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.
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.