What Will Home Energy Management Look Like in 2020?

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.

A key standard for HEM is the Smart Energy Profile (SEP) Version 2, which was selected in 2009 by the U.S. National Institute of Standards and Technology (NIST) for residential demand response. SEP specifies the protocols required to monitor and control the use of electrical energy in the home. SEP version 1.1 is the current standard; the enhanced version, SEP 2.0, is still being developed.

Neither Microsoft nor Google offered any of these demand response capabilities with their HEM offerings. Rather than support HEM, both vendors merely provided a dashboard (dubbed Hohm and PowerMeter, respectively) to view data on energy utilization. And both vendors also made another critical mistake by crafting "solutions" that completely circumvented the utilities and their indispensable role in HEM.

Home Energy Management in 2020

SEP is both proven and extensible, enabling it to support both utility and consumer HEM needs in the future. And what a promising future that is. There are two elements to demand reduction: energy efficiency (how much is being used); and demand management (when it is being used).

Appliance vendors are already producing far more electrically efficient refrigerators, washers, dryers, televisions, etc., and HEM systems can now control how and when these new smart appliances use energy. And compact fluorescent (CFL) and light-emitting diode (LED) technologies are now replacing old-fashioned (and terribly inefficient) incandescent light bulbs.

Perhaps the biggest "game changer" in future residential energy consumption will be the electric vehicle (EV). If the price of gasoline surpasses $5 per gallon next year, there could be at least one EV in most garages by 2020. Utilities are quite concerned about this trend because the EV threatens to both increase peak demand (potentially at the worst possible time: when people come home after work) and extend its duration.

The better HEM systems already have at least some support for EVs, and there are several industry initiatives (including pilots) to establish standards for managing the charging of EVs, as well as for supporting grid-interactive vehicles that add the ability to discharge into the grid using the vehicle's batteries.

By the year 2020, homes that produce electricity will also become commonplace. Existing homes will be equipped with solar panels and/or a windmill, potentially producing enough power to charge the EV, with the remainder going to other residential needs and back into the grid.

With sufficient generating capacity and the ability to offset a home's loads through "net metering", some consumers will pay nothing for electricity to their utility. Yes, nothing. Beyond 2020 newer homes will not need solar panels because the house itself will be constructed with building-integrated photovoltaic (BIPV) materials. The roof, the walls and maybe even the windows will generate electricity whenever the sun is shining.

And "recycled" EV batteries, no longer able to go the distance in a vehicle, will be used for 24x7 on-premises power production.

In the year 2020, if the predictions here come true, it should be possible for any consumer to reduce or eliminate their electric utility bill, and for any nation to achieve energy independence. And these are very good reasons to have confidence in future of home energy management.

Thermostat photo via Shutterstock.