The Evolution of Home Energy Management

Posted by Charlie Hewitt on April 13, 2015
The Evolution of Home Energy Management
Behavioral science may be the key to energy conservation.

In the hierarchy of dreaded activities, reviewing the monthly electricity bill ranks alongside stepping on the bathroom scale. As with most bills, the primary focus is typically on the amount due. The number of kilowatt-hours consumed receives only a secondary glance. However, understanding the details behind the monthly usage may yield opportunities for reducing your energy bill.

When electricity bills are higher than expected, we behave much as we do when the bathroom scale delivers bad news – we make resolutions to reduce consumption. We adjust the thermostat, turn off unnecessary lights, and are mindful of our energy usage habits. However, without setting goals and actively monitoring performance, these measures are unlikely to result in sustained energy conservation. This is where Home Energy Management (HEM) products and services come into play.

HEM products and services allow customers to understand how and when their home uses energy. Keeping customers engaged in managing their energy consumption is a challenge. HEM providers have had limited success in addressing this problem over the past decade. The future of the HEM industry, however, may be brighter than its past.

Navigant Research recently published a report projecting global revenues from HEM products and services to grow from $586.9 million in 2013 to $2.4 billion in 2023. The optimism behind that projection lies in the evolution of HEM products and services.

Device-Based HEM

The first wave of HEM was device-based. The customer attached a sensor/transmitter their electric meter. Energy usage was viewable in real-time on a receiver. These devices allowed customers to track their usage throughout the month and avoid surprises on their electricity bill. The downside of these devices is that the data collected was at the meter level. The data did not contain any information directly identifying energy conservation opportunities.

Examples of these HEM devices include Wattvision and PowerCost Monitor. Recent product updates allow customers to access usage data via mobile devices. Improved graphic displays also make the data more meaningful to the customer. This approach, however, relegates HEM to gadgetry and only a small segment of the market will remain engaged for the long term.

Second Generation HEM

The next wave of HEM adds a service component to the product. This approach goes beyond reporting whole-home meter data and provides the customer with more detailed information regarding their energy usage. Collecting electric usage data at the circuit or end-use level is essential to transforming HEM from an interesting gadget to a value-added service. 

One approach to data disaggregation takes its cue from commercial energy management systems. Current transformers attach to each circuit in the home electrical panel. HEM providers like SiteSage are able to display usage data in a more actionable format than earlier technologies. In addition to purchasing the system, the customer must arrange for professional installation and sign up for a multi-year monitoring contract. This can end up being an expensive proposition for the customer.

Other HEM providers use indirect methods to provide customers with actionable information. Home Energy Analytics  focuses on characterizing the home’s idle load and suggesting ways to minimize it. Bidgley uses a proprietary set of algorithms to disaggregate the total energy usage into its primary components. Smart plug HEM providers like ThinkEco also offer an economical approach to identifying energy conservation opportunities.

The problem with second generation HEM is that eventually it becomes redundant.  Identification of primary savings opportunities occurs quickly. Customers implementing the HEM service recommendations will experience diminishing returns on additional conservation measures. Over time, customers may lose interest in the service.

Behavioral Approach

The latest trend in HEM focuses on consumer behavior. The HEM industry has evolved from providing data and recommendations to actually addressing how consumers relate to energy conservation. By understanding consumer behavior, true and lasting customer engagement may be possible.

Behavioral HEM is rooted in research that shows that consumers are more likely to respond to goals and actions tied to reference group norms. In other words, informing customers of how their energy usage compares to similarly situated homes in their area motivates them to take action. 

Opower is a pioneer and leader in behavioral HEM. They have found that messaging energy conservation in terms of financial incentives and environmental benefits produces limited results. Reducing energy usage to meet arbitrary goals does not engage customers for very long. Working with utility partners, Opower provides consumers information that allows them to benchmark, set goals, and monitor progress toward those goals. This dynamic approach has shown promise in keeping customers engaged.

Given Opower’s success working through utility partners, HEM providers are likely to integrate behavioral science into their products and services. This should increase the serviceable market as behavior-based HEM products and services become available directly to consumers.

Whether it is our competitive nature, desire to blend in, or a sense of shame, Opower has tapped into an element of the human psyche that has resulted in voluntary energy conservation. It will be interesting to see if HEM providers will identify other behavioral elements that can lead to sustained energy optimization and conservation.


Charlie Hewitt is the founder of ElectricityMatch with over 20 years of in-depth energy experience including residential end use modeling and forecasting and load profile analysis.

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