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Smart Energy Summit Event Summary Parks Associates hosted the sixth-annual Smart Energy Summit: Engaging the Consumer on February 16-18, 2015, in Austin, Texas. This summary highlights the key issues addressed during the event, which hosted more than 250 executives from utilities, telecom, cable operators, security service providers, software, retail, government, and appliance manufacturers.

As the role of the energy provider continues to evolve, innovative business models begin to transform relationships with consumers. Connectivity, consumer choice, and restructured markets have challenged the returns once guaranteed in regulated markets. Energy providers are now leveraging new business models and forming new partnerships with smart home platform vendors that promise to enhance the consumer experience while simultaneously increasing energy efficiency.

Success in expanding this market relies on understanding consumer motivations for adoption and usage as well as the value propositions that will engage a larger share of energy users.

For information about this and other industry events, contact Parks Associates at 972-490-1113 or email Eli Lund at [email protected].


TUESDAY, FEBRUARY 17

Impact of Smart Home and IoT on Consumer Energy Markets

Approximately two-thirds of U.S. broadband households are unfamiliar with smart home products or services. The connected home is becoming a reality, but the energy markets need to solidify their role within this evolving ecosystem, including new consumer outreach and educational efforts. Parks Associates opened the sixth-annual Smart Energy Summit with an overview of today's energy consumer and the impact of new technologies, mainstream sales channels, and partnership opportunities.

SPEAKER

Stuart Sikes, President, Parks Associates

NOTES

Generally speaking, last year’s participants claimed that energy providers were not communicating value propositions well enough, leaving consumers to search on their own for smart home solutions and purchase locations. Sikes also underscored the notion that energy providers were built for reliability, not for innovation.

Last year’s participants also felt that consumer participation in demand response (DR) was not significant and that “partnership” inherently means a loss of control for one of the partners. Many of the panel discussions last year revolved around these two general themes. Attendees also noted that consumers can obtain products from a variety of different platforms and distribution channels. They admitted that a successful business must figure out a way to work together or miss passing opportunities and innovative ways to increase market share.

Parks Associates research suggests that about one-half of U.S. broadband households would switch/subscribe to a bundle of smart home services priced at $9.99 per month.

However, several questions persist about comprehensive smart home solutions:

o Are there too many standards now?

o Who is responsible for making those standards?

As the market continues an upward swing, consumers will demand interoperability. Current smart home adopters already consider that very important. Data has also found that once consumers make the jump into the smart home market, they normally do not stop at the smart thermostat. Partnerships between seemingly competing businesses will be necessary to get these disparate products to work together, but they are not always easy.

Utilities need to identify and adopt new business models that increase loyalty and reduce consumer acquisition costs. They will need to rethink the traditional business model to engage with different distribution partners and service providers to remain relevant in the age of the smart home.


Utility Perspectives: Market Impact of New Business Models

The traditional business model, which is based on a guaranteed return on net assets, monetized through rate payers, is dying a slow death. The proliferation of distributed generation, energy efficient products, and home controls technologies and national goals on energy and climate change are straining the traditional business model.

As distributed generation increases, the utility business model begins its “death spiral.” Adoption of distributed generation reduces energy consumption, requiring cost recovery on a smaller base. The resulting higher prices further accelerate the adoption of distributed generation, requiring further price increases.

Distributed generation will also force utilities to develop the capabilities of a distribution system operator. Just as an ISO/RTO operates the transmission lines, wheeling power from source to destination, administering forward capacity, day ahead, and real-time capacity markets, utilities may need to transition to a similar model for operating the distribution system.

As distribution system operators (DSO), utilities would be responsible for dispatch of DR to mitigate distributed generation variability and administer a nodal market and the transfer of energy from node to node. Similarly, just as the ISO plans and administers capacity auctions for the aggregate market, the DSO develops distributed generation and storage plans for local zones in addition to the current load forecasting and distribution planning processes. The distribution planning function assures grid reliability and improves operational efficiencies on the local system.


In this model, distribution system operator incentives align with distributed generation, incentive and pricing based demand response plans, and the associated home control technologies that will automatically shift load to minimize cost and maintain grid stability.

This panel discussed new strategies and business models for traditional utilities to avoid the death spiral.

Potential solutions include shifting rate structures to decouple utility revenue from the sale of electricity, to change the rate structure to include a fixed charge to all meters connected to the grid to cover capital costs of maintaining the grid, to remove restrictions and allow utilities to generate revenue from energy-related value-added services, or to restructure to allow retail competition.

SPEAKERS

Xavier Datin, SVP Prosumer, Schneider Electric

Debbie Kimberly, VP, Customer Energy Solutions, Austin Energy

Marie Bahl McKenna, SVP of Sales & Marketing, Tendril

Justin Segall, President & Founder, Simple Energy

Ken Wacks, Management & Engineering Consultant, Gridwise Architecture, Council, U.S. Department of Energy

Moderator: Tom Kerber, Director, Research, Home Controls & Energy, Parks Associates

NOTES

The market is changing dynamically, and utilities will have to work to be innovators, a new role for the typically slow-moving and regulated industry.


Engaged customers are happy customers. Simplicity in the delivery model leads to consumer “stickiness ” as well as an understanding that the consumers care the most about cost savings

Utilities generally tend to be very silo-ed, but they can expand their services with data-driven energy services management (ESM). They can use data from the consumer to adjust services to align with the needs and demands of both the consumer and the utility. The difficult thing is often the initial customer engagement and subsequent maintenance of that engagement to ensure customer loyalty.

The user experience is important and must be designed for flexibility so that changes and growth can be implemented in a cost-effective way. The utility’s business model of the future will fall into three distinct categories: Own It All, Enable It All, or Do Both.

The evolution of the utility market is a “value-based experience,” which includes a shifting mindset analogous to the evolution that occurred in the telecom industry. Providing consumers with simple value propositions that can be understood is critical to the next stage of growth.

The goal of the independent system operation (ISO) is to maintain a balance of supply and demand because energy storage is neither affordable nor efficient at this time. But the diminishing cost of solar power could allow the consumer to become a producer/consumer (prosumer). The interaction of the prosumer with the other energy users could become a distributed systems operator (DSO) where consumers may be able to sell their extra energy load on “microgrids.”

Big investor-owned utilities supply 75% of the power, but co-ops and municipal utilities have an impact too. America is moving to a renewables-oriented grid.

Austin Energy has very aggressive goals in its increasing usage of renewable energy resources, and the proliferation of wind and solar in Texas will help the company meet those goals.

Reliability has to be in place for the utility markets, but utilities still need to make money. Innovative utilities, like Austin Energy, will continue to look into enhancing community solar and battery storage to meet revenue and renewable goals.

Opening Keynote: Love Your Power

New tools to understand and control energy use are changing the industry – but if your customers don’t use them, then so what? Sicily Dickenson, Chief Marketing Officer of NRG, talked about how to get people to love their power. She explored the kinds of experiences that engage people and move a transactional commodity experience to an emotional connection that creates customers for life who are your most powerful marketing engine. She shared her marketing expertise that guides NRG strategies in promoting sustainable, emerging, and advanced energy technologies as part of the whole customer experience.

SPEAKER

Sicily Dickenson, Senior Vice President and Chief Marketing Officer, NRG Energy


Consumer Engagement Strategies: IoT and Energy Value Proposition

Many interesting technologies for energy management exist in the marketplace today. The most common include:

Energy consumption dashboards that provide insight to consumption. A clear barrier to providing consumers with energy information is a lack of understand of what is a KwH, what is normal, and what effects are caused by weather versus behavior.

Connected thermostats that increase HVAC operational efficiency can increase savings and comfort. The effectiveness of these products at reducing utility bills is claimed to be between 20% and 40%, but knowing what one actually will, or has saved, is a challenge.

Energy monitoring devices, in the form of hardware that alert you when usage is high, often require purchase of yet another device. Its effectiveness relies in large part on consumer perceptions—the consumer could see it either as critical in reducing energy usage or as non-essential to daily living, in which case the device wind up buried in a kitchen drawer.

Utilities are making significant strides to develop programs that begin with the consumer value proposition. Understanding the consumer needs and developing solutions to meet the needs of customers are essential in any industry.

Utilities also understand that successful marketing programs must be personalized and use the media that consumers are using, otherwise this portfolio of programs and services will go unnoticed. Segmentation and targeting are critical to the success of any marketing plan. Positioning communication where and when consumers are engaged in purchase decision meets the customers on their terms, growing program adoption.


Finally, utilities understand that simplifying the buying process for customers eliminates obstacles and increases adoption. Asking consumers to fill out forms, providing savings information without telling them how or where to go to take advantage of programs, creates breakage and significantly lowers program participation.

SPEAKERS

Steve Connor, Senior Product Line Manager, Nortek Security and Control

V. Rory Jones, Co-Founder and Chief Executive Officer, PlanetEcosystems

Malcolm Smith, CEO, DR2

Emmett Romine, General Manager Development, DTE Energy

Gene Wang, CEO, People Power

Moderator: Stuart Sikes, President, Parks Associates

NOTES

Parks Associates research shows that consumers are unaware of some of the seemingly routine ideas in the energy market. Today’s customers don’t think of energy units in the kilowatt hour, just as drivers didn’t think in miles per hour until they were introduced to the speedometer.

The security industry is doing well in customer engagement. Customers are retained, and they are using the equipment.

More and more security companies are integrating control systems into their approach.

Some successful strategies are focusing more on safety and welfare and less on cost savings.

Utilities have options to expand and provide a value proposition of “we manage your home for you.”

Bundling services together helps lead to retention.

Providing consumers with the ability to see real-time energy usage creates engagement. The feedback mechanism for consumers is becoming increasingly important.

The issue of getting customers to be aware of their energy usage is complicated. The future of engagement may be in gamification, creating rewards and strategies and offering comparisons between a household and the activities of their neighbors or community.

Consumers understand that the prospect of new power plants will increase energy costs, so that message—“energy efficiency programs save us from building new power plants”—can be an effective and low-cost way to increase consumer participation in EE programs.

Interoperability will soon emerge as a consumer demand.


Building Energy Management Offerings through Smart Devices and Services

Smart devices open new opportunities for both EE and DR programs. Smart devices can reduce consumption and shift load throughout the product lifetime using new approaches:

Operation Feedback and Recommendations - The manufacturer can use the connection to its product to become an advisor, providing feedback to consumers on how to adjust operation in order to be more energy efficient.

Automate Equipment Operation – Many products include features and capabilities that are not fully understood by users. Some of these features can lower the cost of operation of the device and reduce overall energy consumption.

Fault Detection Diagnostics - If a device can automatically monitor its operation and determine when performance has been degraded, the device can provide feedback to correct operational degradation and a solution; this can promote consumer actions that will cause higher efficiency levels over the product’s lifetime.

Choreographing Loads - Today, all of the appliances in the home operate asynchronously. The upstairs and downstairs heating and air conditioning units cycle on and off to control temperature, as does the hot water heater.


Demand Following Supply - As more distributed generation comes online, systems can be used to consume load during periods of low demand and high supply – such as a windy spring night. Systems would respond to pricing signals to cycle on automatically.

Lower Customer Acquisition Costs for Utility Programs - The OEM uses its large installed base of products to lower customer acquisition costs to the utility. Paying an installation rebate instead of an ongoing annual fee may be a better option for the utility, financially. Both approaches are viable and more cost effective than traditional utility programs.

Despite the laundry list of benefits, only 14% of U.S. broadband households are familiar with energy management products.

SPEAKERS

Brian Huey, M2M & IoT Business Development - Smart Energy, Sprint

Jacob Nielson, Business Development Leader, Emerson

Brad Paine, General Manager for Lyric and Total Connect Comfort, Honeywell Connected Home, Honeywell

Mike Soucie, Head of Consumer Product Partnerships, Nest

Moderator: Maia Hinkle, Research Analyst, Parks Associates

NOTES

Engaging customers is difficult, and consumer research can help provide a better understanding on ideas to implement.

HVAC companies have an opportunity to be part of the broader smart home platform as a result of the ability to use analytics for energy efficiency.

HVAC companies can provide utilities with predictive analytics for that next service visit.

The industry needs open models and open standards in order to have a winning strategy.

Utility partners are anxious about device-to-device connectivity.

Product rewards, energy-savings programs, and feedback mechanisms on showing actual (or lost) savings can incentivize consumers to save energy, which, in turn, helps the utility save money.

Smart products need to “just work.” Do not burden the consumer with a list of things to do or multiple steps to take to enroll or benefit from a solution.

Shared customer values can drive successful partnerships. Co-branding and new partnerships can help attract consumers and help promote energy efficiency and demand response.

Sharing data with consumers helps to create engagement.

The consumer experience is critical. Putting the consumer first and designing products with the consumer in mind will help grow interest.

Data security is of utmost importance and concern to consumers.


Fireside Chat Keynote: Channel Strategies for Consumer Engagement

Many utilities want to be the advisor, a trusted source for energy management products and services. However, as new solutions enter the market through multiple channels, utilities are competing with smart home service providers, smart product vendors, security and HVAC dealers, and retailers that provide advanced energy management solutions.

Each channel to market has its own challenges. The security and HVAC dealer channel is highly fragmented. Some dealers may be resistant to change if they do not see a clean benefit for both themselves and their customers. Many may fear the added complexity of networked solutions and the potential for unpaid service calls to correct issues with the customer’s home network. Integrating thermostats into demand response programs adds more complexity, and more potential for unpaid service calls.

Despite these roadblocks, both HVAC and security dealers are ideally positioned to sell these new products. Because consumer awareness of smart products and services is low (more than 60% of consumers are unfamiliar with smart products and services), dealers can use their face-to-face selling process to communicate the value of smart thermostats and energy management services and allow consumers to ask questions or become comfortable with the user interface.


Retailers and smart home service providers face similar challenges. Consumers are unfamiliar with the benefits of smart products and services and therefore require a more consultative sale process for these products.

This panel discussed the challenges and merits of different channels and the segments they serve.

SPEAKERS

Dan Lieberman, Head of Research & Standards, SmartThings

Stuart Lombard, President & CEO, ecobee Inc.


NOTES

Open communication and access to demand response data are ideal. Once consumers enter the market for smart devices, they’re not likely to stop with one purchase.

Finding the right hook for the consumer—incentives that the consumer understands immediately—is critical and creates engagement.

Consumer behaviors for energy savings are driven not only by price points and saving money but also to make life simpler and better. In this way, message advocating comfort and convenience can find a receptive audience.

Energy Efficiency Programs: Strategies to Accelerate Innovation

Currently, 16% of U.S. broadband households own a smart home product. The rapid innovation in smart home solutions is pushing the market to move faster than the traditional utility pilot process. New standards assure that products meet energy efficiency requirements; however, in some cases, the standard may not reward innovation, or may push up pricing, which may drive consumers to repair an older, inefficient system rather than purchase a new one. This panel discussed potential solutions to accelerate energy efficiency program development and rollout. It also discussed the benefits of connectivity, including savings over the product lifetime, and strategies to reward innovation and encourage consumer adoption.

SPEAKERS

Jeremy Eddy, Senior Energy Consultant, Itron

Joe Sullivan, Account Manager, WSI, the professional division of The Weather Company

Bob Swilik, Manager, Advanced Systems, Carrier

Alex Zheng, Head of the SilverLink Business, Silver Spring Networks



NOTES

Utility energy efficiency programs need to embrace a level playing field for innovation and also avoid commitments to specific technologies.

Residential audits are an opportunity to accelerate a change in the utility program design. With more data, utilities can move closer to dynamic pricing schemes as something that maximizes value. In the end, energy efficiency needs to compete with supply-side resources.

Weather and energy use are directly connected. In fact, weather is the key driver of demand. Personalized and on-demand weather data and forecasts can help people innovate and plan in order to help them manage consumption.

Even for large companies, a primary challenge is ensuring that systems work with all devices.

The application of the smartphone to manage energy has changed the industry. Consumers expect real-time access to data, but delivering on this expectation might need to involve smaller third-party app providers. In order for that to occur, the provider needs access to open data.


Integrating Demand Response into the Smart Home

Nearly 8% of U.S. households have a smart thermostat, and that number is increasing. Significant smart energy management capabilities now exist in the home.

A number of energy providers have followed Austin Energy’s lead of paying consumers to implement one of several approved smart thermostats, with the proposition that the energy provider will pay for the cost of the device if the consumer will allow the provider to interact with the thermostat during a DR event.

With more devices on the market, consumers will increasingly desire their energy provider to support and subsidize any device they choose. How do energy providers maximize consumer choice and still ensure devices meet their requirements?

Parks Associates research shows that smart home devices that are integrated into a system are more valuable than stand-alone smart devices. Those driving adoption of systems are home security providers and retailers. As future smart home purchases are made through the retail and security channels, how will energy providers insert their DR agendas into this relationship?

As energy providers seek ways to more deeply engage their customers, what value-added services can be layered on top of the DR relationship?

SPEAKERS

Mauro Dresti, Manager New Program Development and Launch Mass Markets, Southern California Edison (SCE)

Seth Frader-Thompson, President, EnergyHub

Steve Hambric, VP, Strategic Sales and Operations, Comverge, Inc.

Kenneth Skinner, Vice President, Integral Analytics, Inc.

Paul Wattles, Sr. Analyst, Market Design & Development, Electric Reliability Council of Texas (ERCOT)


NOTES

Utilities are still experimenting to find cost-effective ways to incorporate demand response into their changing business models.

Community-centric messages and providing consumers with access to information about savings can incentivize a consumer to engage with a smart product, which will in turn lead to data for use in DR programs.

Consumers want options, and companies are working closing the value gap for particular devices so that they will help save money.

The problem with the traditional demand response model is in demonstrating the technologies in a simple, easy-to-understand way.

Dynamic pricing models for demand response are being developed that might not involve installing a meter. Peak pricing and rebates are important offerings.


Analytics of smart meters can pinpoint the right customers to target for sales/offers of energy-efficient products.

When correctly implemented, demand response programs create stickiness for the customer. The interconnectedness of the products is enriched, and the loyalty of the customer is solidified.

WEDNESDAY, FEBRUARY 18

Value-added Services for Retail Energy Providers

The close rate for addition products and services is much higher when there is an existing good relationship between the buyer and seller. Retail energy providers use this fact as the underlying business case for selling all types of value-added services to customers.

Retail energy providers use value-added services as a means to add revenue and differentiation to the delivery of a commodity. By examining every interaction with the customer, energy retailers can develop ways to generate more revenue, improve customer acquisition, and reduce attrition through value-added services that provide differentiation and entanglement.

Some common examples of value-added services include online energy management tools and programs that provide information and recommendations on energy-saving products and services. In some cases, retailers may offer a free home energy audit, anticipating revenue generation from follow-up sales and services. Retailers that have the capability to provide services internally will do so. Those that do not will sell the leads to third-party service providers.


Some retailers include appliance services such as furnace and air-conditioning system tune ups in the fall and spring or even air-filter replacement services in which air filters are shipped to the home periodically to ensure that HVAC systems run at peak efficiency.

Others are offering insurance and protection from electricity surges. Programs include home warranty protection from lightning strikes which covers electrical wiring and major electronics and appliances. By offering these services, retailers are expanding beyond energy-related services, pushing their brand outside the energy delivery and directly into adjacent services.

One of the most valuable customer interaction opportunities is at the time of a household’s move. When customers move, they re-evaluate many product and service options. The cross-marketing opportunities can be quite lucrative. Security service companies, telephone and broadband service providers, and cable and alternative video delivery services all vie for first position with the moving household and would welcome the opportunity to partner with utilities to bundle services, concurrently simplifying the installation process for the consumer. At a minimum, service providers will pay for leads.

Smart products and smart meters open up new possibilities for value-added services. While many of the valued-added services derived from meter data cannot drive recurring revenue individually, a bundle of services can drive revenue. Individual energy services have limited appeal; however, a bundled solution that includes multiple energy services yields a solution that is capable of driving recurring revenue. The percentage of households willing to subscribe to a fee-based bundled service is higher than the percentage of households that found any single feature very appealing.

This panel discussed the opportunities for expanding the value added services offered by retail energy providers.


SPEAKERS

Martha Amram, Founder & CEO, WattzOn

Scott Burns, Senior Director of Innovation, Reliant, an NRG Company

Patrick James, Director of Innovation, Stream

Shuchi Roy, Director of Innovation Strategy, Direct Energy


NOTES

“Smart energy service” is an abstract idea that involves many different entities and forms. But the consumer cares only about one thing: what am I buying? Companies have different ways (called “onramps”) to engage with customers beyond selling services or partnering with utilities. A key goal is to give emotional currency to concepts such as “energy savings.” Approximately two-thirds of the ways to save on energy fall into the “easy” category: alter habits, change light bulbs, set appliances, electronics, thermostat, etc.

Value-added services can expand customer relationships by offering certain “bonuses” or benefits for being a customer or participating in certain programs. Programs like a neighborhood energy compare statements and home energy usage profiles give consumers hard data on an average household’s energy profile, energy usage among appliances, and how a household compares to its neighbors.

Competition in the smart home arena is a good thing. However, if a company launches a product similar to others on the market and that product doesn’t perform as promised, it might, by association, slow the progress of similar products.


Mobile services are quickly becoming a cornerstone to energy business models. Everyone has a smartphone and uses it to control their life, so they will want solutions that connect with their mobile devices.

The market has evolved from offering standard on-peak, off-peak rates to fully functional time-of-use services. Companies can engage customers through emails and text messages to further explain how the homeowner is using energy. Power providers need to move away from just being energy companies and expand to introduce value-added products and services and leverage technology to make their customer’s lives easier.

To educate the consumer on TOU pricing, the company has to be upfront and explain exactly what “free” means when it uses terms like “free Saturday.”

The smart thermostat is still the main entry point to the smart home, but it is not an “either/or.” As the market develops, more devices will occupy that lead entry point.

Every service provider is going to enter at their point of expertise. Customers will coming to energy providers for their energy services at first. Once the company is in the home, it can add other products if they’re in the same “universe.”

Keynote: Smart, Personal, Energy

Over the next 20 years, the demand for electricity will to grow almost 50 percent and the market value 100 percent, from $2 trillion to $4 trillion. Within this same timeframe, solar generation will to grow more than 10 times, from less than 1 percent of today’s energy mix to more than 10 percent. The IEA predicts that by 2050, solar may be the world’s largest source of electricity, ahead of wind, nuclear, and fossil fuels. At SunPower, we believe this is because solar is abundant, solar is renewable, but most of all, because solar is personal. And as such, we also believe that solar can be the cornerstone for Smart, Personal, Energy.

SPEAKER

Ivo Steklac, Vice President and General Manager, Residential & Commercial Energy Solutions, SunPower Corp.

Smart Meters: Creating Value in Big Data and Analytics

Smart meters and the mountain of data housed in meter data management systems can create significant value to the utility and the residential consumer. Applications that mine the meter data, understand individual user load profiles, and provide exception-based notification are becoming mainstream. More sophisticated systems may disaggregate the data into individual loads, helping the utility to target customers for specific programs and develop new programs to target specific user segments. The data is also valuable to consumers and third parties selling products and services that are aligned with the utility objectives.

This panel discussed innovative approaches to leverage the untapped asset—utility meter data.

SPEAKERS

Luke Fishback, Chief Executive Officer and Founder, PlotWatt

Josh Gleason, Customer Success Lead, Bidgely


Grant Muller, Director of Software, Sensus Analytics

Dave Oberholzer, Director, Energy Products & Business Development, WeatherBug Home by Earth Networks

Rodrigo Sanchez, VP, Marketing and Product, EcoFactor


NOTES

There are still hurdles in collecting and aggregating the critical mass of big data.

There are multiple issues to address in figuring out the most cost-effective way to derive benefit from data analytics. Companies have taken steps to collect and access real-time data, and often there are surprising revelations when they see how products are used “in the wild.”

Data analytics needs to be viewed as a means to an end. If you are not solving a problem with the data, then you are not using it well.

A key question is how to use the data to engage the consumer—and how to extract a genuine picture of that individual consumer from the data in order to find the right message for that person.

Fitbit is a popular example of a mechanism that leverages data to influence behavior. People in general want to be healthy, but the problem was to find the right attention-grabbing mechanism that will get people to engage with the idea through a product.

The challenge of leveraging big data takes on even larger proportions when companies try to discern how to create a solution that will engage the mass-market consumer.

One option in the energy market is the “set it and forget it” approach. A company actively manages smart products on the user’s behalf and applies analytics to control the way a household’s products and help to set preferences based on behavior of its inhabitants.

Businesses and commercial properties, such as chain restaurants, can provide good examples of areas where data analytics work well for energy applications.


New Partnerships: Smart Devices in Retail Energy Markets

As the roles of service providers (electric provider, broadband and TV provider, security provider) change, we see increasing overlap in their roles. AT&T is a security and smart home provider, Comcast is


exploring being a retail energy provider in some markets, and restructured energy providers are becoming providers of energy-related products other than electricity.

All of these service providers have the option to consider becoming the supplier of many services or collaboratively forming partnerships to leverage their respective strengths for deeper relationships, increased stickiness, and lower churn.

To provide consumer services that add value to the home, increase efficiency, protect the environment, provide increased convenience and control, energy providers may form partnerships with, at a minimum:

Retailers

Electric vehicle manufacturers

Smart home device makers

Cable and telcos

Home security providers

Consumer products makers

Weather info providers

Warranty and home maintenance companies

SPEAKERS

Blake Lasuzzo, Senior Vice President, Just Energy

Wannie Park, VP of Utility Solutions, CEIVA Energy

Jennifer Pulliam, Senior Director, TXU Solutions, TXU Energy

Curtis Snyder, Executive Director, New Business Development, Comcast Cable


NOTES

It is important to keep perspective when entering a business deal or partnership and incorporating the goals of another company. Partners co-own the customer relationship and need to work together to ensure that, from the beginning, end users have a positive and seamless customer experience.

Partnerships among cable companies and other industry leaders are natural and logical extensions of the smart home market because these industries face the same challenges to their business models.

Understanding the strengths and weaknesses in a partnership and knowing when to defer to their partners are important for a successful relationship. For example, telcos have decades of experience in managing the consumer experience, but when it comes to energy, they have little expertise in load management.

Often partnerships grant a business the ability to expand into a market it would otherwise be absent from, but structuring a successful relationship is not always easy. The goal of a partnership,


especially within the energy markets, should be diversification, in order to create bigger, broader relationships with the customer. Each partner also needs to be clear on what it wants to achieve.

A few key partnership issues, which need to be invisible to the consumer, is in service calls and revenue sharing. For support, companies need to ensure the proper setup and established process for escalation among partners so that consumers can get help. For revenue, often there won’t be money/revenue upfront, so a partnership often has to start by identifying a problem to solve for the consumer and then working backward.

Standards and Interoperability: The Foundation for a Consumer-focused Market

Internet-enabled, connected devices are entering the home in growing numbers. At CES, over 900 companies announced new smart products. Most of them will be point solutions and will not be interoperable with other smart products in the home. Interoperability is a challenge, and service providers use this challenge as a business advantage, creating platforms that integrate multiple product categories into a broad ecosystem of products.

For many years, ZigBee and Z-Wave have been the default technologies for constrained devices. These organizations have built an ecosystem of interoperable products and an alliance of hundreds of companies. Today new technologies such as Low Power Wi-Fi, Bluetooth Low Energy, and DECT ULE are


competing for the constrained device market. Additional competition is coming in the form of 802.11ah, a 900 MHz version of Wi-Fi that will target the constrained device market.

Some believe that the IoT should be IP based, and AllJoyn, Thread, and others are working to move IP to the edge of the network.

OSGi, the OIC, and others are focusing their efforts on abstraction and a common framework for application developers to build upon.

Utilities want to take advantage of the many smart products in the home, but fragmentation within the utility industry is a huge obstacle to integration. Utilities could join together to agree on a common approach that is in line with the broader market. OpenADR and SEP 2.0 are potential solutions. At the same time, some argue that utilities will not agree on a common approach to communicate with smart products, and manufacturers should plan on a fragmented approach to communication.

This session examined the technologies that enable the connected home and the broader Internet of Things. Speakers discussed interoperability, the different approaches to interoperability, including peer-to-peer communication, cloud APIs, integration into connected home platforms, and the standards and technologies that will simplify interoperability.

SPEAKERS

Edgar Figueroa, President and Chief Executive Officer, Wi-Fi Alliance

Barry Haaser, Managing Director, OpenADR Alliance; President, Lakeview Group

Christopher Kotting, Executive Director, USNAP Alliance

Sujata Neidig, VP of Marketing, Thread Group

Bill Scheffler, Director of NA Sales and Business Development, Sigma Designs/Z-Wave


NOTES

Every player in the smart home market talks about standards, but in the end, the market always decides. It will take some time for SEP 2.0 to make it through the utility to the distribution channels and, eventually, to the home.

There will likely be a multitude of technologies in the smart home divided up among the devices and services.

Technology often moves too fast, making it difficult for protocols to keep pace. Energy is a very complicated market, and it is always changing. Innovative partnerships and industry collaboration are important to resolve interoperability issues.

Regarding cloud-based services, one cautionary note was that cloud services generally involve servers, requiring companies to maintain and support those servers. If the company or the business model promoting cloud service goes away, that cloud-based service goes away; however, the original demand for that service is still there and needs to be met.


Future of Smart Home Systems and Home Control Platforms

Sixteen percent of U.S. broadband households own a smart home device, and the top two most frequently owned devices, smart lights and smart thermostats, can be used for energy management. Many utilities want to be THE trusted energy advisor to their customers, a resource for information and advice on all matters related to energy. The broad deployment of smart meters and smart home devices creates partnership opportunities that benefit all parties. Smart meters provide valuable data that can be converted into services that enhance smart home solutions. Smart products can be integrated into utility demand response programs. In addition, smart home devices offer multiple points of contact with the customer including the local user interface and the product app.

SPEAKERS

Kris Bowring, Director of Business and Channel Development, Lowe's Companies

Tom Chmielewski, VP Strategic Sales, iControl Networks

Joe Jankosky, Director, Intelligent Home New Verticals, Time Warner Cable

Jay Kenny, Vice President, Marketing, Alarm.com

Dan Lieberman, Head of Research & Standards, SmartThings


NOTES

Consumers care about three core value areas:

1) security and peace of mind;

2) convenience and entertainment;

3) energy savings.


The value-added message on the energy side is still a bit muddy and not presented clearly to the consumer. The industry needs to figure out how to save money for the people who need savings as well as provide and demonstrate the clear benefits of the connected home to consumers.

Data collected from devices suggest that what consumers really want is a safer, smarter, and more efficient home. Cost is a concern, and so is being green, but desire for comfort and convenience exceeds both.

Security is a major point of entry to the smart home. Energy management is another point of entry, but energy savings is often too small or abstract to engage consumers.

Energy management is becoming “cool”, but what this industry needs is a catchy term, other than efficiency, to make it more compelling to consumers.

Big-ticket items like electric vehicles, solar panels, and even battery storage are making their way into the energy efficiency matrix.

Bundling products and services provides more value and functionality to the consumer. The industry needs to work together to incorporate new offerings with ease and flexibility.

With existing connectivity, new devices can be brought online in a relatively straight-forward manner if they’re developed the right way.

More developers are embracing the idea of connected solutions within multifamily units, which will introduce whole new segments of consumers to the smart home. These consumers will take these ideas with them as they move into new homes.

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