Blog Post

How Utilities Can Avoid "Driving Off a Cliff" With Home Energy Tools

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

energyawareimageThis week, once again, we heard even more noise from both startups and large firms looking to grab a piece of the smart energy home space. On Wednesday dueling announcements emerged from energy management startup Tendril and conglomerate General Electric (s GE) about a smart appliance partnership, as did a strong showing from home automation startup Control4, which has raised money to connect with utilities and smart meters. But a post from Jesse Berst on SmartGridNews cuts through the press releases and sums up the dilemma of this market quite nicely:

As I’m watching utilities make their first forays into the space, I see most of them driving full speed straight over a cliff. They are piloting HANs [home area networks] and in-home displays (IHDs) that are the worst of both worlds. They have neither the power necessary for utilities nor the sex-appeal demanded by consumers.

The problem is this: Consumers have conflicting demands when it comes to home energy management. In one group are consumers that are actively engaged with their energy management and will want interesting tools — a sleek gadget, a rich interface — in order to take a proactive position in changing their energy consumption behavior. That’s who German utility Yello Strom and Texas energy retailer TXU Energy are counting on to buy their new, fancy energy management tools.

In a second group, however, are consumers that want any type of change to their energy consumption to be either very low maintenance or entirely transparent. Such a consumer could check a box that says s/he will agree to, say, let the utility turn down an appliance during a peak event, but that’s the extent of the participation desired. This group needs a device and services that are largely behind the scenes.

According to research from GigaOM Pro’s Green IT section (subscription required) created by Pike Research’s Clint Wheelock, 26 percent of consumers are “extremely interested” in energy information displays, 26 percent are very interested, 33 percent are neutral, and 15 percent are either not very or not at all interested. Basically about half say they’re pretty interested in energy information displays, and half are not so, or not at all, interested.

So the issue is that the utilities have to work with both types of consumers, and find products that both would like. Something that isn’t engaging isn’t going to satisfy the eager tech-savvy consumer and something too complex or intrusive won’t please the other consumer. On top of that many utilities are regulated and just aren’t equipped to deliver competitive, innovative tools and networks over which to connect the tools.

Ultimately this means that utilities need to be able to offer as much choice to the consumer as they can. To do that, utilities need to keep their systems and networks as open and standardized as possible so as many third parties as possible can create compelling products. That was a lesson the came out of the maturing of the Internet, and something that phone companies have just started to learn with the entrance of Apple (s AAPL) and Google (s GOOG) in the phone market. As the CEO of energy management tool EcoDog, Ron Pitt, told me this week: The market for home energy management tools will unfold like other consumer electronics like cell phones and TVs. Or as he put it, “Not everyone wants the same brand, price, and functions in a cell phone.”