Utilities positioned to drive residential gateway market

Steven M. Brown, Associate Editor

Tight electric power supplies and high consumer demand for that power may help propel one relatively new technology into millions of homes over the course of the next three to five years. If the technology does indeed take hold, it is likely that electric utilities will provide one of its primary distribution channels.

The technology is the residential gateway, and research and consulting firm Parks Associates has reported that the market for this technology will more than triple by 2005. The market for residential gateways, Parks Associates projected earlier this year, will grow from 8.6 million units in 2001 to more than 33 million units in 2005. Research firm Cahners In-Stat Group also has predicted rapid growth for the residential gateway market, predicting that the market will rise sharply from the $100 million point it held in 2000 to $5 billion in 2005.

The residential gateway these analysts speak of can take many forms and facilitate the provision of a wide variety of services. At its most basic level, the residential gateway serves as a network interface through which service providers can deploy their offerings to residential homeowners. But the gateway is more than a cable box, cable modem or an electric meter-although each of those devices can be a component of the gateway. The residential gateway that market analysts and other industry watchers project such a bright future for will serve as a sort of simple home networking server. It will be the connection point for a network of “smart” appliances and devices within a residential dwelling and allow for the remote control of those appliances and devices by either the homeowner or an outside service provider.

Parks Associates analysts have reported that consumer demand for broadband Internet and high-definition entertainment services, as well as advancements in home networking technology, will drive the growth they predict for the residential gateway market. But at the present, a number of gateway developers are targeting electric utilities and energy-related applications as the drivers of their emerging technologies.

Electric utility providers stand uniquely qualified to drive the gateway market for two primary reasons: First, the electric utility lays claim, almost universally, to an accessible entry point to the residential dwelling-that being the electric meter and a home’s electric service entrance. Second, one of the first practical, demonstrable uses for residential gateway technology is directly related to energy supply and demand concerns.

Whether it is referred to as load management, demand response, or its old- fashioned moniker demand-side management (DSM), programs that seek to manage and control load on the customer’s side of the electric utility meter have been the prime early drivers of gateway tests and deployments for companies such as Coactive Networks and muNet Inc. Both of those companies currently are conducting pilot projects with U.S. utilities and energy service providers to prove the viability of their gateway products as energy conservation/load management devices.

Coactive Networks is participating as a technology provider to pilot projects launched in two U.S. cities by energy service provider The New Power Company. Through the pilot programs in Philadelphia and Houston, hundreds of New Power customers will be able to remotely control their home’s thermostat settings from any Internet-accessible device. Coactive Networks’ home gateway system, the Coactive Connector, is the enabling device driving the programs. In addition to consumer control, the energy service provider, The New Power Company in this case, has the ability to remotely adjust the homeowner’s thermostat settings a few degrees during peak usage hours. The end-use residential consumer reserves the right to override those utility-induced adjustments.

Adam Marsh, Coactive’s co-founder and chief strategy officer, said that the Connector system can communicate with a residential meter to provide a number of energy-related services to customers. For the time being, Coactive is focusing its efforts on those energy-centric applications. Automatic meter reading, time-of-use pricing programs, real-time pricing, meter data aggregation and various energy curtailment programs all can be provisioned through the residential gateway.

Marsh said that quasi-DSM initiatives like the pilot programs taking place in Philadelphia and Houston are among the main drivers of current gateway technology. He said that the ability to send consumers an alert via the gateway when energy usage goes beyond a certain predetermined level is particularly popular in service territories where conservation initiatives have been tied to financial incentives. California’s 20/20 rebate program, in which residential consumers who reduce their summer load by 20 percent are eligible for a 20 percent credit on their bill, is one example of an area where consumers are showing interest in gateway-type products.

“In California, we have consumers who call up and want to buy the system (the Coactive Connector) directly from us because of the 20/20 program,” Marsh said. “The gateway offers a lot of information to consumers to show them how successful their conservation attempts are.”

Despite that type of consumer interest, Coactive does not sell its products directly to end users. Coactive is focusing on electric utilities as the primary distribution channel for its residential gateway technology.

Perhaps tying its gateway technology even more closely to electric service providers is muNet Inc., a company which builds its residential gateway directly into electric utility meters. Vincent Moeyersoms, muNet’s co-founder, said that integrating the WebGate iRIS (Internet residential information system) into the utility meter results in a simpler, more cost-effective solution for electric utilities to deploy. Similar in function to Coactive’s Connector, muNet’s WebGate iRIS provides advanced AMR functionality and can be used by the utility or the customer to remotely control appliances within the home.

Northeast Utilities (NU) is currently testing a pilot installation of the WebGate iRIS gateway system with its residential end users. With the gateway technology, NU will be able to manage residential peak energy demand over the Internet, collect data about residential energy usage, and learn how customers respond to load management strategies. Similar to Coactive’s initiatives in Philadelphia and Houston, NU will be able to adjust residential customers’ thermostats a few degrees during peak demand periods. Since the gateway is integrated with the meter, NU can quantify immediately the effects of its adjustments. Besides the NU trial, muNet has been involved with test projects at nine other investor-owned and municipal utilities, including Detroit Edison, Tacoma Power and Grant County PUD.

Moeyersoms said that supply-and-demand concerns have caused utilities to take a closer look at residential gateway technology and the solutions they can provide. “We know about the issues related to adding power plants,” Moeyersoms said. “Another way to deal with high demand is to provide systems that allow a leveling of loads over a 24-hour day. We definitely see the gateway playing a key role there.”

Moeyersoms said that while utilities have had the ability to control end-use devices such as air conditioners and heat pumps for some time, the control generally was administered without customer interaction or feedback. By incorporating two-way communication between the utility and the customer, gateway-driven load management programs become attractive value-added services.

Both Coactive’s Marsh and muNet’s Moeyersoms believe that increased retail competition in the electric utility industry should help drive the residential gateway market.

“Utilities are trying to decide what they will become in the future,” Moeyersoms said. “Becoming a re-regulated, shrunk-down entity that only delivers power isn’t always attractive to them, so they are looking for other ways they can leverage their desirable entry position on the side of the house.”

As utilities attempt to differentiate themselves and become more than just commodity providers, residential gateways provide the springboard for additional services that are logical in the minds of consumers.

“Consumers don’t associate their utility with services like long-distance telephone or cable television,” Marsh said. “But they definitely associate them with energy savings and issues related to electrical devices within their homes. These (gateway) devices enable those types of energy management programs.”

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