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Smart Home: As technology and innovation race through the 21st century, it’s beckoning into homes was more a matter of when than how. Yet, the most widely recallable smart home tech is more convenience-oriented and entertainment-focused. As a result, most of us recollect our Alexas, Google Homes, Siris, and such assistants when we speak of smart homes. Fortunately, there is more to Smart Homes than helping you plan your schedules, automating dimming of lights, or voice-controlled performing mundane tasks. With Smart control of our homes, we are open to the benefits of actively controlling and monitoring our home energy consumption, also known as home energy monitoring systems (HEMS); HEMS is a technology platform comprised of both hardware and software that allows the user to monitor energy usage and production and to manually control and/or automate the use of energy within a household.
Most importantly, home energy management systems allow users to have more control over power-intensive loads and, at the same time, customize power consumption to their specific needs.
In the second episode of ‘Climate Change with Net Zero Homes’ podcast, Manish Pant sits down with Daniel Talero from Guidehouse Insights to chat about one of the most pressing issues since the world went into lockdown one year ago and we all started to spend more time at home consuming more energy than ever before: Home Energy Management (HEM).
Just how has deurbanization and the new multi-purpose housing trend impacted the smart energy industry?
Find out how home builders and home owners can forge a path to achieve net zero houses in this latest episode.
Topics discussed in this episode:
Smart home market trends
What are the barriers to adoption of smarter energy management tools?
Retrofitting vs new builds
Decarbonization
Listen to the complete podcast here:
Want to follow the conversation closer? Read the transcript of Climate Change with Net-Zero Homes Podcast episode #1: “Road to Net-Zero Homes with Home Energy Management Systems”
Manish: Hello, and welcome to the second episode of the Climate Change with Net Zero Homes podcast. I’m your host, Manish Pant, and I drive sustainable smart homes innovation at Schneider Electric. This series explores the home of the future and features experts from all walks of life in the residential sector. In today’s episode, I’m here sitting down with Daniel Talero from Guidehouse Insights. Daniel is an industry analyst based in Boulder, Colorado. One year ago, when the pandemic was starting in Europe and propagating to the US quite rapidly, one of the consequences was that we have been spending many hours at home like we never did before. The perception of our homes has changed a lot in this period. I’m very glad to have today, Daniel, with us to discuss the things about home energy management, or HEM as it is also known and called, the de-urbanization and the new multi-use home trend. Thanks for joining me, Daniel. How are things in Colorado?
Daniel: Thank you, Manish, it’s great to be here. Things in Colorado are great. It’s a lovely state, plenty of mountains, plenty of fresh air, which I enjoy frequently. So yes, things are good here. And this topic is definitely of interest to me and to Guidehouse. I am a senior consultant with our buildings suites, and I focus primarily on the residential side of home energy management, HEM what we can call it for short. And we’ve been tracking a lot of different trends around home electrification and just generally smart home technology for quite some time. So, we’re thrilled to participate in Schneider series today.
Manish: Thank you, Daniel. I’m here in Hong Kong by the sea. So, I think between us, we got it all covered.
Well, coming back to our topic, it’s great talking to you today on what’s hot in the smart home space. What are some of the biggest trends that you’re seeing in the market?
Daniel: Yeah, great question, Manish. So really some of this may be familiar to our audience here, but really we’re seeing, especially in residential, a lot of time, more time being spent at home for a variety of an expanding set of reasons. Right we have people using the home in a multiuse way as an office, as a gym, as a school, as an entertainment center. Some trends also in many regions around increased population of suburban areas rather than urban centers, just to decrease any potential transmission risk. We’ve also seen a lot of home energy demand increasing under lockdown. Obviously, people are… With all these uses, they’re using a lot more energy. So, it’s something that is more top of mind for people nowadays. And all that kind of leads up to just this… The opportunity we see around home energy management technology to really reach out a broader audience with a deeper set of solutions. So, we’ve been tracking that across a variety of different areas in the home energy reports, smart home, but we’d like to go more in depth into what’s emerging in this space. So really exciting trends.
Manish: Indeed. And I’m part of those trends, just like a lot of us here, we’re spending more time at home and therefore I’ve seen together with the family that we are spending… Our energy bills have clearly been mushrooming because of that. And as a consequence, we clearly see a growing interest in smart home energy management solutions, not to mention that the weather phenomenon’s that we are seeing all across the world have also brought in a corresponding change in terms of how we look at home energy management. So Daniel, are there any challenges when it comes to the widespread adoption of better energy management tools? I’m assuming that there will be more uptake as we consume more and more energy.
Daniel: Yes, absolutely. There are a number of challenges in this market that we’ve also been tracking alongside the many opportunities we see. So, really the first thing I would highlight is just a big disconnect between demand for and supply of improved HEM solutions, right? There’s a siloed suite of digital solutions right now in residential, and we see a lot of opportunity for a more holistic system-oriented approach for the home as a whole. Consumers I think are also… There’s increasing awareness and comfort with digital solutions in the home. And again, the question of interoperability across different devices is a major challenge. So, the holistic approach, again, it has a lot of potential there. It’s quite a fragmented market in general. And I think you could characterize HEMs and smart home really as in a kind of a mid- to early-adoption phase.
Research Analyst – Guidehouse Insights
So, again, this next level is kind of beckoning around integrated solutions that have a single dashboard, if you will, that have all of the energy loads integrated across the home. So, the comprehensive data that would allow that, and that would go into a system that also has the potential to really expand the net zero proposition and the net zero potential of the home specifically. But we also see the consumer awareness of those energy savings is maybe low through HEM adoption. Smart appliances are maybe an exception, there’s been more uptake there, but in a more siloed context, right, without the kind of comprehensive bill and load management capabilities that a more holistic system would provide. And again, if we’re thinking about just the status quo in many, many developed economies, most existing homes are not energy efficient and new construction is a small part of the annual building stock. So, 80% of the buildings that are going to exist in 2050 are already built today. So then we need a lot of retrofit capability in the next generation of home energy management systems. So those are key challenges to take from this, but we’re there and there’s a lot of opportunity as well.
Manish: Great that you mentioned it. If we segregate the market between what has to be retrofitted and together with, of course, the new builds, we feel that for retrofitting of home energy solutions, the digital side is something that could be done much faster as compared to the physical changes that are required in the homes. And also it is much more cost-effective and it starts to build on bringing the consumer awareness and leading into much larger physical retrofits that potentially could be happening. Now at the same time for the new builds, consumers would expect new homes to come along with energy efficiency measures, which are already in place. We at Schneider Electric have seen a lot of home builders across the globe that are actually already implementing it and building homes that are respectful to the environment, even though the initial costs may be a bit higher than standard homes. And there’s a lot of support, which is coming from various governments and the regulation bodies that are going to help them go in this direction.
Daniel: Yeah. I mean, I’m aware of some of Schneider’s partnerships, which in this space, which are incredibly important for a variety of reasons. As you say, new homes today can be built in a variety of different ways and things are that… Some of those standards are changing quite rapidly. I think a key consideration is how easy it is to pre-configure some of these HEM and net zero solutions into building plans for home builders, for electrical contractors, especially in new construction. Making these systems easier to adopt at that level is extremely important. So, there’s some of the industry partnerships, I think that I’m aware of, not only at Schneider and then some of the other vendors that we follow and support, the partnerships that they’re creating take pressure off of electricians, off of some of the frontline stakeholders, even the homeowners, especially, to be technical or cybersecurity specialists, and they are making efforts to ensure some of the best of green products are more widely available and especially easy to install and provide again that single dashboard, right, for the whole home, so the homeowner can manage the entire energy load easily.
EVP, Home & Distribution
Manish: And you said it well, that it’s good to have these solutions in place and without the homeowner having to rely on calling the electrician every day to support them. I agree with you on that. So, home energy management becomes a very important aspect of both retrofits and new builds that are happening. And clearly it’s going to help us fight against climate change, which is becoming so more imperative. As I mentioned before, with all the changes that we see around us. And I personally think a lot of that has got to do with the climate change, and this is our contribution to it. We’ve seen in some recent numbers that buildings are responsible for 39% of global energy-related carbon emissions. And it could even get worse as the building stock is expected to double by 2050 and here in Hong Kong, if I give an example, buildings account for almost 90% of electricity and over 60% of carbon emissions. So, clearly de-carbonization of the build environment is becoming very, very critical.
Daniel: I couldn’t agree more. And actually, we really see it here at Guidehouse as kind of the next real general or challenge for a lot of particularly North American stakeholders. There’s a lot of effort into de-carbonizing generation and using more renewables and then also to electric fund transport. But now really de-carbonizing the building stock is the next challenge. And there we see electrified homes, especially on envelope retrofitting, low-carbon construction, those are the most effective ways to de-carbonize zones. And right now it’s a small percent that is… You could describe that way in the building stock, but that needs to accelerate rapidly. We know that with improved solutions and business models, especially. I think the smart home has had a dual effect on consumer behavior in that regard, silent solutions have made it possible to act more sustainably throughout the home and increased awareness. But especially now with a lockdown, COVID impacts… The changing energy use of the home really requires a new level of management, more holistic, as I’ve said. An integrated approach that can take all of the different energy loads within the home, different appliances and both aggregate them and disaggregate them, right? So that you can see exactly where increases in energy usage are coming from and how to coordinate that, for instance, with time-of-use rates, with utilities, all that is kind of that’s the next level that we really need to be playing. We know that consumers care about sustainability and energy efficiency, but it’s this perhaps guidance and information about ROI, especially on new systems that can actually make the whole home profile more sustainable. It’s that level of information that’s maybe still lagging, but that’s the awareness element I think is emerging. So yeah, I would add that.
Manish: Yeah. As you say that we clearly need now a Fitbit of the home that is able to provide the full energy picture. What we see is home owners are, are likely to invest in more solutions that allow them to make informed decisions about the energy consumption and therefore act on it. Data is going to become very key as part of that. And which could then be translated through simple devices just as we gave the example of Fitbit for their home, which can give a clear explanation of the benefits and the ROI, which is today a missing link. So what do you see are some of the other developments that are supporting the transition to net zero and facilitating de-carbonization and efficiency in homes?
Daniel: Yeah, this is a fascinating area we track quite closely. There’s a wide variety of developments, I could mention. I think of a few that I’ve highlighted is just the… With a growing share of renewables on the grid, you have, utility is really rapidly expanding. They are called distributed energy resources systems, and business approach is really allowing for more distributed assets throughout the residential and commercial building stock. So, a lot of net zero DIY, if you want to call it that, and consumers who are generating their own energy via solar, they have a lot of net metering opportunities. That’s the kind of installation that can go to net zero more quickly obviously, but it requires tighter coordination with the utility. So, a lot of utilities are expanding their offering in that area, which we call DER or solar management, this kind of thing.
Storage, I think, is also a major development as EV penetration increases in 2020 was a landmark here for EV penetration. I can find some data on this, actually as an aside, but really unprecedented adoption in 2020 of EVs. As that accelerates, you’re going to see a lot of that energy load going into the home. People need to charge those cars, right? So, that’s going to increase the business case for stronger home energy management and also for utility connection. Why? Because that added electricity load is significant, right? So a time-of-use rate, for instance, during charging, will make a massive difference on the cost of charging. So, all of that needs to be coordinated for, for optimal use, and I’m aware that Schneider and other vendors have had DER management as part of their home energy offering. So, that’s extremely promising, you have the integrated user-friendly digitized HEM systems for the home that are enabling these new use cases. So that contributes to net zero. So there are a lot of developments.
Manish: True. Now, Daniel, we could keep on talking for more time, but I’m mindful of your time, as well. And we know how important this topic is, and it’s so fascinating for us to continue the conversation. Maybe to wrap up, what are the three things that our audience should take away regarding the net zero homes, especially in this time that you’re spending a lot of time at home and together with all the climate change that’s starting to impact us.
Daniel: That’s a great question, Manish. So, I think I’d highlight a few things here. First is that net zero technology is changing incredibly quickly. So, it’s improving both in cost and performance HEM software, and that would apply to HEM software as well as major appliances, right? I’m thinking of heat pumps, heat pump water heaters, there are a lot of new refrigerants that are cold weather performance coming into play. As far as home construction itself, new low cost prefabricated methods, as well as low carbon materials that are lowering costs for new construction, energy efficient homes that would… They’re easy to reach net zero with. And then again, pre-configuration can lower that even further. So, it’s worth really keeping track of those changing dynamics in this market, which is something we do intensively at Guidehouse.
And just also for those… If you’re considering this kind of investment, or if you’re a home builder, remember just that the cost of power and therefore regional context is a great influence on ROI for these investments. We know that electrification paired with efficiency investments, envelope type improvements, that’s a powerful combination in energy savings terms and in ROI. So, just evaluating these things in context is really an imperative. And, I mentioned home builders, they have a key role to play as quality installers. Even the best HEM system can’t overcome efficiency losses from improper installation. So those are some of the points that I’ll highlight.
Manish: Thank you, Daniel. That’s what we have time for and thanks a lot for sharing the Guidehouse Insights perspective on net zero homes today.
Daniel: Thank you, it was a pleasure. And for more information on some of this market, feel free to consult the Guidehouse Insights website, where we offer a coverage of a wide variety of technology related to energy efficiency. Some of our reports are available there as well as free executive summaries. And we welcome any further discussion on these topics. Very interesting and very grateful to you, Manish, for this discussion.
Manish: Thank you very much, Daniel, for joining me and to the audience on this episode of Climate Change with Net Zero Homes podcast. We’ll be back in the next episode in a couple of months. If you’ve enjoyed this episode, don’t forget to subscribe on your favorite podcast app to stay up to date and to find out more how we can create this path to net zero homes. Until next time, thank you.
