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The Smart Home: Built by consumer pull


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Pilgrim Beart's presentation to the IET, London 8th March 2011

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The Smart Home: Built by consumer pull

  1. 1. The Smart Home: Built by consumer pullPilgrim Beart, Founder Director, AlertMeEngineering the Smart World, the road to 2020IET London, 8th March 2011
  2. 2. Agenda • Setting the scene • Home Energy today • Consumers are key to a successful transition • Seizing the opportunity • Consumer trends & journey • What does that mean to service providers? • Propositions • Technologies • The view in 2020 • Based on today‟s trajectory 1
  3. 3. Setting the Scene
  4. 4. Home Energy Today - landscape • Consumer: • Doesn‟t think about energy • Reliable supply • £1200/year average energy bill is quite painful • 9% of disposable income • Zero visibility into where that money is going • In same category as the mortgage/rent • A choice of energy supplier (but little differentiation) • Home is “dumb” – nothing connected • Government: • Legal requirement to sharply reduce carbon • Climate Change Act mandates 34% by 2020 (vs. 1990) • Renewables not coming on stream fast-enough - and are intermittent • UK becoming a large net importer of energy (energy security issues) • 50% of all UK energy is consumed directly by consumers (30% in homes)SETTING THE SCENE • Utilities: • Forced to sell less energy • Energy retail is increasingly a low-margin commodity • Need differentiation, and other sources of revenue • Abroad, Smart Meter initiatives have yet to deliver much benefit • Aimed at solving utilities‟ problems, rather than bigger picture?
  5. 5. Home Energy Today - the opportunity • The UK has a unique opportunity to lead: • Starting Smart late-enough to learn from mistakes of others • Deregulated market, so consumer matters • Which means Telco‟s can play, as well as Utilities • Consumer products & service bundles evolve fast • Opportunity for rapid market-driven change (vs. “Soviet” approach) • Addressing the demand-side can have big effects, quick & cheap • Even just a simple in-home display can drive significant reduction • It can start now (pre-Smart Meters)SETTING THE SCENE • …in fact, it already has • All major UK utilities are rolling-out online consumer energy engagement programmes 4
  6. 6. Does UK government “get” it? Positive noises…SETTING THE SCENE 5
  7. 7. Consumers are key to a successful transition…so worth understanding them!
  8. 8. Consumers are key - psychology How do consumers think? Abstract Concrete Consuming Energy Using a washing machine Motivation – Empowerment = FrustrationCONSUMERS ARE KEY Motivation + Empowerment = Action 7
  9. 9. Consumers are key - psychology Motivation: Money! • Energy bills ≈9% of disposable income • 90% of householders concerned about bills • Standing charge is exactly the wrong model • Rule of thumb: 1W = £1/yearCONSUMERS ARE KEY 8
  10. 10. Consumers are key - psychology We are social animals • Motivated by Competition and CollaborationCONSUMERS ARE KEY 9
  11. 11. Consumers are key - empowerment What empowers consumers? • Today feel un-empowered - view energy bill as outside their control • Like mortgage or rent • Need to bring energy costs into the here-and-now • Per-use • Associate cost with use Visibility TangibilityCONSUMERS ARE KEY 10
  12. 12. Consumers are key - empowerment Analytics – beyond kW and kWh • from Data into InformationCONSUMERS ARE KEY 11
  13. 13. Seizing the opportunity
  14. 14. Consumer Trends • It‟s all about being connected • 100% of people have mobile phones • 70%+ of homes have broadband • Therefore, enter the Connected Home • Usage: • Fixed PC is largely dead • Web 1.0 only a subset • Web pages don‟t work well on mobile • Consumers too busy to visit portals just for the sake of itSEIZING THE OPPORTUNITY • Web 2.0: Apps & Social • SmartPhones, Tablets, IPTV • Whereever, whenever • At home, at work, on holiday, in the kitchen, the living room, • Even in bed! • Increasingly: “if it‟s not online, it doesn‟t exist” 13
  15. 15. Consumer journey • Price of energy will rise and energy consumption will get more complex with TOU tariffs, DR and micro generation • 8%-10% of the average disposable income is spend on energy ( £1200 p.a.) and approx 20%-25% of consumption is waste • Provide awareness through real time visibility, control & automation, enabling consumers to reduce energy use, cost and CO2 Overall home energy usage and bill over time “Usage Shock” Possible Net Bill Position Better tariffSEIZING THE OPPORTUNITY Turn off standby Reductions necessary to offset likely future Identify consumer energy price rises appliances Smarter use using most More efficient appliances energy Use Sustained usage levels “Free” energy contribution - self appliances more cost generation (eg. Solar panels) effectively Diagnostics Establishing Active Behaviour Change Self-Generation Stages of Behaviour Change 14
  16. 16. What does this mean to service providers? The Energy industry is undergoing significant technological change driven by • The need to provide certainty and security of supply • De-carbonise supply to meet challenging Governmental/Regulatory targets Energy Industry • Respond to customer and regulatory pressure on pricing Consumers must Investing in Smart Metering Capital Cost believe and see that Efficiency Smart Grid (passed to consumers) there is a tangible benefit to them Smart metering/smart grid holds considerable promise • Brings operational efficiencies to the utility - reduce overheads, billing and collection efficiency, smoothing demand, flexible pricingSEIZING THE OPPORTUNITY • Need to tap into consumption related efficiencies (Time of Use Tariffs, Demand response) … the 60% … the 40% OPERATIONAL EFFICIENCIES CONSUMPTION RELATED through technology deployment through Consumer engagement “60% of the business case for smart meters lies in operational benefits, 40% consumption related ” Boston Consulting Group, April 2010 15
  17. 17. Propositions • Generally: • Hide the technology • Turn data into information • Bring information to the customer • Make it REALLY easy to use (esp. installation) • Enable different Modes of use (web, phone) • Remember we are all different. • Avoid “Home Automation” pitfall: • Has a (deservedly) bad reputation, e.g. X10 for rich people & geeksSEIZING THE OPPORTUNITY • Instead, offer simple, complete, propositions which “just work” out of the box and immediately solve real needs (e.g. saving money) • Creative consumer-oriented service business models, e.g. • Advice showing where energy spent, help budgeting & reducing • ESCO • “Buy this fridge and get its first year of energy free” • C2C energy trading?! 16
  18. 18. Places to deliver the UX • Phones (dumb & smart) • Tablets • In-home displays • TV‟s • Virtual real-estate • iGoogle • desktopSEIZING THE OPPORTUNITY • Social apps All of these are increasingly online Can‟t predict all the places we might deliver a future UX But can predict they will all be online 17
  19. 19. Examples (already on the market) Electricity + Gas + MicrogenSEIZING THE OPPORTUNITY 18
  20. 20. Examples (already on the market)SEIZING THE OPPORTUNITY
  21. 21. Technology – In-home Connectivity • For end-devices (cost £‟s, and have to last years on a tiny battery) • For appliances (cost £10‟s or £100‟s, generally mains-powered) • Today • >70% of homes have always-on IP connection (broadband) • >46% of homes have WiFi „dialtone‟ [Ofcom Q1 2010] • >95% of homes have cellular access • Ultimately… • It‟s a heterogenous world, with a range of constantly-evolving PHY‟s • ZigBee SE, HA, Mbus, WiFi (low power), powerline, 3G & 4G…SEIZING THE OPPORTUNITY • It‟s all ultimately IP, would be nice not to obsess about the PHY • However… • UK Smart Meter PHY is in a quandary • No-one (Govt, Utils, Tech providers) wants to be seen to be “picking a winner” • Everyone will benefit if we do pick a winner (not least the Consumer) • …even if it‟s not perfect • Whatever is chosen will go out of date (but that‟s not a reason not to pick one!) • e.g. 10base2 Ethernet spawned a huge market, even though no-one uses it today • Or by delivering online we could avoid PHY issues entirely 20
  22. 22. Technology – the Home Hub • Gateway and local agent • Platform for multiple Connected Home services • Home Energy, Heating & Cooling, Peace of Mind, Telecare, … • Online (but acts locally too, for latency/reliability) • Initially a new device in the home (for ubiquity) • But ultimately embedded: • Smart Meter (if “thick”) App App App App App App App AppSEIZING THE OPPORTUNITY • Broadband router CLOUD • STB (IPTV) UX UX UX • Femtocell App App App App App App App App • … Operating Operating Operating HOME System System System PHY PHY PHY PHY PHY PHY PHY PHY PHY PHY PHY PHY THICK THIN HYBRID
  23. 23. The view in 2020
  24. 24. UK Home Energy in 2020 The Consumer… • Thinks of energy services like other home services: • Broadband, TV, mobile, … • Energy is a part of broad service “bundle” from many providers • Energy services (e.g. e-commerce, switching etc.) available separately from energy retail • Has a Smart Meter (with Time of Use tariff, DR just starting) • (and 3rd-party services can help manage it) • Has several HANs (WiFi + others), with some white goods on them • Is one of the 5%(?) with microgen (PV, thermal, CHP) • Is one of the 5%(?) using an (PH)EV (= 3 houses!) • Has a choice:CONCLUSION • Between more complex, more expensive (+60%?) home energy • Or simpler, cheaper if they opt-in to letting it be managed 23
  25. 25. Thanks for listening