Growth of the “Smart Energy Consumer”

The utility industry is moving aggressively towards building its renewable energy portfolio, and consumers are gaining interest in renewable sources of energy and energy management. Downward pricing pressure on solar panels, batteries, and smart home devices are contributing to the growth of the “smart energy consumer.”

Younger respondents express a stronger preference for clean energy as well as a stronger willingness to pay more for it. They are growing up in a world where renewable energy and climate/environmental concerns are top of mind.

Nearly half of all households in the US desire to be independent of the grid. While this sentiment is likely rooted in feelings of energy insecurity in emergency circumstances, the reliability of distributed energy resources is still a way off from enabling most energy consumers to be truly “off the grid.”

?Drivers for Home Builders

• There is increasing homebuyer familiarity with and demand for smart tech, fueled by a desire for security, safety, convenience, and comfort.
• Builders seek to increase the perceived value of their products
• Some builders seek to drive revenue through increased sales price
• Builders need to differentiate their products in competitive markets
• Technology costs are decreasing
• Smart speakers and security systems can provide a unified experience
• Ubiquitous Wi-Fi and Bluetooth enable easy, affordable endpoint solutions

?Smart Products Help Build Stronger Customer Relationships

In general, integration with smart home solutions delivers four key benefits to utilities and energy providers: increased consumer engagement with energy management programs, facilitation of smart product integration in demand response programs, increased adoption of smart products for use in energy management, and increased program awareness through cross-marketing efforts.

To maintain its position as a trusted energy advisor, the utility must move more aggressively to serve the energy management needs of its consumers. The utility can deepen its relationship with its customers by empowering them to save energy or offering energy-saving programs. Stronger customer relationships open the door to diversified revenue opportunities as the utility business model is adjusted to reflect the competition for distributed generation.

The convergence of technological advances, energy awareness and concerns, and growing demand among consumers and on the grid is driving adoption of smart home solutions that can deliver new solutions in this energy sector. Industry players and especially energy providers and builders recognize the benefits of incorporating smart products into their offerings.

Most of the early efforts were geared at reducing the friction for consumers to acquire these products, but the next successful step is in enabling a new, unified experience for the consumer. Forward-thinking utilities are investigating strategies to integrate multiple devices and aggregate data across industries/ use cases to deliver a truly comprehensive and actionable picture to consumers of their energy consumption at home. These offerings will help build positive consumer engagement, open avenues to expand service portfolios, and ultimately generate new revenues, even as energy consumption is reduced.

?Energy Program Use and Incentives

• ?~ 40%+ of US households used a special energy program in the past, such as time-of-use or tiered pricing. No one program has adoption greater than 20%
• ?Incentives are key to securing consumer participation in utility programs, and a $100 annual credit generates the highest interest among consumers, where they are willing to allow utilities to control their thermostat during peak times

This is an excerpt from Parks Associates research white paper, Next Frontier of Smart Energy Management, written in partnership with SmartThings . The whitepaper highlights the continued growth of the smart home ecosystem, with new capabilities for builders and utilities to leverage through the connected assets in the home, such as smart thermostats, appliances, smart lighting, smart plugs, and other energy solutions. It also highlights consumer demand for technology that delivers a unified smart home experience and real-time data and analytics regarding the home, especially around energy consumption.