WHAT IF WE MADE A SMART HOME AND NOBODY CAME?
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1 9TH INTERNATIONAL CONFERENCE ON ENERGY EFFICIENCY IN DOMESTIC APPLIANCES AND LIGHTING WHAT IF WE MADE A SMART HOME AND NOBODY CAME? THURSDAY, SEPTEMBER 14 BILL GOETZLER NAVIGANT CONSULTING, INC. PARALLEL SESSION 13 SMART HOMES Dahl s Japan, The Japan Times,
2 THE FUTURE IS HERE!... Websites of prominent Internet of Things (IoT) manufacturers and displays at big box retailers might lead you to believe that the purchase of a few simple products will upgrade any home to a smart home. $30B in % CAGR 1 Electronic House, Accessed at 1 Navigant Research Residential IoT Device Revenue by Region, World Markets: navigantresearch.com Includes total costs for smart meters, thermostats, lighting, appliances, plugs, EV chargers, solar PV, energy storage, and other technologies. Brian Chen. New York Times. 2
3 OR HAVE I SEEN THIS MOVIE BEFORE SMART August 1939 February 2017 Popular Mechanics, Vol. 72, No. 2. Accessed at blog.modernmechanix.com/ Popular Mechanics, Accessed at 3
4 SMART HOMES HAVE A HISTORY OF FALSE STARTS A range of barriers have prevented The Smart Homes of Tomorrow from achieving widespread adoption. 1950s 1970s 1990s Today Smart Home Concepts Push-Button Manor X10 Home Automation Microsoft Smart Home Internet of Things Adoption Barriers Popular Mechanics 1950, Accessed at Installation complexity Limited control interface Communication issues Limited capabilities High cost Limited product availability Integration Total system cost Clear value proposition 4
5 SO HOW DO WE AVOID THIS FATE? Fitting everyone into the puzzle Developing a roadmap for action Turning challenges into benefits Finding mutual ground Facilitating the transformation Popular Mechanics, Photo of 1957 Flying Car. Accessed at amazon.com 5
6 MAKING SURE EVERYONE FITS INTO THE PUZZLE No group can drive the transformation alone; instead, stakeholders must take a collaborative approach that recognizes inherent conflicts and rallies around common goals. Manufacturers Consumers Utilities Service Providers Policy Makers 6
7 AND BY TURNING PROBLEMS OPPORTUNITIES SOLUTIONS Smart home technologies could provide a wide range of benefits for a diverse group of stakeholders. Stakeholders Challenges Potential Benefits of Smart Home Technologies Consumers Complex Lifestyle Limited Time & Attention Convenience User Experience Security Peace of Mind Energy/Cost Savings Elder/Child Care Utilities Load Growth Revenue Pressure Renewable Integration Improved Customer Engagement Data-driven Insight Peak Load Reduction Base Load Energy Efficiency (EE) New Revenue Streams Renewable Energy Integration Manufacturers Differentiation Deepening Customer Relationships Improved Customer Engagement Proactive Maintenance Data-driven Product Insight Revenue Growth Opportunity Service Providers Proximity to Consumer Developing Innovative New Products Increased Brand Awareness Revenue Growth Opportunity Stickier Subscriptions Proactive Maintenance Policy Makers Guaranteeing Energy Savings Applying Emerging Tech. to Mission Energy Savings Emissions Reductions Zero Net Energy (ZNE) Integration Electric Vehicle (EV) Adoption 7
8 UTILITIES FACE A NUMBER OF CHALLENGES IN FUTURE YEARS Supply / Demand Mismatch Zero-Net-Energy Homes Hard-to-Reach Customers Electric Vehicles Flat Demand / Revenue Growth Renewables create greater variability, and large ramp up in early evenings Electric vehicles may create negative price periods Cold-climate heat pumps create winter peaking ZNE homes decrease the annual electricity consumption provided by the utility grid ZNE creates large swings in hourly net production and consumption from the grid perspective Low-to-middle income and multi-family customers have been traditionally hard to reach for EE, TOU, and other programs EV chargers potentially create a large new load within the home But EVs can be a new grid asset with a large battery pack and potential flexibility for overnight charging Energy efficiency has reduced growth rate of electricity consumption On-site renewable energy can reduce the amount of grid power homes use 8
9 SMART HOME TECHNOLOGIES CAN HELP SOLVE UTILITY CHALLENGES Supply / Demand Mismatch Zero-Net-Energy Homes Hard-to-Reach Customers Electric Vehicles Flat Demand / Revenue Growth More home loads can participate in DR scheduling Make better use of TOU rates Appliances can communicate to flatten load curves Verify DR opt-in Batteries allow greater DR capabilities and avoid overgeneration Significant energy savings from smart appliances, plug load controllers, and other technologies Insights into a home s energy use, uncovering specific efficiency recommendations More communication of energy use and cost to better plan monthly / seasonal bills Smart chargers can communicate with other assets to reduce peak events, utilize onsite production and storage Homeowners can use a single app to properly charge/discharge overnight New revenue stream selling items, controlling assets, offering new load opportunities (smart EV charging tariffs) 9
10 UTILITIES HAVE A UNIQUE ROLE IN ENABLING SMART HOME BENEFITS Utilities are well positioned to lead the market transformation based on: Strong market position Standards Development Reliability & Cybersecurity Quantifiable benefits to their business from embracing connected home products Technical expertise in energy and communication technologies Significant financial and consumer capital Available Capital Consumer Trust Marketing Relationships 3 rd Party Validation Utilities Touch Everyone EE / DR / TOU Incentives 10
11 UTILITIES AND TECHNOLOGY DEVELOPERS EACH BRING STRENGTHS AND WEAKNESSES TO THE SMART HOME MARKET For example, technology developers are often nimble but lack funding, while utilities are often slow-moving but well-funded. Strengths Utilities Well funded, with steady revenue Established in market, with regular customer touchpoints Works regularly with policy and regulatory agencies Technology Developers (Mfrs. + Service Providers) Offers new technologies that transform the market Moves quickly to increase capabilities and add features Builds consumer excitement and daily lifestyle engagement Weaknesses Lack new technologies Slow-moving and riskadverse Lacks consumer excitement or lifestyle engagement Lack resources funding for widespread rollout (most) Difficult customer acquisition without substantial marketing Potential regulatory hurdles for new capabilities 11
12 FINDING MUTUAL GROUND TO OVERCOME CONFLICTS Technology Policy & Regulatory Agencies Funding Utilities Consumer Excitement Market Presence Speed Technology Developers (Mfrs. + Service Providers) Regulatory Experience Working together combines the strengths of each group to address conflicts with safety, reliability, privacy, and security. This strategy also streamlines interactions with policymakers and regulatory agencies that could: Support RD&D through grants Promote products & services to lowincome customers Allow new programs, tariffs, and revenue streams for regulated markets 12
13 HOW WILL UTILITIES AND TECHNOLOGY DEVELOPERS BENEFIT? Utility: Communication between EE/DSM tech and utility systems Tech: Better cost-effectiveness, easier integration Technology Consumer Excitement Utility: Co-developed products, services, rate plants, DSM programs Tech: Improves value for skeptical consumers through local connection Utility: Streamline lab and field demos Tech: 3rd party validation, utility incentives Funding Market Presence Utility: Increased DSM participation Tech: Greater audience and local distribution Utility: Regular updates for tech; streamline enrollment Tech: Faster validation of savings through demo projects Speed Regulatory Experience Utility: Increased comfort with products using utility-supported certifications; interaction with policymakers Tech: Streamlined certification processes 13
14 HOW DO WE UNLOCK THE SMART HOME FUTURE? Together, utilities and technology developers can finally unlock the tremendous benefits that connected home technologies could offer for consumers daily interactions with their homes, and the wider goal for a more sustainable energy future. Standards Development Demonstrations / EM&V Certification & Labelling Marketing & Sales Communication to Other Stakeholders Develop standards and test procedures to ensure products carry a minimum level of energy savings, cybersecurity, DR capabilities, privacy, etc. Participate in demonstrations and EM&V studies to quantify the energy savings and benefits of products, and to understand potential issues prior to wide-scale rollout Create co-branded laboratory certification programs and product databases that qualify product capabilities and features (e.g., energy savings, cybersecurity, privacy) Create a joint marketing and sales program that will communicate benefits to consumers, reduce concerns over cybersecurity, privacy, etc., and provide helpful information for utility storefronts, online retailers, and brick-and-mortar locations Create a joint industry organization that communicates with policy makers, regulatory agencies and other stakeholders to explain the benefits of connected home products, listens to concerns, and start a continued dialogue around an interoperable connected home environment 14
15 SUMMARY AND CONCLUSIONS The availability of and market need for connected home technologies exists today, but utilities and technology developers must leverage their combined abilities to achieve this larger vision. Acting alone, neither party can overcome the issues of standards adoption, interoperability, cybersecurity, tariff development, data sharing, and other topics. Together, utilities and technology developers can ensure new products and services address the needs and concerns of all parties through: Utilities Manufacturers + Service Providers Policy Makers Consumers - Collaborative standards development - Joint demonstrations - Accelerated adoption through incentive programs, rapid customer enrollment, and local retail partnerships 15
16 THANK YOU FOR YOUR ATTENTION! BILL GOETZLER Managing Director (781) JIM YOUNG Managing Consultant (312) JEREMY ROSENBLATT Senior Consultant (781) Icons sourced from The Noun Project by (in order of appearance): Yasser Megahed, Nicholas Menghini, Vladimir Belochkin, David, corpus delicti, Masha Eizner, Ricardo Moreira, Ramakrishna Venkatesan, Icon Solid, Alicia Kranjc, Mood Design Studio, Alexey Voropaev, Guru, Vectors Market, anbileru adaleru, shashank singh, and Oksana Latysheva. Creative Commons License. Available at: 16
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