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Event Summary

The 5th annual Smart Energy Summit: Engaging the Consumer was hosted by international research firm Parks Associates, Feb 17-19, 2014 in Austin, Texas.

This summary highlights the key issues addressed during the event, which

hosted more than 250 executives from utilities, telecom, cable operators, security service providers, software, retail, government, and appliance manufacturers. Charts included throughout this document represent real-time audience responses during the event.

The consumer is the core focus of the event. The lack of consumer engagement is

often cited as a primary barrier to success in the home energy management space,

generally attributed to a mix of apathy and lack of awareness.

Parks Associates research in the energy markets confirms the segment of highly

engaged consumers is small—but that there is growing interest and awareness in

energy services. In general, 40%-60% of U.S. broadband households are willing to

participate in demand response programs, depending on the incentive offered. The

most successful incentive is the most immediate and straightforward, with the

households receiving $5 for each day the thermostat is adjusted.

Key factors including the role of connected devices and the impact of the smart

home and the Internet of Things will continue to provide new revenue

opportunities for multiple industries.

For information about this event, contact Parks Associates at 972-490-1113 or email

Eli Lund at [email protected].

2014 Attendees

TESTIMONIAL

“We strongly feel that the Smart Energy

Summit provided a unique and compelling

forum for the emerging Smart Energy space.

You've successfully gathered a critical mass

of decision-makers from both sides of the

market—supply (utilities) and demand

(consumer/Connected Home)—and the

growing attendance and strong engagement

from all attendees highlights how well

you've targeted the space.

"In addition, the 'soft sell' approach to

showcasing your excellent research strikes

exactly the right balance from a customer

perspective. The discussion builds on the

information presented and effectively

cements the info as industry-standard

against competing products.

"Last but not least, the event provides a great

return-on-investment for sponsors. Beyond

the reasons above, the support provided by

the entire Parks Associates team stands out

as 'best practice' among the many events

we've been involved with."

Senior Executive & Event Sponsor


Session Highlights

February 18

Energy Management Programs: How to Engage the Apathetic Customer

Energy management solutions create value for consumers by providing them the means to reduce their energy

consumption and the convenience to control connected devices in the home. This session highlighted the situations where

energy efficiency matters to consumers and programs that are successful even when the consumer is not engaged.

SPEAKERS

Scott Burns, Director of Product Innovation, Reliant

Ted Fagenson, CMO, EcoFactor

Denis Garman, Category Leader - Energy Management & Information Group, Duke Energy

Tim Lott, Director of Energy, Vivint

Jennifer Pulliam, Director of Products & Innovation, TXU Energy

MODERATOR

Stuart Sikes, President, Parks Associates

The panelists discussed the historical patterns of consumer interactions with their utilities. Traditionally consumers

had contact with their utilities for one of two reasons: questions about their bill (i.e., it is too high) or reporting a

power outage. Both are negative experiences, so it is little wonder that people do not have a positive impression of

their power company.

0% 20% 40%

None of the above

Press or industry media

Consultant

Retailed of consumer products

Software platform developer

Developer of control devices/household appliances

Local, state, federal gov't entity

Traditional home security provider

Telco/cable company

Energy delivery company

Which statement best represents your job function?

2014 Smart Energy Summit Attendees | © Parks Associates


The main point of contact used to be the phone - but that is not what today's consumers expect. Utilities need to

align their services to connect with consumers who are on social media and using apps and smartphones for

information. These new consumer segments expect to have actionable information readily available, and to see

immediately the results of their actions. They will not wait for a monthly paper bill to show if these new activities are

saving them energy and money.

A large portion of the energy-consuming population simply is not interested in energy management programs. Many

in the industry believe that this apathy is the result of a lack of awareness of options. Others believe that the industry

is not doing a good job of articulating the benefits, or value propositions, of these programs and products.

Parks Associates research finds the segment of truly “green” consumers is small. Programs for green energy and

electric cars have met with some success, but saving money and increasing comfort and convenience are the main

drivers for energy management programs.

Parks Associates recommends utilities and other energy companies offer direct and immediate financial rewards to

consumers for participating in demand response (DR) programs. Such efforts will be successful, but response to

energy programs overall will increase if these rewards are bundled into offerings that address a number of consumer

needs and interests, including security and safety/monitoring offerings.

0% 20% 40%

Other media

Internet ads

Social networks (Facebook)

Direct emails

Post office mailers

Bill inserts

Radio commercials

Television commercials

No recollection

How do I recall my energy provider communicating energy savings programs to me?



Leveraging New Approaches and New Technology in Addressing Utility Challenges

KEYNOTE SPEAKER

Deborah Kimberly, VP of Distributed Energy Services, Austin Energy

The cloud connects us all in many ways, from e-mail, Twitter, and Facebook to the online marketplace. In the energy

space, the cloud connects customers to their home and the utility in new ways. Smartgrid V3.0 is a customer-centric

smart grid celebrating customer choice, customer empowerment, technological innovators, and the Internet of Things.

Residential demand response (DR) V2.0 is emerging—utilizing the customer’s own energy management devices to

delay the need for new power generation in Austin, TX. This transformative residential thermostat program puts the

choice in customer’s hands. This model drives manufacturers and web hosts to develop and market features and

functionality customers want while also using open standards and protocols that enable the utility to leverage the

devices in DR initiatives.

In her keynote, Debbie Kimberly addressed new approaches to providing functionality and options for consumers,

including current success and future opportunities regarding Austin Energy's Power Partner Thermostat Program.

Austin Energy’s Power Partner Thermostat Program gives customers 14 different approved products to choose from.

This transformative residential thermostat program puts the choice in customer’s hands: customers choose the

functions and features that will help them manage their home and energy use.

Utility Strategies: Innovative Demand Response

Connectivity enables verification and measurement of any control action in near-real time and is impacting the way that

utilities approach demand response programs. This session provided an assessment of trends in demand response (DR)

programs and highlights the more innovative DR programs in North America.

SPEAKERS

Anthony Hawkins, Group Product Manager, Landis+Gyr

Dave Kaintz, Manager of Programs and Projects, SCE

Robert Warden, VP of Partners & Alliances, Comverge, Inc.

MODERATOR

Maia Hinkle, Research Analyst, Parks Associates

Demand response is going to be substantial part of ERCOT’s electricity portfolio, increasing from 1.4% to 7.2% during

the period of 2012-2020.

The persistence analysis of Southern California Edison finds that customers opt out of participation after a couple of

hours during the “Save the Power Day” when events were scheduled during 2-6 p.m.

Comverge, citing the work done with PEPCO Holdings, finds that 47% of eligible customers participated in demand

response providing a reduction of 15% in both energy consumption per capita and peak load per capita.

Residential demand response is in transition. Smart meters, participation in energy markets, and connected products

are all forcing executives to consider new approaches and business models that take advantage of the new

environment.

Smart meters and their associated meter data management systems enable utilities to create new DR programs that

reward participation.


Restructured markets such as Texas have limited residential DR assets. Retail energy providers are beginning to enter

the DR market; however, they are motivated by economic gain rather than grid reliability. Programs offered by T&D

and ISOs have historically had little traction. Business model, product, or service innovations are necessary to grow

the residential DR assets in restructured markets.

FERC order 745, requiring DR assets to be considered on equal footing with generation assets in day-ahead and real-

time markets, may create opportunity for residential DR aggregators. Utilities must also understand how residential

DR participation in energy markets will impact utility programs.

Connected products, specifically smart thermostats, are gaining momentum in the market. These devices are sold

independently through the HVAC channel or retail or as part of a smart home system sold by the security channel,

retailer, or broadband service provider. In order for utilities to utilize these assets for DR programs, they must

understand the business models, technologies, participation rates, and load shed results.

0%

8%

16%

76%

0% 20% 40% 60% 80%

4+ Hours

3-4 Hours

2-3 Hours

1-2 Hours

What Do You Think is the Optimal Amount of Time for DR Event from a customer's perspective?



From Push to Pull: How Nest is Redefining Energy Services

For decades, utilities have worked hard to build an image of safety and reliability. How do they reposition themselves as

innovative energy partners? Erik shared how Nest is working with energy companies across the country to help customers

save while staying comfortable. He also shared how Nest has managed to upend the traditional thermostat business model

through design, service and connectivity.

KEYNOTE SPEAKER

Erik Charlton, VP of Business, Nest

Companies operating in this space need to take a holistic approach in creating solutions for home improvements by

understanding customers and their aspirations and also by focusing on the details of their solution, even down to the

look of the back plate on the thermostat. Companies cannot focus all of their efforts on one part of the product.

Nest uses data continuously to improve customer experiences and provide feedback to the customer at no additional

cost. The company believes that data should be used only to improve the customer experience, which also allows the

customer to discover the truly magical experiences within a product interaction.

By letting the customer discover hidden product experiences and functions it encourages them to share their

discoveries with their peers thus stimulating word-of-mouth referrals within the target market.

Nest is currently focusing in three areas: instant savings, analyzing consumer behavior, and reducing direct load.

Developing a consistent and disruptive public relations effort is a key. Mr. Charlton encouraged companies to not be

afraid to use bold and creative ways to expose a brand to customers.

Even after evaluating large amounts of usage data, manufacturers still need to step back and understand who the

customer really is. The customer focus must look at the whole experience, not just the product.

By creating maps of customer journeys through data collection, Nest is able to unlock additional customer value

in its product.

Education is the key in successfully getting the customer to participate in demand response activities. The Rush Hour

Rewards program resulted in a 50% reduction in peak demand from the customers that participated in the trial.

Partnerships & New Business Opportunities for the Smart Home Platform

This session discussed partnership opportunities between utilities and smart home product and service providers. It

analyzed programs that incentivize third parties to partner with utilities in promoting energy-saving products and services,

increasing energy awareness, and achieving demand-response and energy-efficiency goals.

SPEAKERS

Joe Jankosky, Director, Intelligent Home Vertical Markets, Time Warner Cable

Jay Kenny, Vice President, Marketing, Alarm.com

Letha McLaren, Vice President, Product Management, iControl Networks

Kevin Meagher, Vice President & General Manager, Smart Home, Lowe's

MODERATOR

Tom Kerber, Director, Research, Home Controls & Energy, Parks Associates

Companies developing a business model for the smart home need to consider all aspects of each system, such as

whole-home energy use, control of energy devices, and intelligent home automation.


One-third of survey respondents in the Smart Energy Summit audience felt that fear of losing control of the

relationship with customers would be the main barrier to creating partnerships between smart home service

providers and utilities.

The need for privacy rules, identifying specific ways of accessing data, and the size and differing needs of service

providers and utility companies add to the complexity in crafting a business model for smart homes.

The three phases or levels of home control development begin with Internet-connected devices, progress to devices

that are able to learn, and then develop into home controls that are able to be intelligently integrated into one

complete system.

Macrowikinomics takes an in-depth look at the current trend of mass collaboration.

Some implications of mass collaboration today and in the future include:

▫ Increasing customization

▫ A growing community of tech support

▫ App store models for control systems

▫ Growth in security and health systems

Parks Associates’ survey results indicate a majority of customers are open to participating in some form of demand

response in return for a reduced monthly service fee.

By setting a low price point on trial premium services via freemium apps, companies are encouraging the customer

to get addicted to the premium services and enter into the monthly subscription model.

By simplifying demand response into a period where companies are willing to pay for energy and consumers willing

to be paid for the energy, novel demand response partnerships can be formed.

Smart products and smart home platforms have enormous potential to deliver both energy efficiency and demand

response capabilities to consumers. However, fragmentation within the utility space makes it challenging for smart

home platforms.

The business case is marginal for smart product OEMs and service providers to work though numerous utility pilots.

The experience of SEP 1.X product vendors, who were dragged through endless certification processes and pilots, is

not viable and cannot be repeated. Utilities and service providers must find a way to work together. Service

providers cannot afford to run systems through lengthy and costly pilots.

Platforms and service providers must come to the table with a solution that utilities can embrace.

0% 20% 40%

Scalability

Execution speed

Technical issues

Service providers as energy aggregator competition

Service providers as energy retailer competition

Losing control of customer relationship

Brand positioning

What is the largest barrier to creating partnerships between smart home service providers and utilities?



Moving Customers to Variable Pricing Programs

Less than 20% of U.S. broadband households are aware of programs such as tiered pricing, time-of-use, and energy

monitoring devices. As real-time measurement and verification become a reality, utilities can transition away from demand

side management programs to demand side management markets. This session reviewed different approaches to variable

pricing programs and how to overcome consumer objects through incentives or risk mitigation.

SPEAKERS

Eric Danziger, VP, Business Development, Genability

Josh Lich, Product Strategy and Marketing, Opower

Alan Shaffer, Deputy General Manager, Lakeland Electric

MODERATOR

Maia Hinkle, Research Analyst, Parks Associates

The panelists, to emphasize the difficulty in engaging consumer in energy programs, noted that 77% of Californians

would benefit from the variable pricing structures, but only 1.5% has signed up so far. Three major challenges in

variable pricing are technology, customer participation, and feedback technology.

One of the keys to success is to give customers what they want, through deep, personalized analysis of the data.

Keeping things easy, following up with consumers, and proactive solutions can all help flourish demand-side

management programs.

Peak time rebates (PTR) are the most prevalent form of variable rate offered to residential customers. PTR allows

customers to keep their existing rates but earn a credit or rebate for reducing usage during peak times. PTR are

usually offered during a set number of days during the summer. Both BG&E and SDG&E have full deployments of

PTR underway.

PTR offers only benefits to the customer and does not add any risk or chance of penalty. PTR also introduces the

consumer to the concept of time-varying rates. Other variable pricing can be phased in as consumers become more

familiar and aware of peak periods.

Some utilities moved directly to time-of-use (TOU) rates. TOU structures charge more during regular peak times (e.g.,

4-8 p.m.) but a lower price all other times. If the peak period is short, consumers can shift energy use through

behavior changes. Longer peak periods make it less likely that consumers will be able to shift load. For example, pre-

cooling strategies can be utilized to shift HVAC usage away from peak periods that last 2-3 hours without sacrificing

comfort. If the peak period is longer, consumers will have to weigh savings vs. comfort. Other behavior changes are

also more difficult to delay for longer peak periods. Delaying laundry or washing the dishes for 6 hours may not be

practical or may not fit into the daily routines of many families.

The difference in the price between peak and off-peak periods creates incentives for consumers to adopt smart

devices that automatically make adjustments based on price signals or time of day. If the difference between peak

and off-peak pricing is relatively low (2X or less), the payback is small. However when the difference between peak

and off-peak pricing is high (4X or more), the payback alone will likely drive adoption of smart devices.

Critical peak pricing (CPP) will rise in prevalence as consumers become more comfortable with variable rates. CPP

structures charge a significantly higher rate during critical peak (e.g., 4-8 p.m. on 10 days during the summer) but a

lower rate during all other time periods. Because of the substantial cost penalty, the return on investment in smart

devices that automatically react to pricing signals is very good.


Standards & Interoperability: Solutions That Bring It All Together

This session reviewed the technologies that will enable energy utilities to participate in the smart home and the larger trend

toward the Internet of Things.

SPEAKERS

Duncan Bees, Chief Technology and Business Officer, HGI

Garth Hillman, Secretary, Smart Grid Marketing and Technical Task Groups, Wi-Fi Alliance

Fabrice Hoerner, Technical Marketing, Sr. Manager, Qualcomm

Ryan Maley, Director of Strategic Marketing, ZigBee Alliance

Bill Scheffler, Director of NA Sales and Business Development, Z-Wave/Sigma Designs

MODERATOR


HGI addresses several smart home challenges. Currently there are too many smart home interface standards with

different semantics, so there is a need for well-defined APIs to allow interoperability between application, smart

home devices, and cloud services. HGI enables the development and deployment of a home service gateway with a

fully modular software platform.

Qualcomm’s intelligent technology, with the help of smart gateway, is taking interoperability to a new level through

the AllSeen Alliance. It brings intelligent connectivity to all devices in the home, from entertainment to smart

appliances.

ZigBee wireless device-to-device communication is still a big player even though Wi-Fi connectivity is growing at a

faster pace.

The Smart Energy Summit audience was divided when asked about the future outlook of SEP 2.0. Approximately 36%

think that SEP 2.0 will have moderate growth whereas over 50% believe that there will be little or minor growth.

0% 20% 40% 60% 80%

None of the Above

Energy Monitoring & Management Products

Direct Load Control

Tiered Pricing

Time-of-Use

Which of the following energy programs does your household participate in?



Internet-enabled smart devices are entering the home in growing numbers. OEMs and service providers are

developing applications that extend functionality and add new features and benefits to controls, energy, security,

and home management solutions.

For many years, ZigBee and Z-Wave have been the default technologies for constrained devices. Over the past decade

or more, these organizations built an ecosystem of interoperable products and an alliance of hundreds of companies.

New technologies such as Low Power Wi-Fi, Bluetooth Low Energy, and DECT ULE are competing for the constrained

device market. Some believe that the IoT will be IP-based, and AllJoyn, QEO, and UPnP are all working to create

standards that assure interoperability of IP-based protocols such as Low Power Wi-Fi. Additional competition is

coming in the form of 802.11ah, a 900-MHz version of Wi-Fi that will increase competition for constrained devices.

Partner or Compete: Utility Decisions on Home Energy Management

The market for home energy management offerings is expanding, bringing in new players and more options to consumers.

At the same time, multiple factors influence the design and deployment of new, more robust energy management

offerings, with security service providers, manufacturers, and retailers all converging in the connected home.

Currently the role of utilities is unclear. The traditional pilot approach to energy efficiency and demand response programs

is failing to keep pace with the explosion of connected devices. In his keynote, Kevin Meagher shared insight on successful

strategies to transform energy solutions into mass-market offerings, including new opportunities for utilities in bundling

and partnerships. He shared his experiences launching the Lowe's Iris product line and analyzes current business and

market conditions to present the best business and monetization strategies for home energy offerings.

KEYNOTE SPEAKER

Kevin Meagher, Vice President and General Manager, Smart Home, Lowe's

Home appliances will be all Internet-connected in future, and everyone—retailers, technology companies—want to

be part of it. Lowe's believes that it has competitive advantage over other players, mainly because it sells everything

and has a huge, loyal customer base, with millions of people coming into their stores throughout the year.

Lowe's aims to deliver simplicity, affordability, and scalability to make homes safe, efficient, and easy to manage.

Cooperation among different players is a key to the new market, and Lowe's is trying to create a neutral platform so

that all players can participate.

0% 20% 40%

Will have almost no adoption

Will have little adoption

Will have minor adoption

Will have moderate adoption

Will have high adoption

What is the outlook for SEP 2.0?



February 19

Who Pays? New Ways to Monetize Home Controls

Innovative business models can disrupt mature markets and create new opportunities. This session explored alternative

monetization strategies, highlighting models that do not rely on consumer paid recurring fees.

SPEAKERS

David Friedman, Co-Founder and Chief Executive Officer, Ayla Networks

Karthik Rajan, Regional Vice President, ERCOT Sales, GDF SUEZ Energy Resources, NA

Gene Wang, CEO, People Power

MODERATOR


Today, the business models for smart products and services are a reflection of legacy business models.

Manufacturers do not charge ongoing fees to consumers that use their products, so even as products add new

features and capabilities, consumers are unlikely to understand why they should start paying recurring fees, even if

manufacturers incur ongoing costs to support the ongoing services.

Consumers expect to pay for broadband, security, and video services, so paying a little more for smart home services

is much more straightforward from a consumer perspective.

There are a number of different business models for smart products and services. Several companies are

experimenting with business models that do not require the consumer to pay, in a direct way, for the service.

Different Business Models:

Recurring Revenue

Monthly Service Fees

Mobile Advertising

Lead Generation

Selling Data

Transaction Charges

Energy Programs

Performance Contracts

Reduce Churn for Core Service

Product Sales

New Premium Product

Differentiation in Product Portfolio

(Higher Margin Mix)

Expanded Product Portfolio

Complementary Products

Expand Sales Channels (Incremental

Product Sales)

App Sales, Upgrade Revenue

Ayla is building an Internet of Things cloud platform that is designed to support any type of smart product, including

home and building controls and smart wearables. Manufacturers are not accustomed to dealing with the amount of

data created in IoT, so Ayla is positioning its solution to help them in this regard.

Part of Ayla's monetization strategy is to provide SaaS related to device hosting & management services.

People Power explained the Presence App, which leverages the growing number of retired smartphones to create

new home monitoring equipment. Presence follows the freemium model of monetization, starting free and driving

upgrades to premium, desirable features.


The API Economy: The Impact to Consumers and Energy Management

How do we accelerate the connection to the Internet of Things? Stuart Lombard, CEO of ecobee, believes the answer is

simple: embracing partners and the Open API model. During his keynote, Stuart explained how an open API model will

eliminate obstacles and reduce friction for revolutionary new energy management models. He shared how ecobee

embraced the API economy to do things that wouldn't have otherwise been possible, like integrating with energy

companies such as AutoGrid, Earth Networks, and Integral Analytics, and working with innovative smart home solutions like

SmartThings and Control4. Stuart illustrated how the open API economy opens doors to remarkable new energy

management solutions.

KEYNOTE SPEAKER

Stuart Lombard, President and CEO, ecobee

The API economy allows a company to focus on its core competencies while enabling others to address the rest—

and allowing all parties to benefit.

Open APIs enable the integration of the best components of specialist companies into a platform in order to

maximize customer satisfaction. Open APIs enable the fulfillment of the long-tail customer use cases.

Rigid standards will always lag behind what is actually happening in industry.

Creating systems around open APIs builds resilience into the product. Third parties can add new features to the

product, addressing undiscovered or neglected customer needs, thus enabling the company to provide value to a

range of customers across a variety of segments.

Using the same APIs internally and externally streamlines the testing and quality-control process.

0% 20% 40%

Performance contracts

Aggregation of load

Utility demand response programs

Transaction charges

Commissions on product sales

Lead generation

Mobile advertising

Where is the big money? What is the most viable alternative to recurring fees paid by the consumer?



Special Section: The Impact of Solar & Electric Vehicles on Home Energy Management

SPEAKER

Tomoyuki Nanami, General Manager, DENSO WAVE INCORPORATED

The large peak load that is generated when the customer selects the quick-charge option is not added to the grid

demand but is supplied directly from the localized battery.

Denso Wave offers home energy management systems that optimize the combination of home generation and EV

storage in combination with localized battery storage to minimize peak demand and to shift power demand to off

peak times.

Expanding the Energy Markets through Connected Devices

As more smart devices enter the market, the opportunity to aggregate these devices and potentially directly connect them

to participate in energy markets is real. This panel addressed the evolution of smart devices and the impact for Demand

Response solutions in the energy markets.

SPEAKERS

Seth Frader-Thompson, President, EnergyHub

Kristian Handberg, Principal Consultant, Percepscion

Yann Kulp, Vice President, Strategy and Business Development, EcoBusiness North America, Schneider Electric

Bram Reinders, Director Alliance Management, CleanTX/Alliander NV

MODERATOR


Research by EnergyHub shows that 40-60% of eligible customers are willing to participate in DR programs.

Besides developing new technology, the EnergyHub business model also works with the existing systems installed

in the household.

There is a huge market for the growth of the solar industry in United States as compared to the Australia—on

average 10% of households in Australia have solar installations. In the U.S., it is around 1%.

Companies need to focus on using customer-specific data to create action-based solutions. The privacy issues in

getting customer-level electricity usage data is a major concern; however, many customers are already accustomed

to giving more sensitive data such as web browsing history, purchasing behaviors, and credit-card information. How

can the energy management industry turn this tide so that customers are not hesitant to give their usage

information? Companies need to connect this usage data with tangible benefits and rewards while also establishing

their role and reputation as a trusted curator of consumers' information. Companies need to build trust, and not

violate that trust, among consumers.

Parks Associates research finds 40-60% of U.S. broadband households expressed a willingness to participate in a

hypothetical demand response program, and 50% would buy a thermostat needed to enroll in the demand response

program if a rebate were offered.

Alliander is relying on users to generate energy programs in an attempt to maximize customer engagement. The

company took the proactive step of installing charging stations for EVs in an attempt to encourage EV uptake and to

increase the level of electricity demand. Together with the implementation of political policies, this effort has

resulted in a rapid uptake in EV vehicles in the area.


EnergyHub is connecting concentrations of smart device users with demand response opportunities for utilities by

pooling the customer base of their strategic partners.

Demand response efforts have been limited to a number of utility-based programs, offering incentives ranging from

devices to discounts on monthly bills. The impact of multiple, integrated devices working in concert has the potential

to significantly impact energy consumption while minimizing discomfort or inconvenience. Once these networks of

coordinated devices are in place, a significant economic value is realized by the energy utility.

Connected Homes Power Energy Management

Service providers are offering a range of smart home solutions across the country. Comcast is one of the largest smart

home platforms in the world. Energy-related solutions are a key component to the strategy and shown to drive significant

customer value. Scale, breadth of devices, and data analytics can lead to innovative energy offerings that drive customer

engagement through personalization, savings and ease of use.

KEYNOTE SPEAKER

Bill Horrocks, VP, Product Management - Xfinity Home, Comcast

Bill Horrocks noted that 77% of participants in an Xfinity Home Customer Research survey were interested in

connected home features such as real-time text and email alerts on how to save energy or new technology that

learns their heating and cooling preferences and automatically adjusts their thermostat to save money.

Simplified, single-user interfaces that unify all systems are key to mass adoption.

Comcast is seeing a trend of reduced customer sensitivity towards security concerns associated with in-home

security cameras.

Energy Management Capabilities of Smart Home Systems and Connected Products

This session examined the expanding capabilities of energy management and the growing deployment of smart home

systems and smart products. While the primary selling features for many smart home products and systems may not be

energy related, new products have expanded energy management features and capabilities. This panel highlighted

innovative solutions for energy management.

SPEAKERS

Al Choperena, CEO, Smartenit

Joseph Franz, Strategic Channel Partnership Development, Constellation

Syed Zaeem Hosain, CTO, Aeris Communications, Inc.

Dan Lieberman, Senior Director of Platform Strategy, SmartThings

Jeff Wilson, Director of Product Management, NETGEAR

MODERATOR


The growth in creating smart homes is very positive but still in the early stages. There is a need to develop a working

business model combining data sources, protocols, and consumer behaviors.

The panelists focused on finding a common ground between different partners to deliver the best products with

incentives as the smart home concept is happening.


Even though service providers think that DR, energy efficiency, and smart homes are different concepts, customers

think them as one.

Industry growth for the smart home is positive, but overall the market is still in its infancy and scaling stage. Major

challenges include developing product interconnectivity and that data is held “locally” by individual products.

A smart home must be easy to use, intuitive, and personalizable, and it must include all components of the house

(security, energy management, automation, etc.).

Panelists discussed the future directions of the industry. One possibility is an upcoming period of consolidation,

where the home will be filled with fewer modules that do more functions, which would simplify the smart home

experience from installation to customer interfaces as well as maintenance and troubleshooting.

The industry could also move towards a monetization strategy similar to the telecommunications industry where the

product is initially given away or sold at a low cost but ultimately paid for through monthly service fees. There could

also be a shift towards individual customer pricing models where their monthly service fee is based on their level of

participation in demand response activities.

For a product to be successfully implemented, the solution must demonstrate real benefits to customers. It must do

so in order to get initial traction in the market and to spur customer engagement, which will ultimately maximize a

solution's overall impact and make it beneficial for the utilities.

Overall the panelists agreed that smart individual modules will begin to merge over time in order to reduce function

duplication and redundancies. As the number of devices continues to expand, there will be a point where the

customer becomes overloaded with information. A smart controlling device or cloud service is needed to filter and

transform the incoming data into simplistic, layman terms for the mass market to understand.

The construction of new homes and buildings presents a wide range of new design and construction opportunities,

as superseded or redundant components of classical buildings are no longer required.

With the current rate of development within this industry, any successful product must be able to be repurposed

without the need for the physical product to be replaced. This functionality will lead to greater levels of customer

satisfaction and encourage more users to enter into the market at this early stage.

The biggest hurdle to customer uptake isn’t inter-industry competition; it is the lack of customer awareness.

Smart meters have opened up new opportunities for energy efficiency. Green Button Connect allows a customer to

authorize a third party to access meter data. Many third parties are using data-mining approaches to enhance the

operation of a product, and they come to the utility to get energy data to enhance their analytics-based solutions.

Typically, EE programs provide a fixed payment at the point of purchase of an energy-efficient product. Many third

parties are now using data analytics to control the operation of a device, making smart decisions on the owner’s

behalf to reduce waste, energy, and cost. Others are using the data to provide feedback to the homeowner with the

intent to influence behavior.

Operational savings can also be achieved through fault detection. If a device can automatically monitor its operation

and determine when performance has been degraded, the device will operate at a higher efficiency level over its

lifetime. If a refrigerator door is not fully closed, has a bad seal, or if the coil is dirty, the refrigerator will detect more

frequent cycling and notify the owner that maintenance is required. If the fault detection can show pervasive

savings, EE programs can incentivize the capability.

The utility has the opportunity to incent and accelerate EE savings resulting from operational or behavioral changes

and fault detection. The incentive structure for behavior-based programs must be customized on a per-customer basis,

using a pay-for-performance model with a verifiable baseline. Programs could be designed to give customers badges or

points with intrinsic value that can be used toward purchase or other EE products. Measurement and verification

systems may need enhancements, moving toward instant verification in order to be effective in changing behavior.


Smart meters also provide consumers insight into energy consumption with products such as in-home displays or

more advanced solutions such as disaggregation. Load disaggregation can be accomplished using software to analyze

load patterns and provide an itemized listing of devices and their consumption. As more devices are connected, end

devices could report energy consumption by reporting their load profiles at start-up and runtime profiles during

operation. The combination of those data sets would allow consumers to understand how the operation of each

device impacts the overall utility bill.

While DR programs are transitioning to market-based, pay-for-performance models, EE programs have not made

that transition. Each program requires individual assessment of market factors, barriers to adoption, calculation of

savings and incentives, pilot programs, and PUC approvals. Traditional EE programs that influence buying behavior

require that analysis, behavioral, automation, and fault detection programs are measured and verified. Therefore,

utilities have the opportunity to begin those programs as market-based incentives, encouraging third parties to bring

solutions to the market.

Independently, new products are entering the market promising energy savings. While energy savings may be one of

several selling points, energy is a key consideration in the buying process of many products. For smart home systems,

energy savings is a significant part of the value proposition.

0% 20% 40% 60%

EE programs will not change much

EE will move to pay-for-performance model

Integration of energy data will be incentivized

Fault detection / equipment monitoring will be incentivized

Automation + operational savings will be incentivized

How will connected systems and products change energy efficiency programs?



Big Data & Analytics: Residential Energy Applications

What seems to some as a burden, the mountain of data generated from smart meters may become a goldmine. This panel

discussed how data analytics are being applied in residential programs.

SPEAKERS

V. Rory Jones, President, PlanetEcosystems

Dave Oberholzer, Director, Energy Products & Business Development, Earth Networks - WeatherBug

Matt Plante, Vice President of Sales, Bidgely, Inc.

Matthew Smith, Senior Director, Utility Solutions, Silver Spring Networks

MODERATOR


Customers’ value propositions are what matter the most in driving this market. Service providers should be able to

answer a few questions: How can they help make the home safer and more comfortable? How can customers save

money? Can customers participate in creating a cleaner planet?

The panelists discussed the perspective that the industry has low expectations for customers’ engagement, which leads

service providers to do little in driving engagement. However, the right use of data could help overcome this issue.

The panelists and audience together analyzed the ethical issues raised by the consumer data created and used by

smart home systems and solutions. The extensive use of data definitely helps to target specific actions based on

consumers’ behavior. However, is it the responsibility of the service provider or the regulators to set policies for data

usage and disclosure?

WeatherBug uses large amounts of atmospheric data to create very accurate thermal profiles in order to eliminate

inefficiencies in home heating and cooling control systems.

Silver Sprint uses the substantial amount of data points generated by large-scale deployments of smart devices,

rolled out by utilities, in order to compile customer consumption profiles to help their utility partners better predict

future demand.

To increase the profitability a company needs to cut cost and increase revenue. Taking a close look at the data

generated through an organization's operations provides the opportunity to do both if the company is creative and

innovative in the way it joins and leverages its various data streams.

It is a generally accepted idea that customers own their own data and that they should have the ability to opt in or

out of any additional or third-party application that wants to use their data.

When referring to the issue of customer data security, the panelists stated that customer trust and participation in

big data applications depend on whether one of the few bad players in the industry is going to do something

significantly evil to warrant a user revolt against the volume of the data collected and used by companies. In essence,

will there be a breach of trust or security/privacy, similar to the Target hacking issue, in the smart home that will

bring to issue to the forefront of consumer concerns?

When basing a business model around big data, you must ensure that your data source is your differentiator in the

market because the competition is easily able to duplicate your product and algorithms.

The future of big data is a shift towards large-scale collection of behavioral data in order to combine it with the

classical statistical data, which can then be used to generate a holistic model of the user.


Net Zero: The Impact on the Utility Business Model

Traditional utility business model will continue to change as new solutions are introduced that allow consumers to be more

energy efficient. This session explored trends in distributed of residential solar and wind power generation and the impact

on utilities and consumers.

SPEAKERS

Brent Hodges, Senior Vice President Retail Unit, Tendril

Dave Hyland, Manager, Business Development, Schneider Electric

Brewster McCracken, President & CEO, Pecan Street Project Inc

Ted Reguly, Director, San Diego Gas and Electric

Ken Wacks, Management & Engineering Consultant, Gridwise Architecture Council, U.S. Department of Energy

MODERATOR


Big data is a new and exciting thing, but customers care about small data—i.e., things that make their life easier.

Conference participants were equally divided when asked about whether the move towards net-zero would impact

the relationship between customers and the utility companies. One of the speakers said that it would improve the

relationship; however, the rate structure has to be right.

There was also a concern about the uneven playing field between various service providers. Investor Owned Utility

(IOUs), municipals, and cooperatives face different regulations. IOUs are not rewarded for taking risks, and it is not

easy to innovate without taking risks.

In the San Diego region, 1,500 customers are adding PV devices to their homes each month.

The grid will shift from a centralized power-generating system to a decentralized mesh like grid.

0% 20% 40% 60% 80% 100%

Undecided

Would likely authorize

Would not authorize - compromise of safety

Would not authorize - violation of privacy

Assuming that I see benefits in a product or service that utilizes my personal electricity usage data, I...



The utility has the ability to be a transition agent between individual localized small-scale producers and consumers.

The panelists debated the perspective that government regulation is the single biggest hurdle that utilities face in the

transition to a more modern business model.

Political forces have a massive influence on the energy regulators because the state governors employ and control

who runs the regulation departments, and their motivations are naturally political. A vocal minority can easily

overtake and guide utility and statewide policy decisions.

The electric utility business model is rapidly becoming outdated. The proliferation of distributed generation, electric

vehicles, and home controls technologies; the full participation of demand response assets in power generation

markets; and national goals on energy and climate change are straining the traditional business model that has been

in place for the last hundred years.

The traditional utility value proposition from the consumer’s perspective is the delivery of reliable affordable power.

The deployment of the smart grid, smart meters, distributed generation, and electric vehicle charging stations is

extending that value proposition to include the delivery of data such as information on power consumption and

power cost.

Utilities have a well-developed process for evaluating and implementing energy efficiency and demand response

programs. If a vendor comes to a utility with a great idea, the utilities will put it on a fast track for testing and

implementation, but even the fast track takes approximately three years to complete. The regulatory framework

constrains choice and inhibits innovation. In an open market approach, innovation and the market drive efficiency,

not a bureaucratic process.

Moving from 2% to 1% to zero or negative load growth requires utilities to reexamine their role and how they are

paid for their services.

0% 20% 40% 60%

Very likely to diminish relationship

Likely to diminish relationship

No Impact

Likely to strengthen relationship

Very likely to strengthen relationship

How will the move toward net zero impact the utility relationship with the customer?



Attribution

Executive Editor: Brian Canny

Compiled by Parks Associates

© 2014 Parks Associates

Dallas, Texas 75248

All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from

the publisher.

Printed in the United States of America.

Disclaimer

Parks Associates has made every reasonable effort to ensure that all information in this report is correct. We assume no

responsibility for any inadvertent errors.

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