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Prepared by:
Emerald Sponsors
Diamond Sponsors
Impact of Smart Grid on Connected HomesContinental Automated Buildings Association
CABA and the following CABA members funded this project:
Impact of Smart Grid on Connected Homes 2012
About CABA
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Continental Automated Buildings Association
International not-for-profit industry association
Dedicated to the advancement of intelligent home and intelligent building technologies
Membership driven
Provides members with networking and market research opportunities
Celebrating 25th anniversary in 2013
Impact of Smart Grid on Connected Homes 2012
CABA Connected Home Council
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Continental Automated Buildings Association
Established in 2004
Initiates and reviews projects that relate to connected home and multiple dwelling unit
technologies and applications.
Examines industry opportunities that can accelerate the adoption of new technologies,
consumer electronics and broadband services within the burgeoning connected home
market.
Impact of Smart Grid on Connected Homes 2012
CABA Research Program
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The CABA Research Program offers a range of opt-in technical and advisory research services
designed to provide industry stakeholders with collaborative market research and R&D
opportunities.
Benefits
Reduced cost of research by working with other industry leaders in a collaborative research environment.
Tailored to member research project development needs and requirements.
Completely formatted research reports that are actionable business tools.
Reduced workload for participating companies.
Collaborative setting without antitrust issues.
Organizations direct research objectives.
Impact of Smart Grid on Connected Homes 2012
Key Study Objectives
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Key objectives of the research project are as follows:
Increase awareness and generate demand for connected home solutions
Understand the changing dynamics of the industry with Smart Grid deployment and the impact on
connected home solutions
Create the right business models and technology roll-out initiatives to meet changing demand
Achieve standardization with regard to codes, communication standards, and topologies, that will be
critical for market adoption of these solutions
Understand the technology market curve and isolate hype elements from actual growth trajectory
Create differentiating platforms for solutions and demonstrate value adds through field trial data and case
studies
Define growth zones and prospects for market participants
Impact of Smart Grid on Connected Homes 2012
Summary of Key Findings
• The connected home consumer prefers easy-to-use interfaces and simplified options to control,
monitor and remotely manage his or her home.• The demand potential for connected home solutions is further impacted by the perceived price-
performance ratio of these products. • Consumers do not have a clear idea of the actual benefits of buying these products and
solutions, other than adding to their tech-savvy lifestyles.• Competitive advantages will depend upon the vendors’ ability to offer solutions that have multi-
faceted features and can meet scalable needs for the customer.• This will influence how home networks operate and which networks gain popularity, presence of
more than one internal and external network to meet customer needs is inevitable. • The ability of a connected home to integrate with the smart grid is a beneficial proposition both
for home owners and utilities, however, optimized solutions in this area are currently in pilot
stages only.• There is a greater need for vendors and service providers to collaborate and create joint
business models to service the connected home market.• The immediate need for the industry participants is to organize initiatives to unify standards and
protocols to enable peer-to-peer connections within the home as well as to better manage
external communications and applications from a third-party service provider’s network.
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Impact of Smart Grid on Connected Homes 2012
Smart Grid - Key trends in Implementation
Key Trends
Some utilities have decided to use a
separate communication gateway to trigger demand response
events
In the long run utilities are not interested in
branching out in HAN services.
Instead their primary role would be to just register
HAN devices
There are very few demand response
programs available. Those that exist centers
mostly on curtailing HVAC usage during
extreme weather condition
Roll out of non-smart grid real time pricing
programs
Smart grid implementation is nascent stage but has the potential of enabling connected home through wide roll out of TOU rates…
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Impact of Smart Grid on Connected Homes 2012
Utility Initiatives
Short-term
Implementing programs to monitor electrcity usage online and transitioning customers to TOU rates.
Medium term
Using meter data for other then just billing purpose. Strategies are being deployed to use meter data for voltage conservation strategies and outage management by converging AMI with distribution automation systems.
Long term
Full deployment of AMI systems will aid the development and availability of micro grid to support growing electricity usage.
• Full deployment of AMI
systems in order to
integrate TOU rates
with current and future
smart home
appliances
• Open platforms for
meter technology to
enable wide adoption
• Achieving consensus
on communication
protocols
• Increase customer
participation
Gaps
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Impact of Smart Grid on Connected Homes 2012
Grid-enabled Applications for the Connected Home
• The market is currently is very early commercialization stage.
• The vast majority of pilot projects involves in-home displays and
programmable thermostats.
• With the full deployment of AMI systems and TOU rates for
residential customers the industry will see a growth of smart grid
enabled devices that will be registered by utilities.
• Most utilities do not have the intention of selling HAN devices due
to the pact of offering universal customer service.
• Future grid enabled applications have yet to be
determined/qualified by utilities.
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Impact of Smart Grid on Connected Homes 2012
Consumer Perceptions
64%
•Programmable Thermostat
14%
• In-home Display
4%
•Home Automation System
Type of Energy Management System Currently Owned
59%
52%
45%
23%
23%
11%
7%
64%
0% 20% 40% 60% 80%
Lighting
HVAC
Security
Electric meter
Entertainment
Smart appliances
Weather
Others
Functions Controlled by Home Automation and Control System
Frost & Sullivan’s research shows that residential customers are adopting energy management systems in the form of…
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Impact of Smart Grid on Connected Homes 2012
Motivating Factors
53%
25%27%30%
20%
10%
25% 25%
7%12%
19%
1%4% 6%
1% 1%4%
1% 3%8%
18%
6.16
5.44
4.79
0%
20%
40%
60%
80%
100%
Cost savings Convenience Environmental concern
1
2
3
4
5
6
7
Significant Influence 6 5 4 3 2 No Inlfuence Mean Scores
Motivating Factors for Using Demand-Response or Energy Management Devices (N=1,013)
There are very few residential customers on demand response programs. However, Frost & Sullivan’s research shows that potential customers are drawn to demand response due to the prospects of cost savings…
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Impact of Smart Grid on Connected Homes 2012
Integrating Connected Home Devices to the Grid
Key Challenges
Deployment of smart grid
technologies is regulatory driven
with a long approval process.
Large installed base of AMR
systems
Selection of hardware devices
Keeping customers engaged
Fragmented utility sector
Integrating connected home devices to the grid is currently met by the following challenges…
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Impact of Smart Grid on Connected Homes 2012
Utilities’ Current Decision Making Process – Issues and Changes Required
The market is dictated by a lengthy decision-making process. The following illustrates the typical approval process for investor owned utilities (IOU)
1. Planning Process:
Utilities must begin the planning and approval process for new resources years in advance.
2. Financing Arrangements
Financing arrangements occur in advance of actual construction.
3. Filing with Public Utility Commission
Utilities must file construction plans with the respective PUC for approval.
4. PUC Conduct Public Hearings
5. PUC Approval
6. Request for Proposal
Vendor selection occurs by means of a request for proposal (RFP). It takes between six and nine months to create an RFP.
7. Interview and Screening Process
It takes 3 months to initiate an RFP and to receive information back. It can take an additional 9 months to close.
8. Supplier Selection
The entire RFP process can take between 12 and 16 months.
IOU Procurement Process
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Impact of Smart Grid on Connected Homes 2012
Connected Home Overview
Defining a Connected Home:
Frost & Sullivan’s interactions with the connected home industry, and building upon previous projects undertaken by CABA in the connected home area, the following definition was adopted to define a ‘connected home’: “A residential dwelling unit that uses both technology and process to create a plug-and-play environment that is safe, responsive, adaptive and comfortable for its occupants”.
Key characteristics observed by this research:• Transition from ‘digital’ to connected• Interconnected and intercommunicate • Adaptive to a homeowner’s needs and comforts• Wide variations in “connectedness” depending upon sophistication of the ‘connected
network’
• Built ad-hoc by tech-savvy consumers
• Limited or no unifying/connecting presence
• Evolved into ‘Connected Home Platform’
• Customer premise equipment used by service provider to deliver services and applications
• Controlled by consumers and/or service provider
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Impact of Smart Grid on Connected Homes 2012
Connected Home Segments
Energy Management, Monitoring, Others
Energy Sources -
Conventional / Renewable/ Distributed
Telecommunication Services
Home Control Systems, Security,
Entertainment
Information Technology
Applications and Services
Utility(LAN,
WAN, FAN)
Smart Meter Communication/ Other Gateway
Home Area
Network
Source: Frost & Sullivan Analysis.
The connected home, and its interconnection with the smart grid, is being conceived as the convergence of four key segments/layers of the industry:
• Energy resources• Physical infrastructure components• Data communication • Automation and integration interface
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Impact of Smart Grid on Connected Homes 2012
Connected Home – Participant Characteristics
Participant Key Characteristics Issues to be Addressed
Consumers
Tech-savvy but slow to accept new technology Confused by multiple technologies/solutions Privacy concerns regarding data sharing with
external parties
Simplicity of systems and Options Reliability of communication networks Data and personal security
vulnerabilities
Home Products and Technology Suppliers
Can influence technology adoption Enjoy consumer mindshare and trust to a certain
extent Products still highly customized and needs
professional installations
Align technology with actual market needs
Actively collaborate on an open-source basis with adjunct industry partners
Standardize technology solutions
Telcos and Service Providers
Established presence with consumers Wide coverage; ubiquitous access Growing participation with standards bodies Technology innovation ahead of actual market
adoption needs
Achieving better alignment of technology Delivering scalable solutions and
interfaces that could work harmoniously
Utilities
Initiatives to move from static to dynamic framework
Challenged with embracing culture changes Financial constraints in implementing changes
Technology adoption and diversification Collaborative role in policy
implementation Dynamic partnerships with technology
vendors
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Impact of Smart Grid on Connected Homes 2012
Connected Home – Presently Active Areas
Home Controls/ Monitoring
Home Controls/ Monitoring
• Providing automation and control of specific home equipment such as
HVAC, lighting, security, energy management
• Dominated by home automation and controls companies such as ADT,
Crestron, AMX, Control4, Schneider Electric, GE, Honeywell
• Estimated market size in North America is $2.5 Billion I 2012
Energy Management/
Smart Grid
Energy Management/
Smart Grid
Media, Telecom, Managed Services
Media, Telecom, Managed Services
• Combination of energy management and home control services that allows
proactive energy use suggestions, integration with smart meters, driven by
utilities or consumer
• Key players include Utilities in North America, Smart meter providers such
as GE, Itron, etc and associated service providers such as Energent,
Energate, etc.
• Estimated market size in North America is $ 9.6 billion in 2012
• Providing communication, multimedia and entertainment services to the
consumer, with an increasing range of home management services
• Key players include Comcast, Bell, AT&T, Verizon, etc
• Subscriber base for broadband alone in Q3 2011 is estimated at approx.
92.6 million in North America ($12.1 billion in revenue)
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Impact of Smart Grid on Connected Homes 2012
Connected Home – Non-adoption Issues
• Cost appears to be one of the most important reasons behind non-adoption or delayed adoption
• Cost-related factors will continue to impose a potential risk to adoption, although the perception of inconvenience has waned between 2009-2011.
• Others include:o Limited clarity on energy savings o Inability to justify the cost of
• Investment is either deferred until replacement needs, or availability of incentives
• Upfront the price quoted appears to be a key criterion for customers in deciding which provider to go with.
• Complexity of solutions made this criterion very important for decision-making.
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Impact of Smart Grid on Connected Homes 2012
Connected Home – Opportunity Areas
ParticipantOpportunities Value Proposition to Participants
Consumer
Energy savings and security Actionable data Multiple value-based solutions
Rich set of functionalities Efficient and comfort-driven lifestyle Add-on services and Upgradeability Manage multiple services via one
framework
Connected Home Technology, Product, and Service Provider
Providing technologically upgraded solutions and more managed services and devices
Revenue generation from partnerships Up-selling ability and reducing support cost Convergence of Telcos and service
providers in delivering multi-screen experience
Innovation and R&D prospects Creating parallel revenue streams and
potentially new ones Expanding engagement terms with
existing consumers
• Take advantage of “sticky” nature of connected home services• Use residential gateway as pass-through point for additional solutions • Other usage - media servers, home management & support
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Impact of Smart Grid on Connected Homes 2012
Connected Home – Technology Initiatives
Industry Segment Tech. Initiatives Areas of Focus
Home devices, smart metering, security, remote monitoring
ZigBee, Z-Wave, Bluetooth, Wi-Fi, HomePlug, IEEE 1901(Device Connectivity)
Focus on home automation, controls, security, lighting, HVAC, etc; ZigBee and Z-Wave has relatively more endorsement and support for the
industry participants Preferred standards for delivering products and services
Home devices, Entertainment, Consumer Electronics
Digital Living Network Alliance (DLNA)(Interoperability)
Consumer electronic, computing, and mobile device industries; Focus is on making connected, interoperable devices, including set-top
boxes, PCs and handheld devices, work together over wired and wireless networks in the home;
Supports underlying standards, including the Universal Plug and Play
Entertainment, Communication devices
Universal Plug and Play (UPnP)(Interoperability)
Defines how devices in the digital home interconnect and interoperate, including discovery and control of devices
Can run on any network technology including Wi-Fi, coax, phone line, power line, Ethernet
Laptops and PCs, consumer electronic devices, home control devices
Wi-Fi Alliance(Network Connectivity)
Driving the adoption of high-speed wireless local area networking, including certification of devices
Wi-Fi Direct enables devices in a personal area network (PAN) to make secure, direct connections to one another
Entertainment, consumer electronics, home appliances, home security and controls
HomePlugAV, HomePNA, HomeGrid/G.hn(Interoperability; Device Connectivity)
Goal is to help service providers cost-effectively deploy new offerings, including Internet
TV, allow consumer electronics manufacturers to network all types of entertainment, home automation, and security products throughout the house; and simplify consumers purchasing and installation processes;
Network connectivity includes a range of networking standards encompassing IEEE 802.3 and 802.11, HomePNA 3.0,MoCA, HomePlugAV
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Impact of Smart Grid on Connected Homes 2012
Achieving the Connected Home
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Impact of Smart Grid on Connected Homes 2012
Delivering to the Connected Home
Active Market Participants
Prevalent Model Expected Changes
Home Automation; Appliances, Other Home Devices; EMS
o Piecemeal service collaboration o Traditional delivery networko Limited or no-collaboration in
technologyo Upfront product/technology pricing and
some subscription-basedo Traditional recurrent revenue –
repair/upgrades
o Open collaboration for technology development
o Revenue share arrangementso Centralized service delivery modelo Potential migration to subscription based
pricing
ISP; Communication Services; Entertainment
o Subscription based modelo Bundled service deliveryo Duration-linked/contractual pricingo Aggressively adding security and home
monitoringo Downward price pressureso Active collaboration amongst playerso Convergence services slowly gaining
importance
o Deliver more to retain customer loyaltyo Up-selling/adding serviceso Mitigate challenges with partnership-based
service deliveryo Steady revenue generation from
convergence services
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Impact of Smart Grid on Connected Homes 2012
Emerging Ecosystem
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Impact of Smart Grid on Connected Homes 2012
Implementing Changes
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Impact of Smart Grid on Connected Homes 2012
Key Takeaways
The key takeaways of this research are the following:
• Limited customer engagement and lack of personalization of solutions, as well as the lack of predictive and self-sensing capability of solutions, will continue to hinder value demonstrations in the connected home industry.
• The industry horizon will continue to be dotted by both pure-play and turnkey players. Competitive advantages will, however, depend upon scalability of solutions to accommodate the emerging demand in technology integration.
• The connected home’s relationship with energy is likely to be further stressed with the ability of such a home to integrate with the smart grid; however, optimized solutions in this area are currently only demonstrative in nature, with limited initiatives undertaken by the utility industry.
• At present, the full service capabilities can be expected to come from Telcos and convergence service providers that are already well-entrenched within the connected home market by way of offering multi-point services to consumers.
• Industry participants need to collaborate in a cohesive manner to make smart home solutions work together; however, both conceptual frameworks and technology development initiatives should work simultaneously toward this end.
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Impact of Smart Grid on Connected Homes 2012
Contact Information
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Contact
George GrimesCABA Business Development Manager
Suite 2101173 Cyrville Road
Ottawa, ONK1J 7S6
[email protected] 613.686.1814 ext. 226
