Brighter future for home energy management?

After a slow start, adoption of solutions for reducing residential electricity consumption is expected to accelerate into 2020.
Written by Heather Clancy, Contributor

I've been pitched about plenty of home energy management systems – like the super popular Nest thermostat. But I've been somewhat skeptical about how quickly they will be adopted, especially the ones that require homeowners to handle many of the tasks manually. Most of them are just too expensive and too time-consuming.

But several recent tidbits in the past week have me wondering whether or not the market might be shifting.

The first is an updated prediction from Pike Research that suggests that shipments of home energy management (HEM) systems will reach 40 million units by 2020, not exactly the rosy forecast of a few years ago but an acceleration over what Pike's analysts thought possible just a few months ago.

"The HEM market is not going to be the land rush some foresaw 5 years ago,” said Pike senior research analyst Neil Strother, commenting on the company's new "Home Energy Management" report. “But there are increasing signals that the market will fulfill at least a portion of its potential in the coming years. The key factors to accelerating this struggling segment are convincing consumers of the benefits of the technology – slim savings of 3 percent to 5 percent may not be enough for them to change – and lowering the costs of HEM hardware."

According to the Pike report, home owners need to realize savings of at least 10 percent in order to make the investment in a HEM system (that comes both in terms of the time and money saved, in my opinion).

I was also intrigued to hear that one of the company's creating cloud-based home energy management services, EcoFactor, just snagged another $8 million in venture capital – despite the rather tepid climate for cleantech funding this year.

The lead backers in this round were Aster Capital, which is a firm sponsored by Schneider Electric, Alstom and Solvay Rhodia that has $200 million under management; along with Claremont Creek Ventures and RockPort Capital Partners, which are coming back with money after earlier funding rounds.

Here's the rationale from Todd Dauphinais, a partner at Aster Capital: 

"After following the energy management software market for some time, we found EcoFactor's approach of using Big Data concepts and software algorithms to be far superior to any other residential energy management solution on the market today. EcoFactor has demonstrated significant commercial progress across a number of different channels – including utilities, broadband providers and home energy service companies – by providing both the end customer and strategic partners with real measurable value."

The company is participating in a wide range of large-scale deployments and pilots. That includes high-profile arrangements with Reliant Energy, which offers the service to customers in Texas; and Comcast, which is preparing to roll out EcoFactor to its Xfinity Home broadband customers sometime in the next 12 months. 

Aside from these two very specific things, the other reason that home energy management will probably take off – at least in the United States – is because while political support for clean energy incentives appears to be waning, energy efficiency still has a fair amount of bipartisan support. The climate is likely to change dramatically after the November election but a focus on energy efficiency will likely prevail. 

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