In the coming competitive environment, electric power utilities are seeking to diversify product offerings. One added service residential customers view favorably is home automation.
Appealing to electric utilities is the fact customers logically link home automation with bundled energy and telecommunications packages, according to a recent RKS nationwide study. In the research firm`s survey, residential consumers rated well the following possible packages:
– Technology: advanced products, such as “smart” thermostats, home automation and control, surge protection and security systems;
– Safety: carbon monoxide detectors, smoke detectors, and air filtration systems;
– Phone/Internet: Internet access, long distance, and advanced television/data systems, such as cable modems and Internet/TV technology;
– HVAC: heating, air conditioning, equipment installation and repair, as well as duct cleaning;
– Alternate fuels: distributed and backup generation, fuel cells, photovoltaics, and UPS systems; and
– Audits: energy and air quality audits, plus air filter repair and replacement.
Demand is growing
Home automation is a steadily growing market. The industry will grow an average 29 percent per year through the year 2005, according to the Home Automation Association.
This is due, in part, to consumers` increasing demand for high-profile entertainment systems and home networking packages (see Figure 1). Among home automation dealers-a market traditionally associated with lighting, in-house intercom and security-95 percent now sell audio and video equipment, according to Parks Associates` “1998-1999 Dealer Survey.”
Parks Associates attributes the shift to the growing number of home-based workers, and the heightened demand for convenience. These lifestyle changes have helped the market for advanced systems and wiring packages, now tying together previously disparate systems such as security, telephone and appliance control.
One-third of the dealers Parks Associates surveyed sell advanced systems requiring a two-way network, and 43 percent pre-wire homes with whole-house structured wiring packages. But for now, these systems remain in the realm of high-income consumers with large homes. More than one-fourth of the dealers pre-wire nine or more rooms in a customer`s house, with seven being the average number of rooms pre-wired in a typical installation job.
Despite the current demographics of home automation dealers` customers, Parks Associates predicts the home systems market will continue growing, especially among middle-income consumers. It forecasts the incidence of multiple computers will reach almost 30 percent of all U.S. households by the year 2002, and the penetration of online services will reach 50 percent of all U.S. households by the year 2004. With these drivers in place, consumers will likely look increasingly to advanced systems technology for their homes.
Numerous home networking solutions, both consortium-based and proprietary, are emerging to cash in on this new market opportunity. Because gateways are vital links between external networks and in-home networks, the concept of residential gateways is now being revisited. Since traditional gateways cannot meet the demand of a networked home, new gateways must be developed, according to Parks Associates.
Several companies are offering innovative packages to utilities looking to offer home automation as a value-added service. TeCom Inc., a Tampa-based subsidiary of TECO Energy, has developed a system that integrates energy management, home automation, advanced entertainment, communications and security features. Its new system, called the InterLane Home Manager, provides advanced two-way communication between homeowners and utilities utilizing a pager and the existing phone line as its utility system communications channel.
For customers, the system monitors, measures and records electricity consumption in real-time. It can supply consumption information for or the entire house or for individual appliances. It also enables homeowners to schedule operation of devices in their homes.
For utilities, the system automates some operating tasks, such as automated meter reading, outage notification, tamper detection and remote service connection and disconnection. It also monitors and reports on power quality, providing load research information, which can be used to create new products and services for homeowners.
TeCom said it conducted extensive qualitative and quantitative research confirming customer demand for such a system. Almost 60 percent of survey participants like the idea of a central home controller, and 75 percent of participants find the energy savings features attractive.
TeCom said its experience has shown customers do not want to give up their systems once they become accustomed to them.
Surveys consistently indicate customers` greatest lure to switch energy service providers centers on cost savings (see Figure 2). Honeywell says “comfort systems” and home maintenance can save residential consumers hundreds of dollars in heating and air conditioning costs each year. Also, most insurance companies offer discounts for homes with security systems-Prudential and Metropolitan offer discounts as high as 20 percent under some circumstances.
Honeywell offers a system called TotalHome that provides security and home automation. This system automates and integrates control of security, temperature, lighting and appliances from a single control pad. It also allows remote control from any touch-tone phone, locally or from long distance.
Another Honeywell system, the Perfect Climate Comfort Center, gives homeowners an advanced programmable thermostat, an electronic humidity control, an air filter service indicator, programmable ventilation system control, and a programmable, energy-efficient fan control. It is the first thermostat product allowed to display the U.S. Environmental Protection Agency Energy Star logo.
Security, telecom, Internet access, cable TV, bundled services-all these areas have captured the interest and investment of several utilities. Over 50 utilities have experimented with value-added services, with varying success.
Most market analysts concede value-added services help distinguish utilities to residential customers. Whether this association will cause customer to choose those utilities as their preferred supplier of energy services is not yet known. Early on, cost savings appear to be the greatest motivator. Perhaps winning strategies in the competitive arena will combine both.