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Bill Melendez

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I am constantly intrigued by the various camps that espouse their unique technologies as being the next global standard in the Internet of Things (IoT) or in home automation. Quite frankly, there are no set standards in the mindset of the average consumer. Consumers, by and large, do not quibble over technologies or standards except when seeking a solution for their own use. Then they surprise all the experts by going down to the mass consumer outlets such as CompUSA, Wal-Mart, and so on, and do what consumers do every day –they buy what the sales guy told them is a good deal or what their friend told them is a great buy or whatever is a “sale” that week. Or, like my wife, they check out each product from different stores and compare pricing and features (does it matter to her if one is ZigBee or Z-Wave?). We went shopping for a new TV the other day. The different options were so overwhelming to her (and truth be told, to me also). So, being the engineering type that I am, she asked me which would be the best choice considering pricing and features/functions available. Well, the first thing that crossed my mind was the IoT. The next thing that I considered, being an energy efficiency type person, was –you guessed it –the energy efficiency of each model. Lastly I looked at the technology itself –was this something that would stay current for a foreseeable future? We ended up with two different brand TVs with different technologies –and they both satisfied our criteria for selection.

This brings up the point about IoT and home automation and the technologies available to the home consumer. While we can discuss forever which technology is best, I think that we manufacturers of home automation products aught to at least consider the consumer mindset and acceptance and not the technologies we choose to use.

In one of the LinkedIN forums the issue of technology was bounced back and forth. It was stated by the forum originator that their technology was the standard for home automation. My response was that we really needed to look at the SALES figure first before portraying any technology as a fact of life. What actually is selling and in which markets is a greater indicator of how the market is moving then it is listing advantages that can easily be applied to other communications technologies. Since home control and home automation is yet to be defined by the mass consumer, it stands to reason that it’s too early to predict the winner in any market as volatile and with as much churn as the consumer markets. Key players in this scenario must include GSM and WiFi/Bluetooth which are not going away any time soon. The telecoms are doing quite a game change when it comes to penetrating the home environment with their “internet of things” and “connected home” scenarios.

GSM along with WiFi/Bluetooth, in my opinion, stands to win the technology race. I use my garage door opener every day but I really don’t analyze what technology it uses. I just want the garage door to open and shut as needed; the same goes for using other devices in my home –they work when I need them to work. For any home technology to become dominant it stands to reason that mass consumer acceptance is critical. Not everyone out there is an engineer or a technical wizard or a technology marketing expert. Consumer behavior does tend to gravitate towards the ‘herd mentality” or “ keep up with one’s peer” mindsets. That, more so then anything else, sets the trend for which technologies survive and which are relegated to industrial markets verses consumer markets. ZigBee, Z-Wave, HomePlug, and the many different communications approaches used for home M2M connectivity eventually must address the IoT solution. Somewhere in the scheme of things, the consumer must be able to connect with the Internet and smart phones/tablets/mobile devices as a means of command and control –which brings us back to GSM and WiFi/Bluetooth.

Startups and Funding Exercises

I am continuously amazed at the proliferation of startup funding sites an entrepreneur has accessible to them. The numbers are staggering. Wow. Are there really that many startups looking for funds and that many angel investors looking to fund? While I not representative of or for other entrepreneurs, I can share my thoughts about the arduous task of investment seeking.

With so many investors out there, one would think that it is a simple matter of being funded. Not so. My own experience with funding as a minority with limited corporate background credentials points to a sad state of things when it comes to qualifying for almost any type funds. Don’t get me wrong, I do have an MBA from the University of Maryland. I have served in the US Army as a successful company commander twice. I have worked directly for one and two star generals in high levels. I have startup experience from two companies with my present one being the third. I write within my industry and have published articles in leading industry magazines, not to mention the many white papers I’ve written. So what’s the catch?

I have observed that fund seeking is an addictive exercise from which the industry as a whole benefits more so then those seeking money. I am aghast at the many fees and costs associated with publishing one’s “executive summary” or company profile at various web funding sites. I am amazed at the “free” memberships that go nowhere but to the deep dungeons of databases somewhere in the bowls of the internet –never to see the light of day. And along with it, the aspirations and dreams of entrepreneurs.

Let’s face it. An entrepreneur has to walk on water for smithereens of attention nowadays. Don’t have the right credentials? Don’t have that dynamic team? Idea too simple? Wrong timing or wrong market? The multiplicity of reasons for failure are many.

When I first started my company I sought out every avenue possible for funding. I failed at every one of them. I admit that my naiveté helped ensure my failure. But where were those that claim to “help” entrepreneurs? I have discovered an undeniable truth –help is directly proportional to the amount of money one is willing to pay. No money, no help; that’s the dilemma all entrepreneurs find themselves in. For us little folks, what is the solution?

Here are some simple tips that may improve your chances of success:
(1) First, determine what type of company you are starting. Is it a “local” small business or is it a “national” type enterprise. Is it a “me too” type or is it unique in execution and product offering? Nothing wrong with the “me too” –Mark Cuban’s was one. Can it scale from a small business to a larger format? What is the level of capacity of the company and the management team? Let’s be honest, everyone can’t be Mark Cuban or Steve Jobs, both which started small and grew exponentially in a short timeframe. A lessons learned: Start where one is at the present and not where one would like to be. Nevertheless, START. It does take time to mature and learn one’s own business, so start now and learn as you go.

(2) What will it take financially to get the company to the next goal? The best solution is a zero overhead cost requirement solution, which is not always possible because of the type of business started. A consultancy would fit this category, as would a software/web company where the owner is also the programmer. In my case, I started a global company in manufacturing energy management home and building devices (very cash and people intensive from the get go). If cash is an issue, look for solutions that fit one’s personality and aspirations. A lesson learned: passion (enthusiasm) for something does sell.

(3) Look for other people that share your passion. There is comfort and support in numbers. In my case, I found a local electronics R&D company that also like the idea and decided to support my efforts. Introduction to this company occurred at a city sponsored small business tradeshow and through an Indian art exhibitor, whose husband was an embedded software programmer at the company. Amazingly, my company was the only “global” company there and all I had was literature to display my ideas. A lesson learned: look in your own back yard first for help and support.

(4) Partnering is full of problems and pitfalls, yet it is a way to move forward for a
company that wants to become larger or that needs those relationships to even be seen as credible and legit. I collaborated with quite a few companies (mostly complimentary startups in my industry) and eventually some paid off. In the MBA world, we call that “strategic alliances.” One can do the same at the local level through the Better Business Bureau, Chamber of Commerce, and so on. Even other companies that compliment one’s business – doctors do that all the time as “referrals.” Working closely with partners helps crystallize one’s business focus and identifies problems in marketing strategies. A lesson learned: Offset personal and company weakness in core competencies with strategic alliances.

(5) Revenue is king. Not the business plan, the planning and execution, or any other wishful thinking ideas. If revenue isn’t king then the company is a hobby or a past time endeavor. Every facet of execution must focus on revenue generation. I get venture capital requests all the time –their spill? When you reach $2 million call us and we’ll fund you. What they are really saying is –eliminate as much as possible our risk and we’ll consider you. Understandable. Get revenue and everyone is your friend. Reminds me of my first tour of duty as a young Lieutenant in the Army. Previously I was a private with a young wife and a newborn baby. No one would give me the time of day. We spent our first winter in Lawton, Oklahoma in a shack with the wind blowing through every crack and crevice in that wooden house. It was miserably cold. When I returned to that same military post as an officer, the reception was different. Banks called to help me settle. No credit checks or hassle, no references required, even received a welcome basket from the Chamber of Commerce, and so on. A lesson learned: how one is seen or perceived makes a difference in opportunities offered. The same applies to a startup.

By now you are probably wondering about the “how to get money” part. If you are still wondering, it’s probably best for you to join a startup and learn more of the ropes from the founder. Learning at someone else’s risk is a good way to learn a business before entering a life-long endeavor that might not be exactly what one had in mind. Goes back to the first criteria I mentioned in this article.

Quite frankly, getting money is hard work, takes forever to get, and is full of
disappointments. Of course, if your company is the darling of the industry, then the
opposite applies. But for most of us, it boils down to persistence and acceptance of the
limitations imposed by those who do have money to waste (think half a billion the US
government gave to the defunct solar company in California). If you want funds, then
you really need to play by the rules of those who want to fund. I looked at the many
options available and concluded that for most of startups, funding from external venture sources is premature at best. Funding from “institutional” angel investors is no better –most are starting to act like banks and venture capital firms. This leaves the often not seen or heard of investors, individual(s) and companies who have resources but don’t necessarily use them for investment. Take for example the R&D company I partnered with. I know another company that collaborated with an electronics manufacturer to launch their product globally. Most of the time one can work with a supplier with the idea of guaranteeing them continued purchases or business. This can work at all levels whether small, medium or large company format. Being creative in this area of funding is not wrong or stupid.

The ability to receive funding depends more on the person asking for funds then
anything else. Selling an idea is an art many of us are not good at. I can say this
though, practice does help. Start with those investors one can afford to loose with the
idea of learning from these failures before pitching to investors that would most likely
invest in your company. That means doing some homework on the investors or their
firm and pitching to their criteria. Even a single investor has motives and psychological needs (besides the known criteria) that must be met by you. Some of that can be countered through an introduction by a known friend of the investor. In fact, most of my investor contacts that have been semi-successful (actually got to talk to them) have been through networking.

Bottom line, admit one’s limitations, which means the startup, and implement (means execute) a plan to offset that. There is plenty of help out there –one needs to judiciously and carefully seek it while avoiding the thousands of rabbit trails that distract and lead to disappointment and disillusion. Just make it happen.

Smart Appliances may not see the light of day anytime soon…

A recent Park Associate report, “Consumer Attitudes and the Benefits of Smart Grid Technologies,” stated that the market for smart appliances will evolve slowly for the following reasons:
• Consumers are unlikely to replace existing appliances with smart appliances
until existing appliances fail or become too expensive to maintain
• The premium most consumers are willing to pay for smart appliances is
unlikely to cover additional material costs
• Public utility commissions (PUCs) will have to approve rate structures that accommodate smart appliances, a potentially time-consuming process
• Many consumers balk at allowing utilities to control their appliances

While smart appliances is the way to go eventually, there are other reasons, I think, for this approach to be a long term, futuristic:

(1) New larger appliance life cycle is normally 10 years and then it moves into the secondary or “used” markets.
(2) Smart appliances need HAN systems in place to work. This area is vague and shifting continuously with no known winner or market dominant or business strategy for implementation.
(3) The relationship between utilities, smart appliance, and consumer interactions have not been defined nor is there a business model that delineates a clear path for all to follow. This may require more regulatory moves to outline relationships.
(4) Current business models assume or require government subsidies or incentives to offset pricing. Most consumers in this report said that they were willing to pay more for smart appliances but only if the amount of difference was “7.5-8.5% of the total cost of the appliance. Such a small premium is unlikely to convince appliance manufacturers to develop such appliances without accompanying utility or tax incentives.” Relying on subsidies may be a slippery slope for many who include such in their market launch strategy.
(5) Smart appliances seem slated for developed countries such as USA whether consumers tend to purchase the latest in gadgets and electronics. That limits the market substantially since developing countries tend to avail appliance manufacturers a larger market. Add to that the current economy situation and the launch of smart appliances in significant numbers would be questionable.

It is too early to tell “when” smart appliances will succeed in the market — the industry as a whole seems to be taking baby steps, full of caution. The biggest push that I’m seeing is the smart water heaters that are being marketed — that may well be the best approach for now.

Most studies tend to be bias in responses. Take the idea of external control of appliances — consumers don’t mind a security company monitoring their home and infringing upon their privacy via video and other devices but “balk” at someone controlling their appliances. So the real issue seems to be a manner of how the concept is presented and positioned to consumer and less of a privacy dilemma. Yes, appliances can lead to “activity” monitoring of electricity use and by fault, infringe upon occupant privacy. But the thought that comes to mind is not one of privacy but of “control” and how consumers respond to “loosing control” of another facet of their life. Americans really don’t like external controls. Take the American Revolution and the Tea Party. As a society, we don’t like others telling us how to live our lives – which is the basic crux of the issue here. Smart appliances manufacturers and sellers have to address this perception before acceptance of such technologies becomes the norm.

Many in the industry misunderstand the term “smart.” Smart is used in many ways — Smart Energy, Smart Meter, Smart Sockets and so on. Doesn’t make it “smart” just that it’s labeled so — marketing at its best. This brings up a point that many do overlook — most appliances can be easily controlled by individuals without much “smartness.” We can easily conclude that using the term “smart” is really about utilities and the industry and how they relate to appliances — not how consumers relate to appliances. That’s another world completely.

As to energy efficiency…well that is misleading. What we really mean is “consumption efficiency.” And here’s where it gets even more vague — consumption efficiency in comparison to what? The efficiency rating here in the USA are based on a national average and on assumed usage tests. Electricity rates vary dramatically so an average would not be a good indicator of “local” efficiency. Nor is the usage test — it is also an average. Bottom line, energy efficiency is a term used as a benchmark of a typical appliance used under certain specific conditions. And conditions do vary dramatically based on weather, region, and demographics.

The best and only way to measure true efficiency is at the location where the appliances are being used. Appliance efficiency also changes over time as the appliance ages or the lack of maintenance impacts it. How efficient the entire home is also has its impact on appliances. An improperly insulated home would make the refrigerator work more (as well as having teenagers in the home!) or having a refrigerator in the garage –which lacks insulation would also impact the efficiency of the appliance.

So the term “smart” should now carry a more meaningful use. And hopefully we all have a better understanding of the complexities that utilities and consumers deal with when interacting with appliances.

In Texas (I live here) ZigBee based Focus meters are now being installed. To date, I have not received any interfacing options. That’s because in a deregulated market, my T&D provider may change. Who then is responsible for the maintenance and sustainability of the ZigBee interface? No two providers agree on what hardware/software would be acceptable unless such device(s) goes through a certification process.

It’s true people buy millions of appliances (49 million were projected for 2007 based on AHAM ) but it is also true that of the millions bought, those qualified as high end appliances, may not be that many. The type models being bought and the price range of those models is important when considering incentives for purchasing smart appliances. Obviously household income and ability to sustain smart appliances (repair and maintenance) is crucial.

The two most important factors for explaining appliance sales trends are the annual number of new households formed (housing starts) and the number of appliances reaching the end of their operating life (replacements). These will play a significant part in smart appliance purchases regardless of what the experts forecast. One last factor that plays a small part is the number of “used” appliances being sold or retained within the market.

Energy Efficiencies in a Home Energy Management System (HEMS)

I have always been intrigued by smart home concepts and technologies that seemingly make life easier for consumers. My view is that a smart home would actually be smart in its efforts to curtail energy waste and reduce cost to the homeowner.

The industry as a whole looks at load shedding, dynamic pricing, Time of Use (TOU) and so on as issues of importance in conserving electricity use within buildings. What the industry doesn’t do is consider alternative solutions that can compliment or even supplant these methods of reducing energy usage.

Instead of TOU, Home Energy Management Systems can buy energy when the pricing is low and store it for use when the prices are high. TOU and load scheduling becomes less of a player when pricing becomes an important part of the overall strategy for energy management. There are other things that also impact energy use that a smart home can manipulate and control to effect energy reduction. For smart homes to be truly effective in energy conservation, they must, in the words of Mark Feasel (Dir of Sales and Marketing at Schneider Electric’s Energy Solutions Business) be “situationally aware” of all factors impacting energy consumption – pricing, TOU, lifestyle habits and so on.

Al Presher in his article, “Metering and Monitoring Trends” (Motion Control/Automation, Design News, April 2010) points out that energy within a home or building can be stored and used to offset electricity use. Smart systems can set up a “profile to store energy in the form of pre-cooling or pre-heating and coast through those peak times.” Buy electricity when its price is low to use when it’s high.

I once visited a “green” newly constructed home and was amazed at the level of technology employed. What I did notice while there was the lack of a cohesive approach to total home involvement in energy management. The house wasn’t “situationally aware.” Let me elaborate. The sun rises on one side of the house and sets on the other. The home is technically being heated on one side first and, as the sun moves across the sky, incrementally heated until the sun sets. In the summer time, this would create more energy need on the side where the sun is most prevalent. A normal house doesn’t cool air using this approach though. Instead, the wall thermostat, which is supposedly placed strategically in the central part of the house (assuming one unit only) acts as the temperature regulator that determines when and how long the air conditioner runs. So portions of the house are hotter then others and the cooling uneven throughout. The air conditioner runs longer to compensate for the “distant ends” that are being stressed by heat from the sun.

What if the house had inexpensive automated dampers that control air flow throughout? What if the Home Energy Management System managed these dampers by closing and opening them based on a low cost remote temperature sensor within each room? Using the above strategy, the HEMS would focus cool air flow on those areas being affected by the sun while diminishing those areas that are not being impacted.

If those rooms are not being used, then the HEMS would regulate air to the areas occupied and close the dampers where needed. In a properly insulated house, the empty rooms would act as air buffers to the rest of the house being cooled.

What amazed me about the green home was its lack of a means to measure efficiencies. While it did employ modern technologies in house construction, it had no means of gauging how all that applied to whole house energy efficiency nor did it have a way to sustain that efficiency rating yearly without an outside agency doing the evaluation. A HEMS integrated network would have looked at the energies being used and compare periodically for degradation of efficiencies, whether it be found in increased heating or cooling requirements, whether it be appliances requiring more electricity due to poor air flow (such as the refrigerator and the air conditioner/heater), or whether it be just an increase in consumption due to appliance breakdown and lack of maintenance.

As climate change impacts weather, the need to ascertain energy efficiencies within homes increases and more will be required from HEMS.

Is Consumer Education on Energy Savings What it Really Aught To Be?

All the recent discussions among professionals on providing “energy information” to consumers are interesting and give a perspective of how industry individuals see the issues. Whether too much information or just enough information will cause behavior changes in how we use electricity is not so much a concern when stack against the idea of NO information. Some within industry have hit it on the nose though. And that is — can we sustain the behavior change over a long period of time? Can we ingrain the change into the consumer mindset? While studies do show changes based on feedback, none seem to really know why– what triggers those changes (other than — “cause the answers given said so”). Quite frankly, there is a huge absence of scientific approach to data gathering and what I am seeing is that the current approach of “surveying” (sampling) skews the resulting data based on the type questions asked or how the questions are positioned within context.

Yet we are all basing our future growth and business strategies on these. The other thing that these surveys/blogs/press releases imply is an increase in consumer expectations of amount of savings incurred using a smart grid systems approach. A 10%, 20%, 30% or even 50% savings is a matter of perspective — depends on “how” one is determining the percentage and what factors are influencing that percentage. Yet we all push higher and higher savings without any real concrete evidence — maybe we are guilty of doing the same thing wall street did in sub-prime — that of using creative methods to make our points credible and palatable to consumers and each others.

In a broader sense, more “info” is more of an industry push than consumer need. Gathering data to the “inth” degree is an obsession executives seek to minimize risk and ensure enterprise success in revenue generation. So the real reason for “inth” data mining and data gathering is two fold: minimize risk and maximize a profit — which doesn’t sound like a consumer benefit to me. Now if that concept can be wrapped within a consumer need to “save” then supposedly all benefit from it. None of us are in the social rehab program for re-educating consumers against energy waste. But if we talk it long enough, promote it long enough, legislate it enough, then consumers will stop wasting energy and all of us benefit economically (or is that really what drives the debate of information overload?) I like the way the ZigBee Alliance grabbed market shares in setting a standard — they basically talked, promoted, and legislated their way into prominence. Since they set the stage on “how” to do things, it is only befitting that we all follow suite in ensuring consumers are educated and informed, whether they want it or not, so as to ensure we sell tons of products, ensure our jobs by proving our viewpoints right, and advancing the smart grid agenda — which is a great thing for all (or at least that’s what I have heard). Oh, I forgot to include the buzz words: climate change, global warming, energy savings, CO2 footprint (hope I didn’t miss any there!) in my sentence (have to legitimize my own comments).

Don’t get me wrong –I’m all for the smart grid and providing information to consumers. But at the same time, I wonder the real motive for smart grid. While I can easily ascertain the utilities’ approach to smart grid implementation, the industry as a whole has raced into the future with no discernable plan of action other than “there’s gold in them hills” mindset. President Obama’s stimulus bill only exasperates the gold rush. By last count, we have the “cable guy” spewing how to save on energy, how to be climate change conscience, and not forget one’s personal carbon footprint. And one can get all this at a huge discount for this month only. What a deal!

Are Consumers Ready for a Social Network in Home Energy Management (HEM)?

Keeping consumers informed may address some of the issues relating to utility smart meter rollout but doesn’t really deal with, as so aptly stated in Kate Rowland’s article “Are consumers ready for the smart grid?” (Intelligent Utility, December 28, 2009), the psychological factors. We still wrestle with understanding consumer motivation and want. We don’t really know how consumers will react to more intrusion by smart meters into their lives (if it is an intrusion or a mere nuisance) and what they will embrace in terms of technology. Maybe the lessons learned in WiFi will be an indicator. WiFi took quite a long time in becoming common within homes. As the internet grew in importance so did the need for technology to facilitate its use.

Being untethered has become norm in our society due to the consumer need to connect while busy doing other things. That is a social behavior that runs common in this society. Translating these type behaviors or habits into a DR/DSM program is difficult because no one has identifies which behaviors are a paradigm shift to the technology need. The strategy industry is using completely reverses this approach. Industry believes that technology will cause a paradigm shift in the way consumers use energy. Hence the smart meter, the smart appliances, the smart grid, and so on. While these technological implementations do make behavior changes, the impact of these changes is more visible within the utility industry and not as much in the consumer world. Bridging the gap between these two worlds is challenging but not daunting.

Energy cconsumers would like systems that integrate their energy use with their social lifestyles. After all, we do “twit” our lives openly to all to see. A social networked HAN would get more results that using any utility program in DR/DSM. Only by combining the energy habits of home residents with the social and competitive conscience of what a community is doing will users really focus on what’s right and what’s best for the community in energy consumption. Not only do utilities have a responsibility to inform its consumers, but the community also has an obligation to encourage and interact within itself and its members.

With that in mind, it would be nice if my home network bought the lowest cost electricity for me based on preset parameters that I chose. Then I wouldn’t need to constantly track pricing on the spot market or worry about TOU (and all those utility terms that get tossed out to the public) to get the best deal. I would prefer to place it on autopilot and let the HAN place limitations on my appliances based on electricity bought. Yes the HAN will need to keep me and family members in the loop – we don’t like surprises.

Taking this further, what if the home network also linked with the neighbors and collectively implemented solutions that benefited the entire community being served by the utility? A paradigm shift in social behavior is possible but only when that community is ready for it, desires it, and has tools that simplify its implementation. Providing tools in and of itself only prematurely sours the social interaction with technology. It clouds the real issue of the need for change in energy use and leads to technological and financial abyss.

Current trends indicate a move towards a more ecologically responsible society. How this translates into behavior change is anyone’s guess. Let’s face it, the world is shrinking and getting competitively crowded in all areas that impact resources and its use. The shift in lifestyles has only just begun. How we, as a society, respond now in implementing energy solutions will have profound affects on community behavior in the future. Since the problems are larger than the technology deployed or being considered; it becomes paramount that utilities, industry and consumers engage the issues openly and transparently. The industry will need to embrace a more social conscious approach to energy reduction and management by inclusion verses exclusion of the people they are committed to serve.

A social network provides opportunities for social change in attitudes and behavior but only if its implementation incorporates the minds and hearts of its community. In an isolated gadget society such as ours accomplishing this is difficult but not improbable. Moving energy users, and collectively the community, towards a socially responsible mindset requires instilling a sense of community purpose and destiny that only comes through interaction. And while technology tend to guide individuals towards “gadget isolationism”, society as a whole desires more social interaction – not less. Facebook, Twitter, YouTube and other such social networks have more then demonstrated this trend. Capturing the “spirit of social networking” can only enhance the use of smart meters and smart HAN deployment — but only if such solutions are part of the public strategy.

The smart grid may be the panacea for energy woes – or we would like to think it is, but it is futile and dangerous if the society it intends to serve is left behind in the frenzy to feed on the benefits sought.

AHAM sees smart appliances as the basis for smart grid

Here’s another me too organizations pushing their agenda unto the industry and trying to compete with the many others who stand to gain or loose in the battle for “oneness.” While I do applaud the efforts of the Association of Home Appliance Manufacturers (AHAM), I am somewhat aware of the bias interest they have in the final outcome of the smart grid initiatives. Let’s face it, they are my competitors so I do tend to (tongue in cheek) become alarmed at their agenda. They do have some good points (why didn’t I think of it first?) as seen in their push for integration of home and grid. It is interesting that they posit the Energy Independence and Security Act of 2007 as making smart appliances integration mandatory and thus inferring that smart appliances are essential to fulfill the law.

“In establishing policy on the development of a Smart Grid, the Energy Independence and Security Act of 2007 requires integration of Smart Appliances and consumer devices that can interact with the Smart Grid. This law also requires that consumers be provided with
timely information and options for controlling energy use.

How will the Smart Grid involve and affect the consumer?
o The deployment and integration of “smart” consumer appliances and devices are mentioned in two of the ten primary Smart Grid objectives as defined by Congress.

o The Federal Energy Regulatory Commission (FERC) identifies important Smart Grid features that will “…facilitate consumer transactions and allow consumers to better manage their electric energy costs.

o A key feature of the Smart Grid is Demand Response, where the consumer, utility or designated third party can reduce the consumer’s energy consumption during critical usage periods. Since the residential sector accounts for 37% of electrical retail sales, it is logical that the utility industry would engage residential consumers in efforts to manage consumption.”

http://www.aham.org/ht/a/GetDocumentAction/i/44191

They redefine the smart grid as being designed for the consumer’s benefit and use. I’m all for that too. However, they also express a sense of alarm in that “without proper consideration of consumer needs in the development of these initiatives, the vision of the Smart Grid is at risk.” Talk about their focus and perspectives…hmmm.

Overall, the downloadable white paper has some serious and important points that smart grid developers and device manufacturers do need to be dwell on. It brought to mind several questions that are yet to be answered and, quite frankly, may not answerable until we gain more understanding of consumer interaction with deployed technologies.

1. How does the utility shift loads of millions of appliances so as to not disrupt peak demands or even create a new peak demand period?
2. What infrastructure, both external and internal to a home would smart appliances really need (no sugar coating hype like I’ve been reading lately coming from news briefs and press releases).
3. How does the industry account for the millions of appliances currently deployed and working without any need for upgrading. What option will consumers have other then purchasing a new appliance? Note that the difference in smart appliances and normal appliances is the communications link and electronics needed to respond to remote command and control (other then the normal “panel” controls on the appliances.
4. The call for one standard protocol for communications into the home from the smart meter seems to be counterintuitive of the market and free enterprise in our society. Who makes that call as to the one standard? Who gains and who looses in the shuffle to influence which is selected?

The final outcome of smart appliances may be more of a matter of consumer preferences verses manufacturer’s push. The number of appliances in use and the brands, types, makes etc is the millions. This implies a transitional period where smart appliances are gradually phased in to replace older and less efficient devices. No one has yet to measure the effect of smart meters since the goal of deployment is utility biased and doesn’t necessarily take into account consumers (other then the normal marketing hype and consumer friendly language used).

Trends in Consumer Electricity Use: Will the smart meter migrate into homes and building EMS as a subpart?

Next year will be a critical year for metering companies as the trends show a progressive split between the utilities and the energy consumer in home energy management systems (EMS). While the utilities are content to use communicable thermostats as a “control” mechanism in demand response programs, the world of energy management and home automation is shifting towards the telecoms, cable, SaaS companies, and appliance manufacturers. Add to the mix Google’s and Microsoft’s web based “free” solutions and the dynamics of energy management quickly change.

Google makes no bones about their thrust into the home energy markets. Their primary goal is to interface with “whole house” energy management products that accentuate their market focus. Microsoft also has a similar approach that basically places the utilities and therefore the smart metering companies as possible secondary goals for consumer to electricity management interfacing. Companies that meter the “whole house” will have an advantage of a larger customer base when coupled with the Google or Microsoft SaaS platforms. Will the meter move inside the home? If we follow the trends, I would say yes — but not any time soon. Once the infrastructure and experience dealing with consumer EMS is established, it would be a matter of time before legislation would follow “practice” in the market. Companies like Google open the Pandora’s Box of possibilities never imagined before in AMI/HAN/EMS options. The concept of “whole house” metering can easily change to “in-home” monitoring with products such as T.E.D. and others.

The trends show four distinct approach to home EMS/HAN with one being utility driven, the second being telecom/cable driven, smart appliance manufacturer driven, and the fourth being pushed by web portal type companies (Google, Microsoft, etc.). The opportunities for AMI/HAN are enormous and will result in many new startups and M&A activity before the dust settles in this market. Meter companies may soon find themselves competing with telecoms, cable, and the likes of Google/Microsoft as they “enable” less expensive options (smart appliances and smart AC sockets) for metering commercial and residential buildings. The key is building integration. As technologies expand the role and education of consumers and smart home solutions become economical to deploy, more consumer driven products will proliferate the EMS/HAN landscape. Utilities and meter companies will need long range vision to anticipate the paradigm shifts in consumer preferences and the impact technologies, climate change perspectives, increasing energy demand and the political environment have on their business. Many meter manufacturers are doing just that by including AMI/HAN representation within their companies. With the move toward consumerism in EMS/HAN, both utilities and meter companies need to ensure their role is not diminished within this market.

Lifestyle Automation

The recently passed stimulus bill has impacted greatly the electricity industry’s business models and notions of consumers as partners in reducing energy consumption and carbon footprint. In the pass the utilities’ actions on Federal and State demand response initiatives have been mixed. Now there is a new drift towards energy reduction as a means of reducing carbon footprint. But to do this, the utilities will need to elicit energy consumer buy-in and support. Research has shown that consumers do have an interest and desire in reducing energy, in doing their part towards eliminating global warming. The lack of a clear business and technological model within the electric industry, however, has hindered this effort.

To date, there are only a few multi-year studies with smart metering AMI/HAN that capture the energy consumption lifestyles of energy consumers – particularly residential users. There are many pilot programs being deployed (or deployed in the past) to capture some data on consumer trends and habits in home appliance use. These programs are limited in scope with mixed results that may be interpreted either positive or negative, depending on points of view or bias. In order to truly know how consumers can and do respond to energy use reduction, to understand how technology and consumers may interact now and in the future, a new approach needs to be implemented. If the industry is serious about understanding consumer behavior and how technology shapes perspectives and attitudes then tracking ALL appliance use within buildings is the best option to do this. A “whole” house power monitoring system that identifies each and every energy-consuming appliance, which integrates consumer needs, perspectives, and lifestyles with how they consume energy via their appliances and every day living, is needed.

The common problem in the studies published is the focus on electricity consumption and pricing (commodity) verses other potential data that better portray consumer mindsets. Most studies use a question and answer approach to understanding what motivates the consumer to reduce consumption or change appliance usage habits. An old saying state that “actions speak louder than words” and ingrained consumption habits tend to reveal themselves after prolongs periods. Energy use within a home is complex with multiple factors impacting the amount of electricity consumed. Getting a “lifestyle” sampling would help verify data given.

Understanding consumer lifestyles through the way they apply appliances to their every day living is key to modifying consumption behavior. Integrating conservation programs with how people live is the right step towards winning the minds and hearts of energy consumers and getting successful results in demand response or AMI/HAN implementation.

When our company first started pitching in early 2004 about the HAN technology it was developing, the initial response was negative. As one individual put it: “saving electricity when it is so readily available and cheap is a waste of my time.” Things have changed since and consumers are more prudent with this valuable resource. Converting the 2004 mindset of the industry and consumers to the current focus on “green” and global warming issues that now dominate the political and social landscape has been an upward battle. If minds can be changed due to social and political changes, then any implementation of technology has to take these market factors into consideration as part of the strategy for successful HAN development and deployment.

Home automated systems that do not consider the lifestyles of consumers and the impact it has on reducing energy use limit the benefits of smart technologies. In fact, current implemented technologies lack the capacity to do lifestyle analysis and to automatically modify the home network accordingly so as to meet customer expectations while focusing on reducing energy waste. The systems model needed would encompass the emphasis on “energy services” rather than “commodity consumption” and billing. Such home networks advance intelligence in understanding consumer needs while balancing those of the industry. The trend towards consumer partnering with energy providers and service companies will eventually influence what the industry perceives and develops in technology. As the market matures in this area of home automation, convergence of multiple technologies will seamlessly provide energy services never before imagined or contemplated. Energy management would be an integral part of a typical home environment.

One of the things that an AMI/HAN needs to ascertain is the impact that a continuous interactive technology has on how the occupants use energy. In part this can be derived from historical data, whether the occupants reduce consumption when the system is implement or if there is an increase or flat lining. Manufacturers and implementers need to know what specific things move occupants towards energy conservation and a greater awareness of carbon footprint reduction.

a. Provide occupants with information as to carbon footprint and how they rate when compared with other participants.
b. Provide occupants with information of energy saved and cost and their rating when compared to other participants.
c. Provide occupants with information of energy saved and cost and their rating when compared with previous historical records.
d. Provide occupants a means to gauge savings goals (budget) verses actual accomplishment in savings on a daily, weekly and monthly basis.
e. Provide occupants with “energy credit” capacity for trading usage allocations among participants across the network. Swap or sell energy credits on a social network environment.
f. Provide occupants with real-time pricing information so they can make decisions as to consumption rates and times.
g. Provide an auto response method for real-time pricing that automates any adjustments needed within the network so as to minimize peak demand costs.
h. Provide occupants with warning messages that relay costs and usage status
i. Provide occupants with the capacity to identify critical appliances and receive status messages on those appliances when those appliances meet set criteria as defined by the owner.
j. Provide remote capacity for distance interaction with the home appliances.

While the list is not all encompassing, it does show the need for a complex software base that takes the AMI/HAN beyond the dollar and kilowatt-hour mindset. Lifestyle systems take into consideration a conglomerate of consumer behavior and adjust accordingly to accommodate utility and consumer needs.

Home Automation in the Utility World: One Company’s Perspective

One of the things that we looked at during our discussions with the utilities in California was the HAN ROI to the homeowner, which had to be extremely short based on the costs savings per year.

The HAN Return On Investment (ROI) would require low cost devices that required little to no support or installation. A ZigBee or OpenRF based device that includes measuring power usage plus ON/OFF capability (for scheduled ON/OFF) needs to be priced for the markets it is intended. A more sophisticated device which determines load signature would, for the time being, cost more but not much. Prices, and therefore the ROI, that are most often quoted are designed for B2B which takes into account the large amount of money the commercial sectors are willing to pay for technology or whatever the market would bear. When dealing with HAN markets, the dynamics are different. Two markets exist — the consumer markets and the utilities/conservation service companies. Pricing would evolve around expected costs associated with those markets.

Within the utilities/conservation service markets, the main approach so far has been to link to an in-home display or to a communicable thermostat. The trend in consumer markets, however, is focused towards energy efficient and energy smart appliances as depicted by GE. GE’s approach basically meters each appliance but does so by moving the monitoring circuit internal to the product. A cheaper alternative would be to meter every plug. While GE’s initiative is futuristic, one can monitor appliance now using inexpensive plug-ins. Instead of calling it a Smart Appliance, as GE does, we can easily say it is being “smart socket.” With consumers demanding more involvement in energy management, but unwilling to pay for such involvement, it is foreseeable that smart sockets will become default in new homes. Particularly if the price per unit is low enough that it can be enveloped into the price of the home much like security systems are now included in most new homes. Since we are not just talking about the USA market but globally, the idea of monitoring appliances via smart sockets is becoming increasingly more attainable. HEMS looked at factors that influence home automation and particularly the energy reduction-demand response side of the equation and concluded that we are on the right track as to our product offering.

Utilities are cautiously looking at load curtailment and reduction through home systems — they are just not saying it publically. Note that Google’s and Microsofts efforts seem to strike a positive note with utilities. Our dialogue with utilities, particularly in California, tells us that utilities are interested in HAN and that metering individual appliances is a strong consideration (see Pacific Northwest National Laboratory’s recent studies and the use of in home displays and PCTs in various other studies). They just don’t see themselves as the owners/custodians of such systems.

There is no study that covers integrated HAN systems for energy reduction (DR or DSM) or the monitoring of individual appliances other than those being pushed by the home control companies, appliance manufacturers, Google, Microsoft, and the recent crop of HAN solutions manufacturers. To grasp the significance of appliance level monitoring one really needs to be looking at the home control, home security, home networks, and home media industry trends. The utility industry is moving towards HAN technologies to include appliance monitoring but because of the much hype surrounding smart grid, these type developments become background noise no one focuses on. That’s not to say that monitoring appliances is not a market nor that it has no future — on contrary, turfs are being carved out now with appliance monitoring as the center with GE, Silver Springs, and Google putting their fingers into the pie and now Microsoft There is so much misinformation (speculative expert comments) on smart grid and smart meters that developments such as these are not that noticeable.

To be honest, we don’t see HAN technologies as being a luxury item that only the few would purchase — instead, we think HAN technologies will only become more dominant as utilities and the public at large realize that reducing usage isn’t as easy as turning off a light switch. Energy consumers in developed countries habitually use electricity when there isn’t a mechanism to effectively alter that lifestyle.

When we did our market research, we had to review tons of data from various industries within the home appliance and home network industries since the utility industry had not even considered HAN and energy conservation/carbon footprint were vague terms. Now every meter manufacturer has a HAN department that is aggressively looking at where the HAN movement is leading them. What would happen if metering and monitoring moves outside the external meter? It is the meter manufacturers that need to be on top of this to stay competitive.

The HAN market is more of a consumer appliance market than a utility market though the utilities do benefit from the implementation of such home solutions. There is also the consideration of the energy management service companies that are considering or already moving into residential markets. Right now energy management systems or EMS is a commercial enterprise with large companies producing costly systems for building monitoring and control. Many are looking at ZigBee as a low cost alternative to market to home owners. Only time will tell if their market research or gut hunches are correct.