Connected home smart meters

What can European utilities learn about connected home platforms from their telco cousins? Thomas Rockmann, Vice President Connected Home, Deutsche Telekom explains.The future for energy management is bright, according to received industry wisdom, due to the guaranteed growth in smart meters and associated smart technology, writes Rockmann.

Analysts predict great things - such as by 2019 the number of smart thermostats growing at a compound of about 65% in Europe and North America (Berg Insight forecasts). However, this good news for the industry masks a series of serious challenges on two connected but distinct fronts - consumer usage data and perhaps the most vital of all - consumer perception and satisfaction.

The growth in the smart metering industry is a widely accepted fact. UK government initiatives, such as Green Deal and Energy Companies Obligation (ECO), are designed to reduce energy consumption and support people living in fuel poverty. The ECO will levy fines on utilities – up to 10% of their turnover – if they fail to implement energy efficiency schemes in customers’ homes, and this requirement is driving adoption vigorously.

Incentivised packages are attracting energy-conscious consumers in their own right. And the fact that regulators in some countries are allowing smart thermostats to be included within targets, has enabled some European utilities to be successful in signing up many customers to such devices as the start of a connected home.

Consumer-utility dialogue

However, this rosy picture doesn’t tell the whole story - a recent study by Accenture found that consumers spend on average six to nine minutes each year interacting with their utility, and when they do, four out of five of the reasons are negative.

While smart meters and thermostats may offer a means for utilities to positively engage customers, market growth in Europe has been significantly slower than in the US.

This may be due to legislation around professional installation, which increases costs for consumers, but it’s also down to the fact that consumers simply do not expect their energy provider to sell them smart thermostats.

While bundling them as part of a service with boiler installation and maintenance operations has seen some success, volumes have often failed to meet the initial expectation. In order to succeed, utilities will need to provide expanded service ranges, such as subsidized appliances, HVAC, insulation (leveraging subsidies where applicable); and thereby improve customer loyalty and retention.

Data, data, data

Real time data from smart devices is a true double-edged sword - while it’s a potentially interesting feature for consumers, it’s also a challenge for utilities and providers to manage securely. For consumers, there is potential to save between €70 and €130 per year by switching off high energy usage appliances at peak/super peak hours and placing unused appliances on standby, according to the UK’s Energy Saving Trust.

[quote] Visualising this data for the consumer allows the utility-consumer relationship to develop beyond the billing full-stop of the meter, and beyond into new areas of opportunity.

For example, the UK’s Department of Energy and Climate Change has created the Data Communications Company (DCC), which is intended to allow authorized third parties to provide services direct to consumers – once they have granted permission to use their energy consumption data – offering new routes for consumers to receive energy services and advice on how to reduce their energy usage.

Aggregated market?

However, consumers are increasingly aware of the value of their personal data, and smart metering and energy usage data can give particularly startling insights into private lives.

A data leak or breach could pose significant brand damage to a utility, and would inevitably increase churn rates. Not only that, but once the DCC is operational, any authorized third party can have access to a customer’s smart meter data – whether it be price aggregator or retailer – not only to provide consumers with energy insight, but also the best tariff based on their energy use.

This could see utilities become nothing more than pure commodity providers and open the door to aggregators, especially given pending legislation to create in-day switching, i.e. near real-time migration. Consumers will potentially welcome the aggregators that claim to guarantee consumers the cheapest tariff by switching regularly.

Utilities learn from telcos

In a recent Deutsche Telekom report ‘How To Create Growth From The Connected Home’, we recommend that utilities consider emulating telcos by offering appliances on a subsidized basis, employing demand disaggregation technology and smart meters to provide flat rate energy charges, thereby providing greater differentiation, realising new revenues, increasing customer loyalty and improving customer retention.

Another threat for utilities is that today, many proprietary and incompatible solutions continue to enter the market.

If this industry is to mature and realise forecasted growth, opening up devices and platforms for seamless connectivity is absolutely essential. Fundamental to achieving this, is the open architecture that we have implemented for our white label connected home platform, as well as the utilization of open source software and third party developers via Eclipse SmartHome.

In Germany and Austria, we have partnered with leading utilities, including EnBW, Vattenfall, Rheinenergie, entega and eww Gruppe to provide a range of home energy management services designed to meet the needs of consumers and the regulatory environment.

For consumers, an open platform provides much better usability than several closed systems with limited features. For companies, a common foundation greatly accelerates the development of products and services with the benefit that virtuous circle can be created as multiple innovations arise from within the ecosystem.

It’s certainly true that the market volume of smart metering products and associated connected devices is about to increase dramatically, but the underlying results of this are still in the balance.

Without the creation of innovative business models many existing meter providers will find they’re irrelevant, and without robust steps to ensure consumer trust, new players may find the same all too easily. The challenge is just beginning, concludes Mr Rockmann.

Connected home

Deutsche Telekom launched its connected home platform in late 2013 under the name QIVICON. The platform is available internationally as a white label solution, and supports the Eclipse Foundation/openHAB initiative. More than 30 partners use the platform, including Philips, Osram, Miele, eQ-3, Sonos, Samsung, Huawei, Netamo and Bosch.