Home energy management (HEM) is emerging as the next-generation technology for forward-thinking utilities. HEM can drive energy savings from 1.5 percent to more than 40 percent, but their value to utilities goes beyond savings to customer engagement, competitive differentiation, and demand response, according to Lux Research.
To maintain their edge in competitive markets, utilities are increasingly partnering with HEM technology companies to engage with residential consumers. However, telecom companies and even technology companies are also getting into the mix and threatening to shake up residential electricity markets.
“The last 12 months have seen a flurry of investment activity in the HEM space. California-based Nest Labs was recently acquired by Google for an astronomical $3.2 billion, and Control4 found sky-high valuation with its IPO last August,” said Alex Herceg, Lux Research analyst and the lead author of the report. “These investments illustrate clear interest in bringing automation and the Internet of Things into the home, and the critical role it will play in energy markets.”
Customer engagement is perhaps the biggest benefit of HEM. Utility revenues are huge — around $265 billion in Europe, $370 billion in the U.S., and $1 trillion in Asia, according to Lux — and utilities are spending less than 1 percent of revenues on HEM to engage with customers via energy dashboards and in-home display panels in order to stay competitive.
The largest opportunity exists in the developed world — specifically, the United States, Europe and Asia — where 90 percent lies in existing home retrofits, which make markets like the U.S. and Western Europe most attractive, according to Lux analysts.
Automated metering infrastructure, electricity rate structures and renewable energy supply mix are keys to the success of HEM. Asia is ripe for HEM but lacks a renewable mix, Lux reports, and European states are subject to directives to equip 80 percent of consumers with intelligent metering systems by 2020.
Source: FierceEnergy.com
