How well will consumers embrace active management of their home energy consumption? It’s a potentially billion-dollar question in the home energy management market. On this blog, Mike Edmonds has expressed skepticism about whether consumers are willing, or even able, to buy the in-home technology that will help them better manage energy use.
I’ve seen the studies that project big growth in the home energy management market. And there may well be significant growth—over the long term. In reading a few reports over the last few weeks, my own doubts about whether we’ll see much near-term growth in active home energy management have continued to grow. Here’s what I’m seeing:
- Lack of demand. Google and Microsoft made headlines in the past year for pulling back from the home energy management market. And at the 2012 Consumer Electronics Show, others—like Katie Fehrenbacher of GigaOm and Jaymi Heimbuch at Treehugger—found limited new green products. Lack of consumer demand, or at minimum lack of perceived demand, is at the root of the lack of new offerings to manage or reduce energy consumption. Consumers
- Lack of dynamic pricing programs. The deployment of time-of-use rate structures has been slow. The latest Newton-Evans Market Trends Digest also reports an interesting finding on dynamic electricity pricing programs. 83% of U.S. public utility commissions are not requiring utilities to implement dynamic pricing as part of their smart meter programs. Without a regulatory mandate, there is question as to whether dynamic pricing will even be an option for most consumers—and without a price benefit, consumer willingness to adjust electricity consumption patterns will be all but nonexistent.
- Limited advanced meter penetration. An advanced meter is a basic piece of enabling technology for home energy management. But it will still be some time before smart meters are available for every U.S. residence. FERC’s Nov. 2011 Assessment of Demand Response and Advanced Metering reports that, based on a EIA June 2011 survey, 13.4% of meters in the U.S. are now smart meters. That means 86.7% are not. The rate of smart meter installations has picked up considerably in recent years, aided by ARRA funding. But even if the current rate of growth continues, it could be years, maybe decades, before there are smart meters in every U.S. home. And a continuance of the recent growth rate is questionable given consumer backlash against smart meters and fewer subsidies as governments tighten their belts.
The question of growth in the home energy management market impacts not just the companies providing these products and services, of course. It also impacts electric utilities charged with forecasting electricity demand and ensuring their system can meet it. If the home energy management market—and with it demand response programs—do not take off, utilities do have other options to manage peak load, reduce energy purchases, and improve the efficiency of the grid. The main difference is that these technologies—like volt/var optimization systems and community energy storage—are grid-based approaches that are largely invisible to the consumer.
What are your views on the home energy management market? Do you think consumers will start actively managing their electricity consumption at home, or do you think their electricity usage patterns will continue as they are?
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