Home Energy Management: Premature Jocularity

One of the hottest cleantech investment segments in recent years has been home energy management (HEM).  HEM technologies enable households to remotely and/or more wisely manage their energy use, enabling lower consumption for equivalent (or better) quality of life:  climate control, lighting, entertainment, cooking, etc.

In the space of just a week or so, two of the leading information technology giants — Microsoft (NASDAQ: MSFT) and Google (NASDAQ:  GOOG) — announced last month that they were pulling the plug on their in-house HEM efforts — efforts that had been launched with great fanfare not long ago.

As reported in such postings as this one and that one and (more humorously) yet another one, Microsoft’s Hohm and Google’s PowerMeter will be discontinued due to lack of customer uptake. 

At best, HEM is an idea before its time, dependent upon smart meters and other so-called “smart grid” technologies to enable a lot of the highest-value functionality of HEM.  At worst, HEM is an idea whose time will never come — simply because most households simply don’t care that much about energy — and won’t spend a lot of time to save a few bucks on their energy bills, preferring to spend that incremental hour playing a video game or surfing social media. 

I’m inclined to the latter interpretation:  while energy management for commercial/institutional buildings can/will be a big deal, simply because the value at stake is significant and building-owners have sufficient profit-motivation to take action to improve financial results, energy management for homes will be a tougher play, due to constrained budgets and limited customer mindshare and appetite for taking action to save relatively few dollars.

Regardless, HEM continues to attract big bucks from outside investors.  iControl Networks just fetched over $50 million from such tech stalwarts as Cisco (NASDAQ:  CSCO) and Kleiner Perkins, and Siemens (NYSE:  SI) invested in Tendril at almost exactly the same time as Microsoft and Google announced their abandonment of HEM.

So, what does Google and Microsoft know that the others don’t?  I’m not exactly sure, but I can say with confidence from first-hand observation and experience that a lot of investment capital that is often referred to as “smart money”…isn’t.

Time will tell if any of these investments generate good returns, but the past and present hype about HEM feels premature, if not unwarranted.

4 replies
  1. johnmuir
    johnmuir says:

    I'm an early adopter of all this stuff, with PV on my roof, a smart meter on my house, a prototype plug-in hybrid in the garage and a 30-year career in alternative energy. I believe Microsoft and Google have figured out what I've figured out, that the topology of the smart grid as being delivered today is not supportive of a business case in HEM. Until that gets sorted, it's a fools errand, and many fools will be soon parted from their money.

    Whether Google and Microsoft will be back through another door to do the sorting is another question. My bet is Google will and Microsoft won't, but HEM won't be a business until Apple does it, and even then only if Steve Jobs lives long enough, with enough strength to direct it. If there was ever a place where his ability to cut through the clutter and build a user interface simple enough for humans to actually operate is valuable, HEM is it. Google has the math skills to work the background stuff but their UI skills are questionable at best and Microsoft, forget it on both scores.

  2. James
    James says:

    You can’t *just* sell HEM. Microsoft and Google have probably discovered that HEM is a complex and specialized business model that requires cooperation with a lot of disparate manufactures and distributors. iControl Networks seems to realize that and has established a platform (which includes home security and remote home management). So MS and Google have probably realized that the money and resources they would have to invest to *merely buy into the game* in order to compete with iCN could be better spent elsewhere. After iCN has extablished the protocols and formats for HEM, Microsoft and Google will probably reexamine how they can capitalize within the industry.

  3. Anker Berg-Sonne
    Anker Berg-Sonne says:

    Its not that they have suddenly had some great flash of insight that the rest of us have missed. On the contrary, they haven't learned anything. They just observed that their "solutions" weren't nearly as popular as they had expected.

    HEM will work when its fully automated, requiring zero intervention from the homeowner.

    You also used the expression "save a few bucks". For many home owners its big bucks ig the savings amount to 25% or better.

    I have been running a fully automated prototype of my employer's EM solution in my home for almost two years now. I don't do anything, it knows when there's someone home and where they are, and over time it learns when we come and go. It uses this knowledge to adjust the thermostats for maximum savings and optimum comfort. Last year it saved 23% off my heating bill compared with the two previous years where I used programmable setback thermostats.

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