What Will Home Energy Management Look Like in 2020?

In the area of home energy management, Microsoft and Google made two mistakes: failing to fully understand the needs of the application, resulting in "solutions" that offered limited real value; and abandoning this nascent market, which is destined to be a significant global opportunity for any vendor with a solution that satisfies the market's needs.

Their failings are understandable because electricity is a peculiar market. Consumers take it for granted. Regulators tightly control it. Utilities struggle to satisfy consumers while being constrained by the regulatory oversight.

Worst of all, the relationship between supply and demand is upside-down: In virtually every other market, as prices go up, demand goes down. But with electricity, wholesale prices increase during peak periods while retail prices remain constant, creating a problem for utilities.

Without demand response capable of reacting to pricing signals, the peak will ultimately exceed generating capacity, as it did in Texas last winter (a summer peaking region!).

Reducing peak demand is the driving force for consumer-connected home energy management, where the VERGE paradigm applies fully. Indeed, the convergence of energy, information, buildings and transportation will forever change the way people use, conserve, store and make energy at home.

Home Energy Management Today

A single word summarizes the status of the home energy management (HEM) industry today: pilots. Pilots are the best way for the industry to experiment with various solutions prior to implementing full-scale demand response programs for reducing peak demand (typically on hot summer days and cold winter days).

A good example of a successful pilot is the one at Oklahoma Gas and Electric Company (OG&E), where smart thermostats enabled residential consumers to achieve a peak reduction of about 1.9 kilowatts per home (while saving money), far surpassing the utility's goal of 1.3 kW.

The OG&E pilot used its newly installed advanced metering infrastructure (AMI) to communicate with the ZigBee-based wireless Home Area Network via smart meters. In other cases, where the utilities have yet to deploy AMI, a broadband Internet gateway can be used.

The smart thermostat, which directly controls the customer's single largest energy device, the HVAC equipment, also uses ZigBee to communicate with switches on other loads targeted for demand response, especially water heaters, window air conditioners, portable space heaters and pool pumps.

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