IoT Strategy

Adapting in an IoT World: Utility Partnerships

by Tom Kerber | Jan. 1, 2015

The Internet of Things, alongside the rising adoption of mobile devices, is driving the rapid expansion of the market for energy services within the smart home. Connectivity opens this sector to a variety of new players, including service providers, app developers, and device manufacturers. For utilities, smart devices open up many new opportunities to reduce consumption and shift load throughout the product lifetime, making them ideally suited for DR and EE programs.

The entry of new players creates competitive pressure, but the energy market in particular is a prime environment for new partnership opportunities. Parks Associates research finds individual smart energy features typically appeal to only one-third of U.S. broadband households at best, but nearly 70% of U.S. broadband households are willing to pay a monthly fee for a bundle of smart energy services. Consumers in general see the value not in one particular offering but in a bundle of services. To ensure the widest possible adoption, companies need to offer the broadest, most appealing bundle of services, which will lead both new and traditional companies in this ecosystem to forge innovative partnerships.

Traditionally, partnerships involve a bilateral agreement between two companies that have similar long-term goals and complement the others’ core competencies. Looking forward, the processes and thinking around partnerships must change in order to scale with the Internet of Things. Products must connect with numerous data sources to create a compelling user experience. Therefore, partnerships must adapt to the new reality of the connected world. The mindset of utilities, manufacturers, and service providers must change and adapt to the scale of the Internet and open themselves to the potential of many loosely coupled partnerships.

Operation Feedback and Recommendations – A manufacturer can use the connection to its product to become an advisor, providing feedback to consumers on how to adjust operation in order to be more energy efficient. Feedback can include advice on behaviors, modes of product operation, or simply information on how users are operating the device. In addition, features could include tips on how to get more operational use out of the product. Users may also benefit from being able to query operational history, enabling user-generated comparisons including energy consumption comparisons.

Automate Equipment Operation – Many products include features and capabilities that are not fully understood by users. Some of these features can lower the cost of operation of the device and reduce overall energy consumption. Manufacturers can provide tools for consumers that eliminate complexity and simplify operation of devices through automation. For example, a clothes dryer consumes less power if the heat is set to a lower setting, but that setting is generally set once and not adjusted. Sensing and automation can select the best setting for a given load and time constraint.

Fault Detection Diagnostics – If a device can automatically monitor its own operation and determine when performance has been degraded, the device can provide feedback, which will promote higher efficiency levels over the product’s lifetime. If a refrigerator door is not fully closed, has a bad seal, or the coil is dirty, the refrigerator will detect more frequent cycling and notify the owner that maintenance is required.

Choreographing Loads – Today, all of the appliances in the home operate asynchronously. Cyclic loads can be coordinated so that, for example, the upstairs and downstairs AC units don’t turn on at the same time. Choreographing loads limits peak demand

Demand Following Supply – As more renewable generation comes online, systems can be used to consume load during periods of low demand and high supply, such as a windy spring night. Systems would respond to pricing signals to cycle on automatically. For example, the water heater may heat to its high temperature set point and then store that energy for later use. Because of the variable nature of both wind and solar generation capacity, utilities can use smart devices in demand side management applications to consume power when it is available and reduce consumption when it is not.

Smart devices are entering the market in increasing numbers. In a recent Parks Associates study 16% of broadband households reported owning at least one smart devices. As adoption continues to grow, utilities can take advantage of the installed base of products and partner with multiple manufacturers and service providers to achieve EE and DR goals and provide grid stability at a much lower cost than traditional programs.

Parks Associates will examine these market trends and partnership opportunities in depth at the 2015 Smart Energy Summit: Engaging the Consumer, held in Austin on February 16-18. This event brings together utilities and smart home solution providers into a single conference that explores the numerous partnership opportunities.

Tom Kerber

Tom Kerber

Director, IoT Strategy

Tom leads Parks Associates research in the areas of home controls, energy management, and home networks. Tom authors numerous reports on energy management and home controls covering the evolution of technology, partnership opportunities, and new business models. Tom’s work at Parks Associates includes managing consumer surveys that track trends and market opportunities and enable insightful evidence-based forecasting for energy, security, and home controls. Tom speaks frequently at key industry events, and his views are sought out by national press organizations and publications.

Tom has done extensive consulting with electric utilities operating in a variety of regulator structures and numerous firms within the smart home ecosystem. Recent utility engagements include defining the home area network roadmap for a California IOU, updating the consumer engagement strategy for a traditional vertically integrated IOU, providing consumer and industry analysis to refine EE and DR programs for an IOU in a restructured market, and providing insights on the evolution of the connected home for a large Midwest IOU. Tom has also led projects for many Fortune 500 companies, helping clients refine smart home strategies, develop scenarios of the future of the smart home market, enhance product roadmaps, and refine specific product features.

Prior to working at Parks Associates, Tom worked as director of engineering and director of product management in multiple industries. Tom began his career in the U.S. Navy nuclear power program on submarines. He holds a Bachelor of Science degree from the U.S. Naval Academy in systems engineering and a master's in software engineering from the University of Texas.

Industry Expertise: Residential Security, Smart Home Products and Services, Home Network Technology, Software Systems, Electric Utilities, AMI, Home Energy Management, Demand Response

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