Utilities have a lock on the energy data coming from their customers -- at least for now. But if they don’t start putting that data to use soon, they may find that they’ve been overtaken by tech firms.
That’s the view that emerged last week during a DistribuTECH panel I moderated on the subject of how new software tools could revolutionize demand response. The panel featured plenty of audience commentary on how much they’d like to get access to utility data to help them design these tools -- and how hard it is to get utilities to share that data.
There are reasons for utilities to avoid sharing customer energy data with just anyone, including the very real issues of customer data privacy and security. But at the same time, there’s a general view that utilities are holding onto their data because they’re not yet sure how to turn it into real-world value -- and they don’t want to allow another party to capture that value until they’ve figured it out for themselves.
That’s frustrating, because with 50 million smart meters deployed across the U.S. and growing, there’s a lot of new and more timely data to be put to use. And, as we’ve noted, utilities still haven’t shown that they’ve been able to turn this new source of information into broad consumer benefits, though some are pushing the envelope on this front.
But as panelist Amit Narayan, CEO of grid data analytics startup AutoGrid, noted, “I would say the utilities have two to three years” to find ways to capture the value of that data. Wait much longer than that, he said, and the consumer-centric companies moving into the home automation field -- like Google and Apple, to name two prominent examples -- could well surpass them in knowing how homes are using energy and how homeowners are behaving.
This is one of the biggest debates in the home energy management system (HEMS) market, which GTM Research predicts will more than double to reach $4 billion in the United States by 2017. Up to now, that market has been primarily driven by utility imperatives -- free or rebated smart thermostats and in-home energy devices, meant to connect customers to efficiency and demand response programs.
At the same time, homes across the country are increasingly being colonized by a set of non-utility players that are collecting data of their own, he said. As GTM Research noted in its 2013 HEMS report, of the vendors that had already passed the 1-million-customer mark, only two of them, Tendril and Opower, are driven through utility partnerships.
The rest are either grabbing customers through their own brand, like Nest, Vivint and ADT, or are working behind the scenes for various partners, like Alarm.com, GreenWave Reality, iControl and MiOS. It’s important to note that energy efficiency and demand response are not the centerpiece of these platforms. Security, convenience and the whiz-bang thrill of being able to control home appliances and electronics through one’s smartphone are the key selling points.
But as David Friedman, CEO of Ayla Networks, noted in last week’s panel, the combination of devices being networked and controlled by these platforms is delivering a lot more data than utilities are collecting with their smart meters and smart thermostats alone. Ideally, both parties would find ways to share that data, he said.
Utilities are also starting to analyze their smart meter data, working with partners like AutoGrid, C3 Energy, Opower and a long list of other analytics providers, Narayan noted. But for the most part, utilities aren’t sharing data with companies outside the select few they’ve hired for these analytics tasks.
Where utilities have shared data openly, such as with the Green Button initiative, that data hasn’t been as deep or rich as many software developers would like, he said. For example, Green Button data is delivered 24 hours after it’s collected, rather than in real time, and utilities have balked at opening up more granular, revenue-grade data for use by third parties.
Google may represent the biggest challenger on the home energy data front, given that it already tried to work with utilities through its PowerMeter effort, only to shutter that utility-data-driven platform to turn to its own resources. These include, most prominently, its $3.2 billion acquisition of Nest, the popular smart thermostat maker, which has since moved into smoke detectors and internet cameras. Last month, Nest announced a long list of third-party device partners through its Works With Nest program, including LG, Whirlpool, Lutron, Osram and Philips.
Apple’s HomeKit platform, launched last year, isn’t nearly as far along as Nest's is. But it has announced partners, including Philips, iDevices, Belkin, Honeywell and Kwikset, and is expected to announce availability of products any day now.
Beyond that, there are a number of would-be connected-home contenders, whether they’re approaching the home through broadband internet and communications (Comcast, AT&T), home security (ADT, Vivint) or the home improvement retail channel (Lowe’s, Best Buy).
Many of these companies are working together, like Nest and iControl, or are expanding their ecosystems to include a wide variety of disparate devices. But perhaps more importantly, they’re establishing relationships with customers, Narayan said. The same goes for companies like SolarCity that are equipping customers with rooftop solar, behind-the-meter batteries and other forms of distributed energy, he added.
To be sure, some utilities are doing a better job than others at putting data to use, he said. Retail electricity providers in deregulated markets like Texas and Germany are on the forefront, since so much of their costs and revenues are tied into metrics like customer churn and retention, he noted. One example is NRG Energy, the U.S. energy company that’s getting into rooftop solar and bundling retail energy services with Comcast cable services in different markets.
But mainline utilities still haven’t shown much openness, according to anecdotal reports from software vendors in the space. The same concerns are showing up in regulatory filings in states like California and New York that are in the midst of revamping energy regulations to bridge this utility data divide. Stay tuned for more coverage on this front, including a report on efforts to find common ground to allow utilities and would-be data competitors to start sharing the wealth.