29 August 2013 – Smart energy portal, Engerati, says that homes, unlike commercial buildings or industrial complexes, do not generate five to six figure savings for percentile changes in energy consumption. The motivation and drive needs to be service, not technology-lead.

The prevailing definition of smart homes seems to be encapsulated by the one published in 2003 by the UK department of trade and industry: "A dwelling incorporating a communications network that connects the key electrical appliances and services, and allows them to be remotely controlled, monitored or accessed.”

There is a fundamental flaw in this definition as it is both technology and feature-centric, not benefit-centric. Engerati says it would like to suggest an alternate definition of the smart home: “A dwelling which utilises the least amount of energy and water in the most optimised way, while enabling its inhabitants to live in comfort.”

If this can be achieved, then the ability to control electrical appliances from a smartphone makes little or no difference. A greater benefit can be derived from three other areas:

1. New building technology and retrofitting

Insulation and materials have a greater effect on energy consumption and payback than any app on the market. Passive houses (a highly energy efficient and environmentally friendly building) use 90% less energy than typical existing homes and 75% less energy than most new homes, according to the Passive House Institute.

These buildings rely on the sun, internal heat sources (such as shower steam) and heat recovery, making active heating systems unnecessary. Strategic shading, window glazing and ventilation help these buildings to keep cool on warmer days without air conditioning. Passive houses need very little energy, making conventional heating and cooling systems unnecessary.

2. Appliances & Lighting

Investing in new, more energy efficient and aware appliances can change energy consumption. The energy rating system has had more of an effect in driving down energy consumption in homes through the investment in new smart appliances.

3. Renewable Generation

The introduction of photovoltaic (PV) panels on roofs has a significant impact on energy bills. It even gives the consumer an opportunity to become a prosumer in some cases. In many countries, there are subsidies for PV and these need to be looked at through a long-term lens.

So what of the technology peddlers and cable companies around the world offering smart home services? There is hope for them but a rebranding and the creation of innovative business alliances may be required.

The beachhead for the connected smart home may not be energy but home surveillance or telecare. Both markets are ripe for disruption through the consumerisation of IP cameras and advances in open video standards.

The connectivity offered, however, can provide the data to facilitate change. However, utilities and telco’s need to ask themselves, “What is in it for my shareholders? What is my incentive to reduce domestic demand? What is in it for us?” Additionally, service providers of any shape need to ask whether these services will retain existing customers and possibly attract more.

Smart homes need smart tariffs. Consider Rolls Royce. The company discovered that the big payoff is achieved from getting engines under more wings by servicing and selling spares. The company then pulled off the conjuring trick and convinced the airline industry to pay a fee for every hour that an engine runs.

Could this be applied to the smart home market? What if a tariff offers more than just selling energy or internet connectivity? What if it can also create an optimally energy efficient smart home?

Imagine dashboards that alert consumers as to what appliances need updating or servicing  as they are not running at optimal energy consumption and offer the relevant remedy, be that servicing or the hire purchase, financing or buying options for a replacement appliance, all negotiated and arranged by my service provider.

An extra smart charge on the bill could cover the above and perhaps entitle the customer to the latest and most energy efficient light bulbs, a control hub, any number of smart sockets, and a solar powered charging system for portables.

A home monitoring box would switch appliances and lights off when it senses that no-one is around using the smart lights and sockets provided. Other offers could include the provision of thermal insulation, competitively-priced PV systems, and provision of monthly finance (negotiated through the buying power of the service provider).

There is an opportunity for service companies to not just supply connectivity or power but to become retailers and providers of goods and maintenance services.

Thought will need to be put into the data privacy and ownership issues. Concern is still ripe on the potential transmission of this much data through a smart meter. The movement to personal data ownership feels at odds with the smart meter.