers, namely the cost to purchase the equipment and the complexity of installing and configuring smart home systems. Those barriers, however, are likely to fall in the near- to mid-term as production volumes build (thus driving down costs) and competing manufacturers reduce the installation complexities. (For a detailed forecast of residential IoT device shipments and revenue, see Navigant Research’s latest report, Market Data: IoT for Residential Energy Customers.)

No Shortage of Competitors

And don’t count out other prominent companies still on the sidelines in this regard. One is Apple; the masterminds from Cupertino are not to be underestimated, as a former colleague says. “Underestimating Apple in this space or even Siri in this space would be fundamentally wrong,” says Michael Gartenberg, an analyst with iMore.com and a former Apple marketing director. I concur. The other is Microsoft, which has yet to launch a virtual assistant product specifically for the home, but could easily do so with Cortana. There is no shortage of competitors in the space.

Given its influence, Google’s entry into this particular market is likely to be significant, going head-to-head with Amazon. For consumers, the competition should drive prices lower, and a flurry of new applications for both product platforms should be just over the horizon. Voice, it seems, is the new touchscreen for homes.

 

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