Smart Homes - Fundamentally Flawed?

Homes, unlike commercial buildings or industrial complexes, do not generate five to six figure savings the drive needs to be service, not technology.
Published: Wed 21 Aug 2013

The prevailing definition of smart homes seems to be encapsulated by the one published in 2003 by the UK Department of Trade and Industry (DTI):

"A dwelling incorporating a communications network that connects the key electrical appliances and services, and allows them to be remotely controlled, monitored or accessed.”

There is a fundamental flaw in this definition as it is both technology and feature-centric, not benefit-centric. If we can equate the ‘Smart’ in Smart Home with the true meaning of the word, that is, “intelligence” and “common sense” (rather than the new meaning espoused by technology marketers), it makes us view things through a very different lens-one that is benefit-centric and creates value for consumers.

We would like to suggest an alternate definition of the Smart Home:

“A dwelling which utilizes the least amount of energy and water in the most optimised way, while enabling its inhabitants to live in comfort.”

If we are to achieve this, then the ability to control electrical appliances from a smartphone makes little or no difference. A greater benefit can be derived from three other areas:

1. New building technology and retrofitting

Insulation and materials have a greater effect on energy consumption and payback than any app on the market. Passive Houses (a highly energy efficient and environmentally friendly building) use 90% percent less energy than typical existing homes and 75% less energy than most new homes, according to the Passive House Institute.

These buildings rely on the sun, internal heat sources (such as shower steam) and heat recovery, making active heating systems unnecessary. Strategic shading, window glazing and ventilation help these buildings to keep cool on warmer days without air conditioning. Passive Houses need very little energy, making conventional heating and cooling systems unnecessary.

We recognize that not every house can be a passive house but the figures illustrate how far the dials can be moved with new building technology alone.

2. Appliances & Lighting

Investing in new, more energy efficient and aware appliances can change energy consumption. The energy rating system has had more of an effect in driving down energy consumption in homes through the investment in new smart appliances. An article published by the UK’s Energy Saving Trust, Products and Appliances, reveals some very relevant figures. The math is not hard and it all adds up.

3. Renewable Generation

The introduction of photovoltaic (PV) panels on roofs has a significant impact on energy bills. It even gives the consumer an opportunity to become a prosumer in some cases. In many countries, there are subsidies for PV’s and we accept that these need to be looked at through a long-term lens.

 

Peddling technology

So what of the technology peddlers and cable companies around the world offering ‘smart home’ services? There is hope for them but a rebranding and the creation of innovative business alliances may be required.

The beachhead for the connected smart home may not be energy but home surveillance or telecare. Both markets are ripe for disruption through the consumerization of IP Cameras and advances in open video standards.

The connectivity offered, however, can provide the data to facilitate change. However, here we need to get real and realize we live in a market economy. Utilities and Telco’s need to ask themselves: “What is in it for my shareholders? What is my incentive to reduce domestic demand? “What is in it for us?” Additionally, service providers of any shape need to ask whether these services will retain existing customers and possibly attract more.

New business models - smart tariffs and more

Smart homes need smart tariffs. Let’s take a moment to look at Rolls Royce. The company discovered that the big payoff is achieved from getting engines under more wings by servicing and selling spares. The company then pulled off the conjuring trick and convinced the airline industry to pay a fee for every hour that an engine runs.

Could this be applied to the smart home market? What if a tariff offers more than just selling energy or internet connectivity? What if it can also create an optimally energy efficient smart home?

Imagine dashboards that alert you to what appliances need updating or servicing as they are not running at optimal energy consumption and offer the relevant remedy be that servicing or the hire purchase, financing or buying options for a replacement appliance -all negotiated and arranged by my service provider.

An extra smart charge on the bill could cover the above and perhaps entitle you to the latest and most energy efficient light bulbs, a control hub, any number of smart sockets, and a solar powered charging system for your portables.

A home monitoring box would switch your appliances and lights off when it senses that no-one is around using the smart lights and sockets provided. Other offers could include the provision of thermal insulation, competitively-priced PV systems, provision of monthly finance (negotiated through the buying power of the service provider), and finally lest we forget an app to boil the kettle.

There is an opportunity for service companies to not just supply connectivity or power but to become retailers and providers of goods and maintenance services.

Thought will need to be put into the data privacy and ownership issues. Concern is still ripe on the potential transmission of this much data through a smart meter. The movement to personal data ownership feels at odds with the smart meter.

Engerati Analysis

The smart home requires joined up and disruptive thinking. We believe that margins lie in services and parts, not monitoring and connectivity. The Smart Home will only work if there is a real and perceived benefit which consumers will buy into and pay a bit more for. Much like our adoption of Smart Phones. Taking this analogy the industry at the moment is selling Nokia 6310’s.

 

Sources

Greenchoices-Insulation

Santa Cruz-Santa Cruz’s First ‘Passive House’