For years, the U.S. smart home industry has been eyeing Europe with a mixture of exasperation, frustration and resignation. But the tide is turning as a growing number of European utilities embrace connected home services. In the second of a two-part series, Eva Munk reports.
Still, why should customers want to replace their familiar, dumb technology for the unknown smart kind? “I really wouldn’t think of changing a light switch because the light switch I have works,” says Nick Hunn, a British expert on wireless communications. “How do you persuade somebody to go from the electro-mechanical products they’ve had for the last 100 years to a connected digital product? … I am very unconvinced, having worked in home automation for a number of years, that there is an actual financial payback for these products. If people want to save energy, they change the light bulbs or get insulation rather than turning to Internet technology.”
The need to educate distributors and consumers
According to Hunn, one of the few areas where savings can be realized is heating. But this poses another problem: The manufacturers of the old systems still have the distributors on their side.“The existing manufacturers have the channels to market to get the products into the shops that the installers buy them from,” Hunn says. “There’s a whole set of mindsets that needs to be changed, and it will happen a lot more slowly than people expect.”
According to Hunn, the change must start with technicians who install the systems. “Most decisions about what goes in as a replacement is made by people that aren’t familiar with smart home technology,” he says. “The person that puts in a new heating system generally puts in the system they were trained on. That’s the big challenge that needs to be addressed – not just making smart home technology available at the right price but educating the people that specify it.”
Lars Kurkinen, senior analyst at Berg Insight, adds that consumer education is also important. “There is not a good understanding among consumers on how smart home systems can be useful in their daily lives,” he says. “European smart home solution vendors will thus need to educate people on the benefits of their products.”
European Union to the rescue
But, here, they could soon get help from an unexpected quarter. The European Union, in its never-ending quest to lower energy consumption, has been leaning on power producers and consumers to tighten up their acts.In 2009, it recommended that member states investigate the option of mandatory installation of smart meters. By the end of 2013, 20 countries had committed to nationwide rollouts of smart gas meters. (Germany, unconvinced of the cost benefit, has opted out for the time being.)
Smart meters are good for power companies as they allow them to manage supply more efficiently while also helping reduce the rampant energy theft plaguing the industry. But they do little to make consumers turn their heat down. This is where the smart thermostat from the likes of Nest comes in.
“Energy companies have incentives to promote smart thermostats as this can enable them to launch demand response and energy management programs, [which] can be efficient tools for energy conservation and can help energy companies to comply with forthcoming energy reduction mandates,” Kurkinen says. “Furthermore, a general reduction in peak load reduces the need for investments in reserve power generation capacity.”
In this vein, British Gas, which plans to install 50 million smart meters by 2030, has started to offer customers the Hive, a smart thermostat similar to Nest’s. The problem is the price: £199 for a rather unimpressive saving of £69 per year. Nonetheless, it’s a start on the road of Europe becoming a full-fledged connected home market.
The way forward
Professionally monitored security services might be another driver although not to the degree it has been in the United States,Kurkinen says. “In the U.S., providers of professionally monitored security services, such as Vivint and ADT, have been very successful in the market,” he says. “Telecom operators such as Comcast, AT&T and Time Warner Cable have entered the smart home market in a similar way … i.e., with professionally monitored security as the base package. However, in Europe, monitored security is much less common. The penetration rate is only 2% compared to 20% in North America.”
Another inevitable market driver will be Europe’s aging population. According to the European Smart Homes and Assisted Living report published by MarketsandMarkets, “Almost a quarter of the E.U. population is expected to be of age 65 years and above by 2035. The European Commission has thus begun underlining the need to use new information and communication technologies (ICT) to enhance the quality of life for the elderly by providing … ICT-enabled ambient assisted living options through the new-age concept of automated or smart homes.”
From smart home to sustainable smart town
To this end, Panasonic has developed a connected home connected to medical facilities, allowing owners to do their own medical checkups from home. And that’s only the beginning for Panasonic.
This spring, on land reclaimed from a closed factory outside of the Japanese city of Fujisawa, Panasonic will open the Fujisawa Sustainable Smart Town, a purpose-built, green city of 1,000 houses, all hooked up into one smart grid enabling the electricity supply to be lined up with demand. Every house will come with solar power generator units, home fuel cells and sensor-controlled lighting for a 70% cut in emissions compared to standard communities of the same size.
Of course, projects like the Fujisawa Sustainable Smart Town are the ideal, and altered solutions will have to be found for older European cities.
(For the first part of the series, see Smart homes connect to Europe's power grid, part I.)
Eva Munk is a regular contributor to Open Mobile Media.
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