The future for energy management is bright, according to many pundits, due to the guaranteed growth in smart meters and associated smart technology. However, this isn’t the whole story - in fact, while smart meters and thermostats are undoubtedly a growth story in the making - it is consumer usage data and cross-referencing that will change the energy management landscape. By Jon Carter, UK Head of Business Development – Connected Home, Deutsche Telekom.
Growth in the smart metering industry is a widely accepted fact, given government intervention into mandating (or at least encouraging) the installation of smart energy meters, with the aim of giving consumers more control over energy costs. In the UK government initiatives, such as Green Deal and ECO (Energy Companies Obligation), are designed to reduce the UK’s energy consumption and support people living in fuel poverty. The ECO will levy fines on utilities – up to 10 percent of their turnover – if they fail to implement energy efficiency schemes in customers’ homes, and this requirement is driving adoption vigorously.
In parallel, utilities are promoting the benefits of smart thermostats with incentivised packages direct to consumers. By deploying a smart thermostat, a weather station, a smart energy monitor (such as Smappee), as well as a smart meter, a utility can determine the level of energy saving that can be achieved and so help to meet its energy obligation targets. Regulators in some countries allow smart thermostats to be included within targets, which has enabled some other European utilities to be very successful in signing up many customers to such devices.
Berg Insight, an industry analyst, forecasts that by 2019 the number of smart thermostats will grow at a compound of about 65% in Europe and North America. When one considers that in Northern Europe about 60% of household energy is consumed by central heating, it is clear why using devices such as the QIVICON-compatible Homematic wireless thermostat to control energy usage will see such traction.
However, there are a series of challenges to be overcome, and the proliferation of smart grids and meters is only one part of the puzzle. We spell out these challenges in full detail in our Market Insight report on the Smarthome (link: http://connectedhomeplatform.telekom.net/), but in short we firmly believe that new and innovative models and more attractive pricing are needed to enable consumers to realize the benefits of smarter heating, greater energy efficiency and energy savings.
Luckily, the assumption of improved loyalty and churn prevention/customer retention of core commodity tariffs has already been proven. For instance, one of the most successful European utilities has seen the majority of its smart thermostat sales secured through churn prevention, using the device as one of its most successful ‘save tools’.
The range of business models the connected home will support is both rich and diverse – we have yet to even scratch the surface. We believe that we will also see others as distinct as gamification, micro-transactions, affiliate programmes, metered use and freemium also playing a role. We also believe, given the reticence that many consumers have shown to sign up to monthly subscriptions to connected home services – as well as the issue many might have with paying the higher costs often associated with connected devices – the industry must think differently about how it is to create value.
Aside from business models, one of the biggest challenges touches on every aspect of the smart energy world, and indeed new technology as a whole - data. Not only will this explosion in new devices create incredibly powerful datasets, but it will also create proportional challenges. For example, if an energy provider could capture data revealing that the south wall of a customer’s home is poorly insulated, and that the homeowner could possibly reduce their heating bill by 5 percent during winter by installing double glazing or wall insulation, a new range of value added energy services could be created.
However, while the benefits to both utility and consumer are considerable, the risks of data mismanagement are very real, especially given the unprecedented volumes the smart home interconnected mesh of appliances, devices and sensors will generate. Consumer awareness of the value of their data is increasing with each high-profile breach, and trust will be a key currency in the digital-dominated smart meter future. Developing new models to deal with even-bigger ‘big data’ will be vital, alongside creating new business models and opportunities - it’s going to be an inspiring and challenging few years for us all!