FEATURED IN: CONSTRUCTECH, June 2001
                by: Kurt Scherf and Ian Bryant, Parks Associates

With the California energy crisis in full swing-it was recently announced that California could face blackouts up to 15 times a week throughout the summer-energy utilities, homeowners, and home builders are beginning to realize the importance of HVAC (heating, ventilation, air conditioning) controls and energy management.

A variety of HVAC controls and systems exist that can cut energy bills by up to 20% or more. In the HVAC controls market the current trend is movement away from simple digital thermostats to programmable and communicating thermostats. The market is also witnessing the emergence of a number of software solutions and the introduction of the telemetry gateway.

Through remote monitoring and management of energy consumption, home controls play on the homeowner's desire to save money, the utilities' desire to conserve energy, and the home builder's desire to set himself apart from the competition. Expect installation of these "smart" energy-management controls to rise as deregulation and the energy crisis in California continue and homeowners and utilities look for ways to avoid another energy crisis.

Start Simply
The simplest and least costly energy management solution involves the integration of programmable or communicating thermostats into the home. While the standard digital thermostat merely maintains the set point that the homeowner establishes at the thermostat itself, programmable and communicating thermostats offer the homeowner greater control and flexibility over the HVAC system.

Programmable thermostats permit the homeowner to program the thermostat, from the thermostat itself, to provide different temperatures at different times of the day. Communicating thermostats use an automation system or computer to do the programming, monitoring, and reporting for all the thermostat functions.

Joe Hlavacek, product manager for Enerzone Systems, Parker, Texas, explains the differences between programmable and communicating thermostats. "The communicating (thermostats) typically occupy the higher-end residential and light commercial markets, while the digital and progammables typically share anything below that," he says. "Communicating thermostats in particular are popular when there are multiple thermostats within a structure." He also noted that communicating thermostats can provide limited control for energy purposes or maximize the efficiency of controlling several different thermostats without having to go to each thermostat location to make changes.

Controlling a "bunch of thermostats" is otherwise known as zoned HVAC. Zoned HVAC generally requires the use of a zoned HVAC controller from companies such as RCS (Residential Control Systems), Rancho Cordova, Calif., or Enerzone systems. However, Honeywell, Morristown, N.J., recently completed its Envirocom protocol that is embedded in zoned HVAC devices and allows them to communicate without the need of a central HVAC controller. However, as a recent development, it has yet to be seen how receptive the industry will be of this new protocol.

Software Solutions
Other advances include the emergence of a number of software solutions that allow for applications such as remote energy management. As broadband becomes increasingly present in homes across America, applications such as remote management are emerging and becoming increasingly popular especially with respect to HVAC and energy management.

Xanboo, New York, N.Y., with its Internet Home Management System, and BeAtHome, Fargo, N.D., with its BeAtHome System, both offer remote energy management capabilities. In both instances, homeowners can remotely access and adjust their HVAC systems via their own personal accounts on the either Xanboo's or BeAtHome's Web page. Currently, both manufacturers are developing applications that will give the homeowner energy usage and monitoring capabilities.

However, consumers are not the only market seeking to derive benefits from software solutions. Energy utilities are becoming increasingly interested in solutions for demand-side management of electricity consumption. Bill Diamond, co-president of Xanboo, says that his company is working with one of the world's largest energy utilities. Diamond says the system that Xanboo and the energy utility have developed "allows users to have total control over a thermostat, see what is happening in their home, and control appliances and devices directly through the Xanboo.com Website using a PC (personal computer) or WAP-enabled cell phone." Diamond notes that the energy utility will also be able to offer load-shedding capabilities through the Xanboo servers.

Diamond says the next step is to "embed our application directly on a DSL chip." Therefore, the general progression in the market becomes obvious, moving from PC-based systems to manufacturer appliance-based systems, and eventually one-chip solutions embedded in a telemetry gateway or a similar device.

Telemetry Gateways
Combining both hardware and software elements to manage and control energy usage between HVAC and other household systems sits the telemetry gateway. Part of a larger category of solutions known as residential gateways, these devices are aimed squarely at energy savings and management of power-sucking devices in the home such as air-conditioners, other appliances, and lights.

Why are energy utilities starting to take notice to the benefits of energy conservation? Says Tim Vail, director of products and services for the New Power Co., Purchase, N.Y., a national provider of electricity and natural gas to residential and small commercial customers, the energy crisis facing California has served as a wake-up call to both industry and consumers alike.

"What we've seen in California has really heightened awareness among consumers that energy management is something that needs to come to pass," Vail says. As deregulation moves forward, it will be critical to provide consumers with real-time information about the fluctuating prices that are inherent in energy provision so they can make better choices concerning electricity usage. "We've got to put in tools where consumers can see these price signals; otherwise it's going to spiral out of control," Vail says.

For these and other reasons, NewPower has joined forces with Coactive Networks, Sausalito, Calif., to implement Coactive's e-services gateway for energy management solutions. On March 14, the companies announced a strategic alliance that will include outfitting households with telemetry e-services including energy management and home control. NewPower plans to launch a pilot project this year, turning existing homes in the eastern United States into Internet-enabled, smart homes.

Another player in the telemetry gateway space, Sage Systems Inc., Alameda, Calif., has targeted home builders specifically in its distribution plans. The company has, for example, already has inked a deal with KB Home, Los Angeles, Calif., which built approximately 25,000 units last year.

In the realm of HVAC systems, nearly 60% of newly built homes in the United States are being installed with programmable thermostats. More than 40% of newly built homes are also being installed with zoned HVAC systems. These numbers increase in proportion to home builders who report that they also install structured wiring solutions or whole-house wiring systems that foster high-speed data and distributed audio and video applications. Watch for more home builders to tie the installation of home-networking solution via structured wiring systems to the installation of other home systems such as HVAC, lighting or security solutions.

Although the concept of the residential gateway is foreign to many home builders, 12% already report that their firms are planning on installing these devices. As is the case with other home-systems installations, these figures grow significantly among home builders installing structured-wiring systems.

Kurt Scherf is vice president of research with Parks Associates. He can be reached at scherf@parksassociates.com.