Ronald J. Zimmer CAE CABA President & CEO Continental Automated Buildings Association LinkedIn...

Ronald J. Zimmer CAECABA President & CEO

Continental Automated Buildings Associationhttp://www.CABA.org

LinkedIn Profile

Impact of Smart Grid on Connected Homes

Impact of Smart Grid on Connected Homes 2012

About CABA

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


CABA Connected Home Council

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.

Oversees “connected home” research activities


CABA Research Program

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.

Prepared by:

Emerald Sponsors

Diamond Sponsors

Impact of Smart Grid on Connected HomesImpact of Smart Grid on Connected HomesContinental Automated Buildings AssociationContinental Automated Buildings Association

CABA and the following CABA members funded this project:


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


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


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


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)


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)

IOU Procurement Process


Utility Initiatives

•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


Smart Grid - Key trends in Implementation

Smart grid implementation is nascent stage, but has the potential of enabling connected home through wide roll out of TOU rates…


Consumer Perceptions

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

This research shows that residential customers are adopting energy management systems in the form of…


Smart Meter and HAN


Smart Meter Installations


Integrating Connected Home Devices to the Smart Grid

Integrating connected home devices to the grid is currently met by the following challenges…


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 since 2009.

• Others include:o Limited clarity on energy savings o Inability to justify the cost of new hardware or services.

• 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 select.

• Complexity of solutions made this criterion very important for decision-making.


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


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


Whirlpool Smart Device Network Architecture


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, this research shows that potential customers are drawn to demand response due to the prospects of cost savings…


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


Achieving the Connected Home


The Home and Beyondfrom a Telecom perspective

Courtesy: ZigBee Alliance


Emerging Ecosystem


Implementing Changes


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.


1173 Cyrville Road, Suite 210Ottawa, ON K1J 7S6

613.686.1814Toll free: 888.798.CABA (2222) Fax: 613.744.7833

[email protected]

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http://www.CABA.org

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Ronald J. Zimmer CAE CABA President & CEO Continental Automated Buildings Association LinkedIn...

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