What Home Energy Management Systems Are Most Effective?

It’s still an early adopter market, but one that will change and grow.


Are home energy management systems (HEMS) ready to move beyond the early adopter phase and achieve mainstream acceptance?

Not so fast, say a couple of research firms.

According to consumer electronics research firm Parks Associates, only about 3.5 percent to 4 percent of households take advantage of electricity load control services if offered by their utilities. That’s pretty sad, but the news gets a bit cheerier.

In a webinar on Engaging Consumers: IP and Energy Services, Parks director of research for home control and energy Tom Kerber says 50 percent of consumers would pay about $60 for a device that saved them 10 percent on their electricity bills, according to a survey conducted by the firm. (Though 10 percent savings could be a stretch for any device.)

At an average yearly cost of $2,200 for energy, though, that’s $220 in the bank.

A new report from Pike Research on Home Energy Management also sheds some light on this new, increasingly crowded and confounding market—and says home energy management will be a $2 billion business by 2020.

Pike segments home energy management systems into several categories, allowing for overlap, and says standalone HEM systems, such as those not connected to outside networks or smart grid services, will grow from a quarter million in 2011 to nearly 4.7 million in 2020. These include more do-it-yourself systems such as smart thermostats and systems like the Iris home control system and the retro-mod Nest thermostat available at Lowe’s.

Standalone HEMS may proliferate will into the decade, but they are not the most effective energy management systems, enabling about 5 percent to 9 percent savings, says Neil Strother, senior analyst for Pike Research.

In-home displays can save 10 percent to 12 percent if done well, Strother says. Some research has indicated that homeowners don’t want another display just for energy information—and who’s to blame them? But state mandates may encourage more adoption of such systems through utility programs. A couple of our favorites are the Energy Orb and the Ceiva Energy Display.

Networked HEMs that are connected to a smart meter or combined with a home area network (HAN) and can receive electricity pricing signals from the utility and perform home automation functions may be the most effective home energy systems, says Strother, effecting as much as 18 percent to 20 percent in energy savings. (Though we might temper that). Combining energy monitoring and management with an area network and home control will surely increase efficiencies. These systems can be more costly, though, and without a tangible return on investment. Also, part of the hold up has been the slow pace of smart grid rollouts by utilities.

Web portals that show energy consumption can also be effective, though Strother so far is not big on the Green Button initiative that provides energy usage data over the web to customers of participating utilities.

One of the most effective energy management systems, at least for now? Paper statements snail-mailed by utility partner Opower that provide a report card of sorts of energy usage with a comparison to others in your area. And it works to get people to save energy.

Parks’ Kerber says to keep an eye on consumer electronics devices, because they have shorter life cycles, forcing companies to constantly innovate. “That channel is innovating and growing and accelerating much faster than other channels, and entering into this market is not [a reach for them].”

He also says that if service providers like ADT, Comcast and Verizon, which are offering home connectivity with some basic energy management, can layer more energy management and perhaps utility rate plan information on top of their offerings, that will drive the market past the early adopter phase.


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