Case Study Barriers to Intelligent Efficiency Smart Homes...MARCH 2018 - INTELLIGENT EFFICIENCY - A...

MARCH 2018 - INTELLIGENT EFFICIENCY - A CASE STUDY OF BARRIERS & SOLUTIONS - SMART HOMES 1

CaseStudy-BarrierstoIntelligentEfficiency–SmartHomes

FinalReportMarch,2018


4EistheEnergyEfficientEnd-UseEquipmentTechnologyCollaborationProgramme,establishedbytheInternationalEnergyAgency(IEA)in2008tosupportgovernmentsinco-ordinatingeffectiveenergyefficiencypolicies.Twelvecountrieshavejoinedtogetherunderthe4Eplatformtoexchangetechnicalandpolicyinformationfocusedonincreasingtheproductionandtradeinefficientend-useequipment.However4Eismorethanaforumforsharinginformation–itpoolsresourcesandexpertiseonawidearangeofprojectsdesignedtomeetthepolicyneedsofparticipatinggovernments.Participantsfindthatisnotonlyanefficientuseofavailablefunds,butresultsinoutcomesthatarefarmorecomprehensiveandauthoritativethancanbeachievedbyindividualjurisdictions.Currentmembersof4Eare:Australia,Austria,Canada,Denmark,France,Japan,Korea,Netherlands,Switzerland,Sweden,UKandUSA.Furtherinformationonthe4EImplementingAgreementisavailablefrom:www.iea-4e.org

Networkconnecteddevices,includingtheInternetofThings,aregrowingrapidlyandofferenormousopportunitiesforimprovedenergymanagement.Atthesametime,thereisaresponsibilitytoensurethatthesedevicesuseaminimalamountofenergytostayconnected.4E’sElectronicDevicesandNetworksAnnex(EDNA)workstoaligngovernmentpoliciesinthisareaandkeepparticipatingcountriesinformedasmarketsfornetworkconnecteddevicesdevelop.FurtherinformationonEDNAisavailableat:http://edna.iea-4e.org

ThiscasestudywasinitiatedbytheConnectedDevicesAlliance(CDA)whichisanetworkofmorethan350governmentandindustryparticipantsthathavecometogethertoworkontheenergyefficiencyopportunitiesprovidedbynetworkeddevices.FurtherinformationontheCDAisavailableat:https://cda.iea-4e.orgThisreportisauthoredbyconsultant,VidaRozite.Theviews,conclusionsandrecommendationsexpressedinthisreportdonotnecessarilyreflecttheviewsoftheIEA,4E,EDNA,theCDAortheirmembers.


Table of contents

Tableofcontents............................................................................................................................................3

Abbreviations..................................................................................................................................................5

Glossary.............................................................................................................................................................6

Executivesummary.......................................................................................................................................8

Background......................................................................................................................................................9

Introduction..................................................................................................................................................10

1 Whataresmarthomes?.....................................................................................................................13

2 Technologypathway...........................................................................................................................182.1 Currentsmarthometechnologyuptakeandforecasts...................................................212.2 Driversandmotivatorsforsmarthometechnologyuptake.........................................222.3 Statusandforecastofsmartgridcapabilities....................................................................22

3 Energysavingspotentialandotherenergysystembenefits................................................253.1 residentialenergyefficiencybenefits...................................................................................253.2 Benefitsintermsofcollectingandanalyzingdata...........................................................273.3 Energysystembenefits..............................................................................................................283.3.1 Quantificationofbenefitstoenergysystems.............................................................................28

4 Energycostsofsmarthomes...........................................................................................................30

5 Barrierstoimplementation.............................................................................................................325.1 Barrierstoimplementationpathway...................................................................................325.2 BarriersTotheuptakeofsmarthometechnologies.......................................................335.2.1 HighCostsandunclearbenefits.......................................................................................................335.2.2 Privacy,trustandCybersecurity....................................................................................................345.2.3 Complexityandtechnologyrisk......................................................................................................35

5.3 Establishmentofsmartgridelementsandmarkets........................................................386 Policyrationale.....................................................................................................................................406.1 Benefitsofaction.........................................................................................................................406.1.1 Possiblerisksofaction.........................................................................................................................40

6.2 Acasefordelayingaction?.......................................................................................................417 Possiblepolicyactions.......................................................................................................................437.1 Visionandengagement..............................................................................................................437.2 Highcostsandunclearbenefits..............................................................................................447.3 Privacy,trustandcybersecurity............................................................................................477.4 Complexityandtechnologyrisks...........................................................................................487.5 Lackofsmartgridcapabilitiesandenablingmarket......................................................49

8.Conclusionsandrecommendations.................................................................................................51

References.....................................................................................................................................................52


TablesTable1Typicalsmarthometechnologyfeatures.................................................................................13Table2Smarthometechnologypathway............................................................................................18Table3Energysavingsbenefitsofsmarthometechnologies..............................................................26Table4Barrierstotheimplementationpathwayofsmarthomes.......................................................32BoxesBox1Definitionofkeyterms................................................................................................................11Box2Arenetzeroenergyhomessmart?.............................................................................................16Box3End-usesmostsuitablefordemandresponse............................................................................23Box4Smarthomeautomation–openvsclosedloopsystems............................................................35Box5Mappingofexistingstandardsandongoingstandardisationinitiatives.....................................44FiguresFigure1Illustrationofasmarthome....................................................................................................14Figure2Simplifiedillustrationofcloudservicesforsmarthomes.......................................................15Figure3Illustrationofasmarthomeaspartofthewiderenergysystem...........................................16Figure4PotentialenergysavingsintheUKfromenergyefficientsmarthomedeployment..............27Figure5Illustrationofasmarthomewithmultiplesmartsystems.....................................................37Figure6GermanheatpumpindustryassociationSmartGridReadylabel..........................................46


Abbreviations

CDA ConnectedDevicesAlliance

DR DemandResponse

DSF DemandSideFlexibility

DSM DemandSideManagement

EC EuropeanCommission

ETSI EuropeanTelecommunicationStandardsInstitute

EU EuropeanUnion

EV Electricvehicle

EVSE ElectricVehicleSupplyEquipmenti.e.chargers

EDNA ElectronicDevicesandNetworksAnnex

HAN Homeareanetwork

HEMS HomeEnergyManagementSystems

HVAC Heating,VentilationandAir-Conditioning

ICT Informationandcommunicationstechnologies

IE IntelligentEnergyEfficiency

IEA InternationalEnergyAgency

IEC InternationalElectrotechnicalCommission

IoT InternetofThings

IPMVP InternationalPerformanceMeasurementandVerificationProtocol

ISO InternationalOrganisationforStandardization

MEPS mandatoryminimumenergyperformancestandards

S&L StandardsandLabels


Glossary

Automation Systemsthatintegratediverseelectricaldevicesandenergy-consumingequipment,allowingautomaticcontrolinaccordancewithselectedsettingsorinresponsetodatafromsensors.

DemandResponse Intentionalmodificationstoconsumptionpatternsofelectricityofend-usecustomersthatareintendedtoalterthetiming,levelofinstantaneousdemand,orthetotalelectricityconsumptioninresponsetochangesinthepriceofelectricityovertimeortoincentivepayments.

Cloudcomputing ThepracticeofusinganetworkofremoteservershostedontheInternettostore,manageandprocessdata,ratherthanalocalserverorapersonalcomputer.

Demandresponse Demandresponseordemand-sideresponsereferstothepossibilityforconsumerstoadjusttheirelectricityconsumptionduringperiodsofpeakdemand,whenpowersupplyisscarceorelectricitynetworksarecongested,inresponsetotime-basedfinancialincentives.Demandresponsecanconsistofinterruptingdemandforashortduration,oradjustingtheintensityofdemandforacertainamountoftimebyreducingorshiftingloads,orstoringenergy.Forconnecteddevices,demandresponsefunctionalitymightenableapowerutilityoraggregatortoremotelyturnoffair-conditioningunitsincustomerhomestoavoidpeakloadissues.

Digitalisation Theapplicationofinformationcommunicationtechnologiesacrosstheeconomy,includingenergy,toachievedesiredoutcomessuchasimprovedsafety,efficiencyandproductivity.

Electricvehicle Avehiclewhosepowertrainincludesbothabattery(whichcanberechargedviaanexternalpowersource)andanelectricmotor.Chargingcanbeachievedbyplugsorby(stationaryordynamic)conductiveorinductivepowertransfer.

Flexibility(inelectricity

systems)

Thecapabilityofanelectricitysystemtorespondtoupwardordownwardchangesinthesupply/demandbalanceinacost-effectivemanneroveratimescalerangingfromafewminutestoseveralhours.

IntelligentEfficiency(IE) Thedeploymentofnetwork-connectedICTtechnologiestofacilitateefficientoperationofenergy-usingequipment,leadingtoenergysavings

IntelligentEfficiency(IE)

technologiesorsolutions

Asuiteofenergyefficiencymeasuresthatuseinformationandcommunicationstechnologies(ICT)suchassensors,networks,anddataanalyticstosaveenergy.

InternetofThings Systemofinterrelatedcomputingdevices,mechanicalanddigitalmachines,objects,animalsorpeoplethatareprovidedwithuniqueidentifiersandtheabilitytotransferdataoveranetworkwithoutrequiringhuman-to-humanorhuman-to-computerinteraction.

Learningalgorithm Aprocessormethodusedtoextractpatternsfromdatacollection(e.g.fromsensorsandcontrols)toidentifyandadaptappropriatesolutionsorapplicationsforadeviceorsystem.

Openinterface Anopeninterfaceisapublictechnicalstandardforconnectinghardwaretohardwareandsoftwaretosoftware.

Plug-and-play Softwareordevicesthatareintendedtoworkperfectlywhenfirstusedorconnected,withoutreconfigurationoradjustmentbytheuser.


Prosumers Small-scale,distributedelectricitygenerationwhichallowsconsumerstohavethechoicetobuyelectricityfromaretailerortoproduceatleastpartofitthemselves.

Realtime Informationavailablesimultaneouslywithanevent,orimmediatelyaftercollection.

Sensor Adevicewhichdetectsormeasuressometypeofinputfromthephysicalenvironment(e.g.daylight,temperature,motionorpressure).

Smartcharging Achargingstrategyforelectricvehiclesthatusesconnectivityandotherdigitaltechnologiestoautomaticallyshiftbatterychargingtotimeswhenelectricitypricesarelowand/orwhenoverallelectricitydemandislow.

Smartmeter Ameterthatrecordselectricityconsumptioninintervalsofanhourorless,andcommunicatesthatinformationatleastdailybacktotheutilityformonitoringandbillingpurposes.Thistypeofadvancedmeteringinfrastructurediffersfromtraditionalautomaticmeterreadinginthatitenablestwo-waycommunicationbetweenthemeterandthecentralsystem.Smartmeterfunctionalityincludesremotereading,two-waycommunication,supportforadvancedtariffandpaymentsystems,andremotedisablementandenablementofsupply.

Standardisation Theprocessofimplementinganddevelopingtechnicalstandardsbasedontheconsensusofdifferentpartiesthatincludeindustry,interestgroups,standardsorganisationsandgovernments.Standardisationhelpsmaximisecompatibility,interoperability,safetyandrepeatability.

Standby Theenergydemandofanapplianceordevicewhenitisnotactivelyinusebutisreadytoberapidlyputintouse.


Executive summary

Buildingsaccountfornearlyone-thirdofglobaltotalfinalenergyconsumption.Forecastsindicatethatbuildingenergyuse,especiallyelectricityuse,willgrowsignificantly.Smarthomesareanewopportunitytoreduceenergyuseinresidentialbuildings,andstudiesindicatethatsmarthometechnologiescouldreduceenergyuseinhomesbyalmost30%.IfathirdofallhouseholdsintheUKweretoinstallandusebestavailablesmarthometechnologies,achievedsavingscouldbemorethan3milliontonnesofoilequivalent(Mtoe)peryear.Correspondingly,savingsinJapancouldbeintheregionof4MtoeperyearandintheUSmorethan23Mtoeperyearcouldbesaved.AccordingtoIEAforecasts,smarttechnologiescouldbetween2017and2040lowerenergyconsumptionofresidentialandcommercialbuildingsgloballybyasmuchas10%leadingtocumulativeenergysavingsovertheperiodto2040of5589Mtoe–equaltomorethanallthetotalfinalenergyconsumedinnon-OECDcountriesintheyear2015.Inadditiontoenergysavings,smarthomescanbeanintegralpartofsmartgriddevelopmentand,throughin-homerenewablesgenerationanddemandresponse,playaninstrumentalroleindecarbonisingtheenergysector.TheIEAforecaststhatby2040,globally,1billionhouseholdscouldactivelyparticipateininterconnectedelectricitysystems,providing185GWofsystemflexibilityandsavingUSD270billionofinvestmentinnewpowerplants.However,theuptakeofsmarthometechnologieshastodatebeenlimited.Whilegrowthisprojected,therearebarriersandgapsinenablingtechnologiesandmarkets.Thekeybarriersarecosts,uncertaintyaroundbenefits,privacyconcerns,cybersecurityconcerns,andtechnologyrisk.Enablingtherightmarketconditionsforsmarthomestoparticipateinandgainbenefitsfrominterconnectedelectricitysystemshasyettooccur.Thebarriersandgapswhicharepresentcontributetoaweakvaluepropositionforhouseholdstoinvestinsmarthomes.Inlightofthemagnitudeofenergybenefitsthatcouldbegainedthroughsmarthometechnologyandinterconnection,thereisastrongcaseforpolicyintervention.Thisreportfocusesonthebarrierstosmarthometechnologyuptake,particularlytechnologiesrelatedtoenergymanagement.Thisisfollowedbyanidentificationofactionstoaddressthesebarriers,particularlythosethataretypicallywithinthemandateofpolicymakersdealingwithpoliciesforenergyusingappliances,equipmentanddevices.Thisreporthighlightstheroleofenergyefficiencypolicymakersinimprovingthevaluepropositionforsmarthomesforenergymanagement,bysupportingthedevelopmentofmethodologiesandstudiesquantifyingbenefits,andtheprovisionofaccessibleinformationtoconsumersvialabelsorothermechanisms.Whilethepreconditionsforlargescaleimplementationofdemandresponseandin-homerenewablegenerationneedtheinterventionsofotheractors,energyefficiencypolicymakerscouldaccelerateprogressthroughthedevelopmentofstandardsandapproachesthatensurethatrelevantsmarthomedevicesare“demandresponseready”.Thereisastrongcaseforinternationalcooperationtopoolresources,developapproachesandengageindialogue.TheIEATechnologyCollaborationProgrammeonEnergyEfficientEnd-UseEquipment(4E)anditsElectronicDevicesandNetworksAnnex,togetherwiththeConnectedDevicesAlliance,areexcellentplatformsforfacilitatingthis.


Background

“Intelligent efficiency” (IE) is the deployment of network-connected ICT technologies to facilitateefficientoperationofenergy-usingequipment,leadingtoenergysavings.IEtypicallyoperatesatthesystem level, rather thanat thedevice level, tooptimise theoperationofa systemofequipment,leadingtoenergysavings.There is currently a wide range of materials available from a variety of sources that provideinformationonthepotentialforIntelligentEfficiencytoachieveenergyefficiencyandotherbenefits.TheConnectedDevicesAlliance(CDA)CentreofExcellencenowhosts60publications,36ofwhichare inthefieldof IE. However,eventhoughmanyseethat increased implementationof IEwillbebeneficialinageneralsense-bycreatingagreatercapacityforenergymanagement,IEisstillquiteintangibleformostpolicymakersanditremainsunclearwhat,ifany,responseisrequiredintermsofpublicpolicy.Toaddress this, theCDAhasstartedtodevelopcasestudies, specificallydesignedtoincreaseunderstandingamongstpolicymakers.ThiscasestudyonsmarthomesdescribesscenarioswhereIEcouldprovidesubstantialbenefits,andaddressesquestionsthatarecentraltotheconcernsofpolicymakers:

• WhatbarrierscurrentlypreventtheoptimisationofIEthatmightjustifypolicyintervention?

• Howcanpolicyovercomethesebarriers?

ThecasestudycontributestotheworkoftheCDAtoestablishtherationaleforpublicpolicyinthisfield,andtoencouragegreaterparticipationbygovernmentsintheongoingworkoftheCDA.Itwascommissioned by the IEA Technology Collaboration Programme on Energy Efficient End-UseEquipment (4E)ElectronicDevicesandNetworksAnnex (EDNA)onbehalfof theConnectedDevicesAlliance.

• The IEA Technology Collaboration Programme on Energy Efficient End-Use Equipment (4E)wasestablished in2008andbrings together twelve countries from theAsia-Pacific, EuropeandNorth America to share information and transfer experience in order to support goodpolicydevelopmentinthefieldofenergyefficientappliancesandequipment.4Ealsoinitiatesprojects designed tomeet the policy needs of participants, enabling better informedpolicymaking.https://www.iea-4e.org

• TheIEA4EElectronicDevicesandNetworksAnnex(EDNA)isanannexof4Ewhichfocusesonnetworkconnecteddevices(devicesconnectedtoacommunicationsnetwork).EDNAaimstoensure that thenextgenerationof suchdevicesuseelectricityasefficientlyaspossibleandthat opportunities for energy management enabled by connectivity are promoted.https://edna.iea-4e.org

• TheConnectedDevicesAlliance(CDA)providesanindustry/governmentumbrellaforworkontheenergyefficiencyopportunitiesprovidedbynetworkeddevices.Itwasformedin2015byparticipantsintheG20NetworkedDevicesInitiative.https://cda.iea-4e.org


Introduction

Buildingsaccountfornearlyone-thirdofglobaltotalfinalenergyconsumption(TFC)1.Globally,theenergyconsumptionoftheresidentialsectorconstitutes2051milliontonnesofoilequivalent(Mtoe),whichismorethanafifthofglobalTFC(IEA,2016).Residentialenergydemandissettoincrease-theIEAprojectsanannualgrowthof0.8%inhouseholdenergydemandto2040(IEA,2016).Buildings-relatedCO2emissionshavegrownby45%since1990andhavecontinuedtorisebynearly1%peryearsince2010.Takingintoaccountupstreampowergeneration,buildingsareresponsibleformorethanone-quarterofglobalenergy-relatedcarbondioxide(CO2)emissionstoday(IEA,2017a).Buildingelectricitydemandconstitutesmorethanhalfofglobalelectricitydemand(IEA,2017d).Electricitydemandgrowthinbuildingshasbeenrapidoverthelast25years,accountingfornearly70%oftotalgrowthinglobalelectricityconsumptionbetween1990and2014.Insomeeconomies,includingChinaandIndia,electricitydemandinbuildingsgrewonaveragebymorethan8%peryearoverthelastdecade(IEA,2017d).Electricityconsumptionbylighting,appliancesandequipmentinbuildingsiscurrentlyincreasingby3%onaverageperyear(IEA,2017a).Electricityuseinbuildingsissettonearlydoublefrom11petawatthours(PWh)in2014toaround20PWhin2040,requiringlargeincreasesinpower-generationandnetworkcapacity(IEA,2017d)2.Globally,energyexpendituresarejustbelow5%ofhouseholddisposableincome(IEA,2016).Significantprogresshasbeenmadearoundtheworldinimprovingtheenergyefficiencyofbuildingenvelopesandofappliancesandequipmentusedinbuildings.However,particularlyinOECDcountriesandincreasinglyinemergingeconomies,efficiencygainsarebeingoffsetbyincreasesinthenumberofelectronicappliancesusedperhousehold.Therearestillmanyopportunitiesforenergyefficiencyimprovements,especiallyinareassuchaswhole-homeperformanceandsystems(ACEEE,2017a).Anemergingopportunityisintelligentefficiencyforhomes,i.e.“smarthomes”.The term “smart home” is used to mean different things in different contexts and there is anambiguity about its meaning. In this report, smart homes mean residences where enhancedmonitoring and control functionality has been introduced. Smart homes could significantlycontributetoachievingenergysavingsintheresidentialsectorandcouldcontributetootherenergypolicyobjectives.However,therapidgrowthofsmarthometechnologiesandsystemsthathasbeenprojected has not materialised - uptake has been limited. For example, currently, only 5% of UShouseholdshavesomeformofhomeenergymanagementsystem(ACEEE,2017b).Therearebarriersconstrainingtheuptakeofsmarthomedevicesandsystems includingconsumerawareness, cost, unclear value propositions, immature technology, lack of interoperability,complicated sourcing and installation, operational and usability problems and data privacy andsecurityconcerns.Furtherconstraints includeregulatorybarriers, lackofdynamicelectricitypricingandgaps inthewiderenablingenvironment“smart” infrastructure(distributedgeneration,electricvehicle charging, energy storage solutions), and lack of services thatwould contribute to a bettervalue proposition. This report focuses primarily on barriers affecting the uptake of smart homedevices and systems. However, some of the barriers and gaps related to the wider enablingenvironmentarealsocovered,astheseaffect thevaluepropositionandusefulnessofsmarthomedevicesandsystems.

1Includesresidential,commercialandpublicsectorbuildings2IEAcentralscenario


There have been isolated attempts by policymakers to take action to remove some barriers andpromote theuptakeof smart devices and smart homes.However,most countries donot have anexplicitvisionorpolicyroadmapthatwouldprovideoveralldirectionforpolicymakinginsupportofenergy efficient smart homes. Typically, there are a range of differentministries and governmentbodies dealingwith issues related to smart grids, and the involvement of energy efficiency policymakers is limited. Intelligent Efficiency and smart homes are technically complex areas,which arecontinuouslyandrapidlyevolving.Thisreportaimstoprovideguidanceforenergyefficiencypolicymakers onwhat the rationale for energy efficiency policy in this areamight be, andwhat actionscouldbetakentoaddressbarriers.There isagrowingbodyof literatureonsmarthomesandhomeenergymanagementsystemsandthe topic has received increased coverage in the past few years. However, this information istypically either highly technical, targets an industry or academic audience, is limited in scope, isspecifictoacertainregionorcountryordealswiththepotentialroleofpolicymakersinasuperficialorlimitedmanner.Asaconsequence,anenergyefficiencypolicymakerinterestedingettinginsightsonsmarthomesandtheirenergyefficiencypotential,energysystembenefits,currentandprojectedmarket, key barriers and possible policy responses is faced with difficulties in quickly accessinginformationthatcouldbeusedasabasisfordecisionmaking.Thisreportprovidesasynthesisoftheknowledge,informationandresultsfoundinreports,scientificandpopulararticles,andprojectandprogrammeevaluations.Thereportprovidesastartingpoint forexploringenergyefficiencypolicy interventions inthisareaandforinitiatingdialoguewithothergovernmentbodiesandstakeholders.Box1Definitionofkeyterms

Forthepurposeof thisreport,“Intelligentefficiency” (IE) is thedeploymentofnetwork-connectedICT technologies to facilitate efficient operation of energy-using equipment, leading to energysavings. IE typically operates at the system level, rather than at the device level, to optimise theoperationofasystemofequipment,leadingtoenergysavings.For the purpose of this report, a smart home device is a device that can connect to acommunicationsnetworkviaahuborcentralinterface(ordirectly)andcanbecontrolledremotelyor set to be controlled automatically based on user preferences and sensor inputs. Following thisdefinition,smarthomedevices includebutarenot limitedtodemandresponseenableddevices.Aconnectedthermostatthatcanbecontrolledviaanapplicationonasmartphoneisanexampleofasmart home device. This smart thermostat can be controlled remotely by householdmembers orpotentially be controlled by an energy provider in certain circumstances to reduce peak powerdemand.Asmarthomesystemconsistsofmultipledevicesthatcanbecontrolledviaonehuborinterface.Asmarthomesystemcanencompassmultipleservicesorbededicatedtoasingleservicecategorye.g.smart lightingsystemor smart security system.Smart home technologies encompass smarthomedevicesandsystems,andothersupportingorenablingtechnologies.

A smart home isa residence thathasa system(composedofa rangeof smartdevices)or severalsystems thatarenetwork connected, and canbe controlled remotelyorautomated. Smarthomescan provide a range of services such as enhanced entertainment (e.g. a smart TV, streaming andaudio system) and security (e.g. a system of cameras, sensors, controls and locks) and energyefficiency(e.g.ahomeenergymanagementsystem).


Anenergysmarthomedeviceisadevicethatisconnectedandcontrollableandcanenableenergysavingsorotherenergy systembenefits.Examplesofenergy smarthomedevicesandsystemsaresmart meters, controls (for heating, ventilation, cooling, lighting, windows, shading), network-connectedlighting,homemanagementsystemsandenergystoragesystems.Ahomeenergymanagementsystem (HEMS)comprisessmartconnecteddevices thatcanprovideinformationon,anddynamicallyadjust,energyusewithinahome.Energyproviderisatermusedtoencompassenergyutilitiesandenergyretailers.Smart gridsare networks that intelligently monitor and manage the transport of electricity fromgeneration sources to meet the varying electricity demands of end users. In this report, focus isplacedexclusivelyon smart electricity grids. Smart gas systems, smartdistrict heatingother smartenergysystemsarenotcovered.Afurtherglossaryisprovidedearlierinthisreport.


1 What are smart homes?

A smart home is a residence that has a system (composed of a range of smart homedevices) orseveralsystemsthatarenetworkconnectedandcanbecontrolledremotelyorautomated.Itenablesthecontrolandautomationoflighting,heating,ventilation,airconditioning,andsecurity,aswellashomeappliancessuchaswasher/dryers,ovens,refrigerators/freezersandhomeelectronicssuchasTVsandstreamingdevices.Smarthomescandeliverarangeofservicesandbenefitstohouseholds:

• Energymanagement(energyefficiency)• Demandresponse(contributetoregulatingenergydemand)• Electricitygeneration,storageanddeliverytothegrid• Comfortenhancement• Security• Entertainment• Householdmanagemente.g.helpwithorderinggroceriesorplanningotherchores• Specialisedservicessuchaswellnessorhealthmanagement• Assistedliving.

Table1Typicalsmarthometechnologyfeatures

Networkconnectivity usenetworkstosenddatatoandreceivedatafromhouseholdmembers,otherdevicesandotherentitiessuchasenergyproviders

Automation canbesettoturnon,turndownoradjustinresponsetopre-setsettingsorlearningbasedonhouseholdpreferences

Contextawareness canviasensorsandothertechnologiesrecognisehouseholdmembersandsituationalcontexts

Adaptiveness canchangesettingsorofferingsinresponsetohouseholdmembersInteractive providealertsandnotifications,canbevoicecontrolledRemotecontrollability

canbecontrolledremotelybyuseofnetworkconnectionviae.g.asmartphoneortablet

Abilitytobepersonalised

canbetailoredtoneedsanddesires

Anticipation cananticipatedesiresorneedswithoutconsciousmeditationSource:ACEEE(2014)Thereisnostandardset-upforasmarthome.Thetypesofdevicesandthesystemorsystemswithinasmarthomewillvarydependingontheneedsanddesiresofthehouseholdandcanchangeovertimeasdevicesareremovedfromoraddedtothesystem.


Figure1Illustrationofasmarthome

Smarthomesystemsgenerallyconsistofsensorsandswitchesconnectedtoahub(sometimescalleda gateway) fromwhich the system is controlled with a user interface via wall-mounted terminal,mobilephoneorcomputer,oftenviainternetcloudservices.


Figure2Simplifiedillustrationofcloudservicesforsmarthomes

Note: The cloud can provide a range of services including processing power for smart devices andsystems,relayingdatabetweendevicesandstoringdata.Currentlyavailablesmarthomeenergymanagementtechnologiesincludesmartthermostats,smartplugs, connected lightbulbs or smart lighting systems, smart appliances, energy-use displays andsmarthomemanagement systems. In termsof energy management, smart homes offer a rangeoffunctions such as near real time3energy use information, enhanced feedback on energy use andadvancedorautomatedcontrol(Hargreavesetal.,2015).Thereareanumberofwayssmarthometechnologies can help improve energy efficiency. Technologies can provide households withinformation about energy consumption to prompt changes in behaviour or can via automationcontrol settings todelivercomfortandconvenience inanenergyefficientmanner. It ispossible tosetupsmarthomeswithoutmuchconsiderationof thewiderenergysystem. Insuchaset-up, thesmart home receives electricity (and gas) from energy providers and delivers benefits to thehouseholdintheformofincreasedcomfort,controllabilityandsomeenergysavings.Smarthometechnologiescanbeutilisedtomakesmarthomesintegratedandactiveparticipantsintheenergysystem.Inthissetup,thesmarthomereceivespartofitsenergyrequirementfromthegrid, uses in-home renewable energy generation and energy storage to lower its need for gridelectricityandassociatedcosts,andoptimisesenergyconsumptionbyenablingsmartappliancestorunautomaticallyatappropriatetimes.Furthermore,thehouseholdcansellexcesselectricitytothegrid and provide demand response services to further lower its energy expenses or generateadditionalhouseholdrevenue.Thelatterset-updeliversmorebenefitstothehouseholdintermsofabroadersetofenergymanagementoptionsandabetterreturnoninvestment.Itcontributestotheenergy systemby supporting grid stability, reducing theneed for additional large-scale generationcapacity,andincreasingtheuseofrenewableenergy.

3Nearrealtimereferstodatacollectedandcommunicatedinspecificintervals.Thedurationofintervalsvariesfordifferentbrandsandtechnologiesandcanrangefrom15minutesormoretomereseconds.


Figure3Illustrationofasmarthomeaspartofthewiderenergysystem

Box2Arenetzeroenergyhomessmart?

Anetornearzeroenergyhomeisahighlyenergyefficienthomethatproducesasmuchrenewableenergyon-siteasitconsumes(onanannualbasis).Netzeroenergyhomeshaveverylowenergyconsumptionowingtotheirdesignandthematerialsandtechnologiesused.Theyaretypicallywellinsulatedanduseavarietyofmethodstoreduceenergydemandandhavehighlyefficientequipmentandappliances.Itispossibletoachievenetzeroenergyusingbothnewconstructionandretrofittingofexistingbuildings.Netzeroenergyhomesaretypicallyconnectedtotheelectricitygridandpurchaseelectricityfromthegridwhenon-sitegenerationorstorageisinsufficient.Incasesofover-supply,theelectricitycanbestoredortransmittedtothegrid.Homesthatproducemoreenergythantheyuseareknownasenergy-plusbuildings.Smarthomescouldbenetzeroenergyorevenenergy-plushomes,butasmarthomedoesnotnecessarilyentailanetzeroenergyhomeandviceversa.Thedefinitionusedinthisreportdoesnotmake“smart”conditionalonenergyefficiency,consequently,smarthomescanbeinefficient(netzeroenergyhomestypicallyhavetobeveryenergyefficient).Someofthesmarthometechnologiesdescribedinthisreport(e.g.smartmetersandhomeenergymanagementsystems)areintegralorbeneficialelementsofnetzeroenergyhomes.Promotionoftheuptakeofsmarthometechnologiescouldbeameanstoachievingnetzeroenergyhomedeploymentpolicyobjectives. Smarthometechnologiesareevolving.Currenttrendsincludeintegrationofvoicecontrol,artificialintelligenceandmachine-to-machinelearning.Thedevelopmentandintegrationofthesetechnologieswillmakeiteasierforuserstointeractwiththeirdevicesandsystemsandwillenabledevicesandsystemstobetteradapttohouseholdbehaviour,needsandpreferences.Ofparticular


interestintermsofenergyefficiencyaredevelopmentsinenergyawareness.Energyawarenessenablesenergyusedataofindividualdevicestobemadeavailablebythedevicesthemselves,whichcanopenupopportunitiesfornewenergyefficiencyactions,aswellasnewwaysofmeasuringenergyuseanddevelopingpolicies(EDNA,2016c).Theuseofgeo-fencing(creatingavirtualcirculararea,orfence,aroundthehome)toaddressstandbyenergyconsumptionandotherplugloads(i.e.byautomaticallyturningeverythingoffonceoccupantshaveleftthehome)couldalsohavesignificantimpactsonreducingenergyuse.


2 Technology pathway

Toaccessthefullrangeofenergybenefitsofsmarthomesatanindividualhouseholdlevel,andonanenergysystemlevel,anumberofelementsarerequired-frompurchasetoinstallationofdevicestocombiningtheminafunctioningsystemtoconnectingthissystemwiththewiderelectricitysystem.Inturn,therearetechnologicalandmarketchangesthatneedtobemadetoenabletheenergysystemtointeractwithsmarthomes.Thisisnotalinearpathwayandstepsalongthewayareaffectedbywhetherotherelementsareinplace.Notallelementsmaybeessential,however,thepotentialenergybenefitsgenerallyincreaseasmoreofthesearefulfilled.Table2liststheelementsthatareconsiderednecessary.Table2Smarthometechnologypathway

ElementRequired-“WhatHastoHappen”

Description Status

UptakeofsmarthometechnologiesSmarthomedevices

Smarthomedevicesincludeappliancesandlightingwhicharenetwork-connectedandhavetheabilitytoadjusttheirownenergyusageinresponsetoremotecommands.Theymightalsoreporttheirownenergyconsumption.

Limiteduptake-withforecastsofgrowinguptake.Developmentsneededintermsofinteroperabilityandplugandplaycapabilities.

Sensorsandcontrols

Asmarthomewillrequireanumberofdevicestoprovideinformationaboutambientconditions,userbehaviour,etc.Actuatorsforthingssuchaswindowshadingcanalsobeincludedinthiscategory.

Limiteduptake-withforecastsofgrowinguptake.Furtherdevelopmentsinmergingsystemsanddevelopingintegratedsolutionsareneeded,aswellasimprovedbatterylifeforsensors.

HomeEnergyManagementSystems(HEMS)

TheHEMSistheinterfaceforallindividualappliancesandequipmentandtypicallyincludessomeformofvisualfeedbackfortheconsumer.Itmayalsoincludeaconnectiontothecloud.Itshouldideallyalsorecordtheenergyconsumptionofallend-usedevicesinthehome,enablecontrolofdevicesandbeabletoquantifyenergysavings.Tooperate(andcontinuetooperate)theHEMSsystemmustbecommissionedappropriately(easilyandpreferablyautomatically-“plugandplay”).Itmustalsobeeasytooperate.

Limiteduptake-withforecastsofgrowinguptake.Developmentneededintermsofinteroperabilityandplugandplaycapabilities.



Description Status

Developmentoffullinteroperabilityofsmarthomeappliances,sensorsandcontrolswithHEMS

FortheHEMStoeffectivelymanageenergydemandinthehome,allappliances,lightingandotherdevices(includingthosefromdifferentmanufacturers)mustbeabletocommunicatewitheachothereffectively,andwiththeHEMS.

Progressisunderwaybutmoreworkisneededtoensureinteroperabilityandtodevelopsolutionsthatenablealreadydeployedtechnologiestointeractwithnewdevicesandsystems.4

OptimisationanduseofHEMS

Whilesomeresponsesmaybefullyautomated,inmanycasesconsumerswillneedtoactoninformationprovidedbytheHEMSinordertobenefit.

Experienceindicatesthatconsumerstendtoloseinterestafteraperiodoftime.Technologydevelopmentisneededtoprovideautomationsolutionsthatsuitconsumerneeds.

DeploymentofsmartgridelementsDevelopmentofsmartgridcapability

Energynetworksthatcanintelligentlyintegratethebehaviourandactionsofallusersconnectedtothem-generators,consumersandthosethatdoboth–inordertoforecastdemandandefficientlydeliversustainable,economicandsecureelectricitysupply.

Progressandinvestmentsareunderwaybutmoreinvestmentsareneededasisthefurtherdevelopmentofstandards,methodologies,enablingtechnologiesandregulations.

Installationofsmartmeters

Smartmetersallowthereal-timeremotemonitoringofhouseholdenergyconsumption/demandandenablemoreaccuratedemandforecasting.Smartmeterscanenableadvanceddemandresponseandnetmeteringtoencouragehomeenergygenerationandstorage.

Deploymentisunderwaywithmanycountrieshavingambitiousroll-outtargets.Someofthealreadydeployedsmartmetersarenotsuitableforsmartgriddevelopment.

Developmentoffullinteroperabilitybetweensmartmeters,smarthomedevicesandHEMS

Smartmetersprovidetheinterfacebetweenthehousehold(HEMS)andtheenergyprovider.

Progressisunderwaybutmoreworkisneededtoensureinteroperabilityandtodevelopsolutionsthatenablealreadydeployedtechnologiestointeractwithnewdevicesandsystems.

4Currently, machine to machine communication in smart home environments is limited. The majority ofexistingsmarthomedevicesandsystemsrelyuponcloudservicesinthemiddle.Effortsareunderwaytohavetheseservicescommunicatingbetweeneachother(mainlythroughtranslationplatformsbetweenprotocols),ortobuildmetaservicesuponexistingones.Furtherdevelopmentsthatwouldenablesmarthomedevicesandsystemstocommunicatedirectlywitheachothercouldhavebenefitsintermsoffunctionalityofsystemsandenergysavingse.g.byreducingtheneedforcloudbasedcommunication.



Description Status

Renewablein-homeenergygeneration

In-homegeneration(e.g.photovoltaiccellsorfuelcells)allowsconsumerstouserenewableelectricitywhenavailable,storeexcesswhennotneededorsellexcesselectricitytothegrid.Thisrequiresagridwithatwo-waycommunicationandtransmissioncapacityandfeed-intariffs.

Deploymentisincreasingandpricesarereducing.Furtherdevelopmentisneededintermsofsolutionsformulti-tenantbuildings.

Homeenergystorage

Energystoragecapacitymaybeprovidedbybatteriesorotherstoragetechnologies.

Newsolutionsarebeingdeveloped,deploymentisincreasinginsomesegments,pricesarereducing.Furtherdevelopmentofsolutionsisneededformulti-tenantbuildingsandhousingareas

Electricvehicle(s) Electricvehiclescanbeusedasstorageforenergygeneratedin-houseorfromthegridwhenotherdemandislow.

Uptakeisincreasing(butisstillmarginal),anumberofcountrieshaveambitiousplans.Requiressignificantcharginginfrastructure.

CreationofsmartelectricitymarketsEstablishmentofdynamicpricingforenergy

Pricingthatrewardsconsumersforreducingdemandattimesofpeaksystemloadortoachieveoptimalsystembalancing.

Limitedtoafewlocations.Enablingconditionsneedtobeestablished.

Establishmentofflexibilitymarkets

Flexibilitymarketsenableotheractorssuchasaggregatorstobecomeinvolvedindemandresponse,providingservicestoenergyprovidersandaddedvaluetoconsumers.

Limitedtoafewpilotprojects.Furtherdevelopmentisneededintermsofenablingtechnologiesandconditions.

UseofsmarthomeenableddemandresponseDemandresponsereadydevicesandappliances

Appliancesthatcanbeautomaticallycontrolledbyenergyproviders.

Limitedbutuptakeisprojectedtoincrease.

Establishmentofdemandresponseprogrammes

Energyprovidersgiveincentivestoconsumerstoreduceorshiftenergyuse(canalsowithconsumeragreementbedoneautomatically).

Limitedtoafewlocationsandafewpilotprojects.Ingeneral,programmesshowpositiveresults.

Householdsengageindemandresponsee.g.respondtotariffsignalsorotherincentives

Thesystemforenablinghouseholdstoengageinthemarketneedstobesimple,userfriendlyandtherewardsneedtobesufficientlyattractivetomaintainconsumerinterest.

Pilotsarestartingtoprovidelearningtoenabledevelopmentofsystemsandmechanismstoeffectivelyengageconsumers.Moredevelopmentisneeded.

Sources:IEA(2017a),IEA(2017b),IEA(2016c),IEA(2017d),Eurelectric(2017)


2.1 Current smart home technology uptake and forecasts Smarthometechnologyadoptionhasbeenslowtogaintractionamongconsumers(PWC,2017).However,salesareontheincrease.In2016,eightymillionsmarthomedevicesweredeliveredglobally–up64%comparedto2015,130milliondeviceswereprojectedtobedeliveredin2017(IHSMarkit,2016)5.Itisforecastthatglobalshipmentsofsmarthomedeviceswillreach1.4billionunitsby2021(Ovum,2017).6Intermsofsmartmajorhomeappliances(washingmachines,clothesdryers,dishwashers,refrigerators,roomair-conditioners,andlargecookingappliances),theglobalmarketisexpectedtogrowfromaround1millionunitssoldin2014to223millionunitsby2020i.e.470millionunitsdeployedbetween2015and2020.Thepenetrationoftheseappliancesisprojectedtogrowfromanestimated0.2%in2014to31.3%in2020,withthatofsmartroomair-conditionersreaching52%andsmartwashingmachines42%in2020(IHSinEC,2017a).7EuropeInEurope8,attheendof2014,anestimatedtotalof3.3millionsmarthomesystemsanddeviceswereinuse,upfrom1.75millioninthepreviousyear.Itisassessedthat,around0.34millionofthesesystemswerewhole-homesystemswhereas2.93millionweresmarthomedevices.Takingintoconsiderationoverlaps(somehomesmayhavemorethanonesystem),thiscorrespondstoaround2.7millionsmarthomes(1.2%ofallhouseholdsinthisregion)(BergInsight,2017).AEuropean9surveycarriedoutin2017,indicatesthat13%ofhouseholdsexpecttohaveasmarthomewithin12months,comparedto10%in2016.(Context,2017).Forecastsindicatethattherewillbe29.7millionsmarthomesinEuropeby2019(BergInsight,2017).Intermsofspecifictechnologies-theinstalledbaseofsmartthermostatsinEuropewas2.3millionin2016andisexpectedtoreach13.6millionhomesby2019and34.7millionby2021(BergInsight,2017).ThepenetrationofHomeEnergymanagementSystems(HEMS)isprojectedtorisefrom2%ofhomesin2014to40%by2034(WaideStrategicEfficiency,2014).NorthAmericaIntheUS,in2015,penetrationofsmarthomedeviceswasalmost19%androsetoalmost25%in2016.Thenumberofsmarthomedevicesinoperationwasassessedtobe294millionunitsin2015andexpectedtoriseto1billionin2016.Forecastsindicatethatby2021,69%ofUShomeswillbesmart(Ovum,2017).Around28%ofconsumersinCanadacurrentlyownsmarthomedevices(Nielsen,2016)andtheshareofsmarthomesisexpectedtogrowto54%by2021(Ovum,2017).Intermsofspecifictechnologies-USsalesofsmartthermostatsgrewfrom2millionunitsin2013to5millionunitsin2015(ACEEE,2017a).Forecastsindicatethatby2019,therewillbe24.6millionhomeshavingsmartthermostatsintheUSand43.4millionby2021(BergInsight,2017).Currently5%ofUShomeshavesometypeofhomeenergymanagementsystem(ACEEE,2017a).

5Itshouldbenotedthatinthecontextofsalesfigures,smarthomedevicesincludedevicesthatarenotintendedforenergymanagementordemandresponsesuchassmartTVs.6Definitionsofwhatisasmarthomedeviceandwhataresmarthomesvaryandarenotalwaysexplicitinmarketstudiesandforecasts,consequentlydatafromdifferentsourcesisnotdirectlycomparable.7Thiscategoryencompassesappliancesthatcanconnecttonetworks,informationontheshareoftheseappliancesthatisdemandresponseenabledisnotavailable8EU28+29BasedonsurveysinUK,France,Germany,Italy,Spain,Sweden,Netherlands,RussiaandTurkey


AsiaPacificItisestimatedthatthereare3.2millionsmarthomesinChina,expectedtogrowto29.5millionby2021(Statista,2017).Forecastsindicatethatsmarthomepenetrationcouldreach48%inSouthKoreaand41%inJapanby2021(Ovum,2017).Penetrationcouldreach100%inJapanby2030ifthegovernmentsuniversalHEMSadoptiontargetismet(METI,2015).InAustralia,in2016,29%ofhouseholdshadatleastonesmarthomedevice,by2017itisexpectedthatthenumberofhouseholdswithsmarthomedeviceswillincreaseto40%.By2021,Australianhouseholdscouldhaveanaverageofmorethan30internet-connecteddevices,14ofwhichwouldbesmarthomedevices(Telsyte,2017).

2.2 Drivers and motivators for smart home technology uptake Surveysindicatethatenergysavingsarenotnecessarilyastrongmotivatorforsmartdevicepurchases.One2016surveyintheUSliststhetopthreebenefitsofdeviceinterconnectivity:makinglifeeasier(71%);offeringconvenience(42%);andentertainment(30%)(PlumChoiceandZ-WaveAlliance,2016).Thissurveyshowedthatwhilein2015energyandresourceefficiencywaslistedasatopmotivator,itwasreplacedbyotherconsiderationsin2016.AnotherUSsurveyfoundthatonefourcurrentsmarthomeusers(26%)saytheyboughttheirfirstdevicetoeitherincreaseoverallconvenience,improvetheirqualityoflife,orhelpthembemoreproductive.Meanwhile,10%wantedtomaketheirhomesafer,andanother10%citedaffordability(PWC,2017).Only6%ofcurrentsmarthomedeviceusersrankedenergysavingsasamotivatorforpurchase(PWC,2017)10.

2.3 Status and forecast of smart grid capabilities Smartgridsarenetworksthatintelligentlymonitorandmanagethetransportofelectricityfromallgenerationsourcestomeetthevaryingelectricitydemandsofendusers.Smartgridsusethetwo-wayflowofelectricityandinformationtooptimisegeneration,transmission,distributionandmanagementofdemand.AccordingtotheIEA,thewidespreaddeploymentofsmartgridsiscrucialtoachievingamoresecureandsustainableenergyfuturethroughaddressingcurrentconcernswithexistingelectricitysystems,suchasageinginfrastructureandincreasingpeakdemand.ICTtechnologiescanincreasetheefficiencyofoperatingthegrid,counteractnetworkcongestionandcandeferoravoidtheneedtoinvestinnewtransmission(IEA,2016).Furthermore,smartgridsareanimportantelementforexpandingtheuseoflow-carbontechnologies,includingelectricvehiclesandrenewables(IEA,2017b).Theextentandrateofsmartgriddeploymentdependsonlocalcommercialattractiveness,compatibilitywithexistingtechnologies,regulatorydevelopmentsandinvestmentframeworks(IEA,2017b).Elementsofsmartgridsinclude:

• SensorsandICTthatmonitorgeneration,andtransmissionanddistributionlines.• SensorsandICTthatcollectandprocessdatatoforecastdemand.• Smartmetersthatenablethecollectionofnearreal-timedata.• Demandresponsetechnologiesandprogrammesthatenableend-userstosupportthe

electricitysystembyshiftingorreducingdemand.• Dynamictariffsthatprovideincentivestoconsumerstoparticipateindemandresponse.• Distributed(includingin-home)renewablesgeneration.• Energystorage.• Electricvehicles.

10However,respondentsnotowningasmarthomedeviceawardedsignificantimportancetoenergysavingsasamotivator(53%veryimpactful,33%impactful)(PWC,2017).


Aspectsofparticularrelevancetosmarthomesincludesmartmeters,demandresponseandincentives(includingenablingmarketframeworks),in-homerenewables,storageandelectricvehicles.SmartmetersThediffusionofadvancedmeteringsystemsvariesaroundtheworld.Chinahasmoreinstalledsmartmetersthantherestoftheworldcombined:about70%ofhouseholdsarealreadyconnectedtoasmartmeter,andChinaiscommittedtoafullcoverageinthecomingyears(IEA,2016).Theshareinotherregionsislower,butitisincreasingfast,withmanygovernmentshavingsetatargetofreachingfullcoveragewithinthenextfewyears.IntheEuropeanUnion,thetargetdateis2022,buttheaverageshareremainslow(around15%today)–althoughItalyandSwedenhavecurrentadoptionratesofover90%(SEDC,2015).AccordingtotheestimationsmadebytheEuropeanCommission,200millionsmartmetersforelectricitywillbeinstalledby2020,representingapproximately72%ofallEuropeanconsumers(EC,2017a).TheUShasanadoptionrateof40%(IEA,2016).DemandresponseDemandresponseisastrategythatisusedtogetelectricityconsumerstoreducetheirconsumptionattimeswhenelectricitysupplyisconstrained.Beyondsmartmeterrollout,technologiesandmechanismsareneededtoenabledemandresponse.Consumptionrecords,dataprocessingandbillingproceduresneedtobeputinplacewhichrequiresinvestmentininformationtechnologyinfrastructure.Manysmartmetersaremostlynotabletodynamicallyidentifyaparticulartime,orsetcertainhoursascriticalandadditionalenergymanagementsystemshavetobedevelopedandintegrated(Eurelectric,2017).Theuseofdemandresponsetargetingtheresidentialsectorisstillrelativelylimited,thoughanumberofprogrammes(notablyintheUS)exist,residentialdemandresponsehasbeenpilotedinseveralcountries(e.g.UK,Belgium,theNetherlands),somejurisdictions(e.g.Australia)havestartedusingautomatedresidentialdemandresponse(i.e.agreementswithcustomersthattheenergyprovidercanautomaticallyadjustdevicestomanagepeakdemand).Box3End-usesmostsuitablefordemandresponse

• Space heating and cooling which can be shifted over a certain number of hours, the extentdependingon the thermal insulationof thebuilding– thebetter the insulation, the longer theperiodofshiftindemand.

• Water heating, most households in cold climates that use electricity tomeet their hot waterneedsareequippedwithastoragetank,sowatercanbewarmedafewhoursbeforeitisused.

• Largeappliances:o Cleaningappliances(washingmachines,dishwashersanddryers)canberunatanyme

ofthedayo Refrigerators can be turned off for short periods, with no loss of service by taking

advantageoftheirthermalinertia(IEA,2016).ElectricitymarketdevelopmentFordemandresponse,tariffstructuresareatooltoimprovecustomerawarenessandresponsiveness.Dynamictime-basedtariffsvaryduringtimeofdayandseasonstoreflecttheactualcostofelectricity(IEA,2016).Integratinghomeenergymanagementsystemswithdynamictariffscanfacilitatedemandmanagementbyautomatingresponsestothesetariffs.Studiesshowthatpeakdemandreductionis60%to200%greaterfordynamictariffswithautomationcomparedtothosewithout(BPIE,2017b).


Theuseofdynamicpricingisstilllimited.Thenumberofcustomersondynamicpricingratesgloballyisexpectedtoincreasefromaround3.4milliontodayto113.3millionin2025(ACEEE,2017b).IntheUS,lessthan5%ofhouseholdshaveaccesstodynamictariffs(IEA,2016).Astrategyforrealisingalargershareofdemandresponsepotentialistoenableconsumerstoparticipateinthemarketviaaggregateserviceproviders.Aggregatorscombinetheflexibilityfrommultiplecustomerstoprovidebalancingservicestothegridbyadjustingpowerdemandand/orshiftingloadsatshortnotice.Theaggregatedload-reductioncanbesoldtothemarketsorenergyprovider(IEA,2016).Aggregatorscanplayanimportantroleasintermediariesbetweencustomergroupsandtheelectricitymarket,andcantakechargeofmanagingtheprocess,withtheconsentofcustomers(BPIE,2017b).In-homerenewablesgeneration,energystorage,electricvehiclesInasmarthomecontext,rooftopphotovoltaicsolar(PV)isthemostprevalentformofin-homerenewableenergygeneration.Theunitcostofsmall-scalePVhasdroppedbyafactoroffoursince2008(IEA,2017d).From2008tomid-2016,residentialPVelectricitysystempricesfellbyover80%inmostcompetitivemarkets(JRC,2016).In2016,photovoltaiccapacityincreasedbyatleast75GW,witha50%growthyear-on-yearofnewinstallations.Thecumulativeinstalledcapacityreachedatleast302GWbytheendoftheyear,sufficienttosupply1.8percentoftheworld'stotalelectricityconsumption(IEA,2016).ThetheoreticalpotentialofrooftopPVishuge.Forexample,intheUSthetheoreticalpotentialofrooftop(alltypesofbuildings)PVisintheregion1.1TWofelectricalpowerand1432TWhofannualenergygeneration(NREL,2016).Energystoragecanenableconsumerstomoreeffectivelyutilisetheirin-homerenewables.Theunitcostforbatterystoragehasfallenby85%since2008(IEA,2017d).Estimatesindicate,thattheglobalmarketforresidentialenergystoragesystemscouldexperiencegrowthintheregionof3to10GWhin2020and6to15GWhin2025(EC,2017a).Withrapidelectricvehicleadoptionaroundtheworld,powergridsarefacinganewproblem,astheywerenotdesignedtosupportthisnewtypeofuncontrolledload,whichcancausepowerqualityissues(IEA,2017c).Smarthomescanhelpenergyprovidersmanagechargingbymakingsurethatchargingdoesnotaddtopeakloadstressonthegrid.Smarthomesequippedwithrenewablescanuseelectricvehiclesasstorageforrenewableelectricity(e.g.byautomatingchargingwhenrenewableenergygenerationishigh).EVscanalsobeusedasstorageenablingthehometodrawpowerfromthevehiclewhenrenewablesdonotcoverthehome´senergydemand.Theenergystoredinvehiclebatteriescouldalso(forcompensation)bereturnedtothepowergridattimesofincreasedenergydemand.Thenumberofelectriccarsontheroadsgloballyroseto2millionin2016.Itisestimatedthatbetween9and20millionelectriccarscouldbedeployedby2020,andbetween40and70millionby2025.InNorway,electriccarshada29%marketsharelastyear,followedbytheNetherlandswith6.4%,andSwedenwith3.4%.Globally,electriccarsmakeuponly0.2%ofthetotalfleet(IEA,2017c).


3 Energy savings potential and other energy system benefits

Smarthomescanenablesignificantenergysavingsandcontributetowiderenergysystembenefits.Smartenergymanagementcanprovideuserswithinformationaboutreal-timedevice-levelconsumption,andviasensorsandautomationprovidecomfortandenergysavingsaswellasavarietyofalerts,promptsorenergysavingssuggestions.Advancedset-upswithlearningandenergysavingsalgorithmscanadapttouserneedsandpatternsandprovideservicessuchaslighting,coolingorheatingwhenneeded,whileautomaticallymakingadjustmentstosaveenergywhenpossible.Whencombinedwithhome-generatedrenewablesandenergystorageorelectricvehicles,smarthomescanprovidehouseholdswithadditionalbenefitsintermsofsavinggrid-purchasedenergy.Whensmarthomesareconnectedtotheenergysystemtheycanprovidevalueintermsofmanagementofpeakdemand,bettersupplyanddemandbalance,andrelatedbenefits(IBE,2012;IEA,2017).

3.1 residential energy efficiency benefits Todate,onlyalimitednumberoffieldstudiesandothertypesofassessmenthavesoughttoquantifythebenefitsofsmarthomes.Intermsofenergysavingsachieved,theresultsfromfieldstudiesvary.Thesevariationsarelargelyduetodifferencesintheset-upofsmarthomes,i.e.whichtechnologiesareusedandhowtheyinteractandthelevelofautomationused,differencesinexternalconditionse.g.climatezoneanddifferencesinhowefficientthehomewastobeginwith.Themethodologiesusedinfieldstudiesandothertypesofstudiesvary.Somestudiesalsoindicatealackofpersistenceinregardtosomeofthesavings(e.g.vanDam,2013).Lackofpersistenceistypicalforset-upsthatrequireuserstotakeanactiveroleinmanagingenergyuse-automatedsystemsdonotsufferfromthisproblem.Thenetenergysavingsofasmarthomewilldependonarangeoffactors:

• Thesmarthomedevices–howmuchelectricitytheyuseindifferentpowermodesandtheintervalsatwhichtheypowerdown.

• Thesmarthomesystem(s)–theinfluenceofcontrollingdevicesintermsofturningonoroffotherdevices,makingthemoperatemoreorlessefficiently.

• Thelevelofautomationandthepremisesbehindautomation–whetherenergyefficiencyisapriorityandtherearerobustalgorithmstoensureenergyefficiencyindifferentsituationsorwhether automation is basedonuserpreferenceswithnoormarginal considerationofenergyefficiency.

• User behaviour –whether the user looks at energymonitoring information, whether theuserusesthisinformationtochangesettingsorchangebehaviour.

Asingledevicewithenergysavingcapabilitiescanalreadyprovidesomesavingsopportunities,whileamanagementsystemcanprovidegreatersavingsbycoordinatinglighting,shading,ventilationandheatingorcooling.Sinceseveraltechnologiesaddressthesameenergyend-use(e.g.,connectedthermostatsandsmartzoningbothaffectheatingventilationandcooling(HVAC)energyconsumption),thecombinedsavingspotentialislessthantheirsumbutadditionalsavingsandbenefitscanbeachievedbyintelligentlycoordinatingtechnologies.


Table3Energysavingsbenefitsofsmarthometechnologies

Technology Benefit EnergysavingsrangeSmartthermostat Heatingandcoolingcanbeswitchedonandoff

remotelyandthetemperatureadjustedupanddown

5-10%forheating(Fraunhofer,2016)8-16%forcooling(Fraunhofer,2016)2-16%electricity(NEEP,2015)5-22%gas(NEEP,2015)

Smartzoning Allowsindividualroomsorzonestobeheatedorcooledtoaspecifictemperature,ataspecifictimeofday

10%forheatingorcooling(Fraunhofer,2016)

Smartwindowcontrol

Controlstheamountoflightletthroughandcanblockheatorcold

11-20%ofheatingorcooling(Fraunhofer,2016)

Occupancybasedlighting

Sensorsmonitorroomoccupancyandturnonlightingwhenneededandturnitoffwhenroomsareempty

30-41%oflightingenergyuse(Fraunhofer,2016)

Smartlighting Lightingthatcanbecontrolledremotely,automated,reactstooccupancy

1-10%11ofwholehomeenergyuse(NEEP,2015)

Smartplugs Turnanunconnectedproductintoaconnectedone,enablingcustomerstoreceivesomeofthefunctionalitiesofferedbysmartapplianceswithexisting,traditionalappliancesatamuchlowercost

1-4.6%ofwholehomeenergyuse(NEEP,2015)

Homeenergymonitoringsystem

Providesenergyconsumerswithinformationabouthowtheyuseenergyinthehomeand/orpromptstomodifyconsumption.

4-7%ofwholehomeenergyuse(PG&E,2015)

Energyportal Atypeofhomeenergymonitoringsystemthatislinkedtoaweb-basedplatformwhichprovidesinformationonenergyuseandsuggestionsonhowtoimproveefficiency.

5.7%-7.4%electricity(NEEP,2015)5.7%-13%gas(NEEP,2015)

Homeenergymonitoringsystem(display)plusdynamicpricing

Providesenergyconsumerswithinformationabouthowtheyuseenergyinthehomeand/orpromptstomodifyconsumptionconnectedtoademandresponseprogrammethatgivesincentiveviaelectricitytariffstoreduceenergyuse.

8-22%electricity(NEEP,2015)8-22%gas(NEEP,2015)

Homeenergymanagementsystem

Providesthehousehold(orthirdparties)theabilitytocontrolenergy-consumingprocessesinthehome,eitherremotelyviaasmartphoneorwebserviceorbasedonasetofrules,whichcanbescheduledoroptimisedbasedonuserbehaviour.

7.8%12ofwholehomeenergyuse(vanDam,2013)20%ofwholehomeenergyuse(Bhatietal.,2017)

Smarthome Combinationofsmarthometechnologiesthatprovidemeasurement,monitoring,informationdisplays,management,control,automation,zoning,occupancysystems,etc.

27%ofwholehomeenergyuse(BPIE,2017a)

Smarthomeenabledenergysavingscouldbeintheregionof20-30%ofhouseholdenergyuse.Astechnologiesareoptimised,developedandlinkedwiththeimplementationoffurtherenergyefficiencyopportunitiesinhomestheenergysavingspotentialcouldincrease.Asanillustration,thepotentialenergysavingsintheUKcouldbemorethan3Mtoeperyearwithasmarthomepenetrationshareof30%.Correspondingly,savingsinJapancouldbeintheregionof2.6-3.9Mtoe

11Thelowerendoftherangeshowssavingsincaseswherethehomealreadyhasefficientlightingandthehigherendshowssavingsincaseswherethesmartlightingreplacesinefficientlightingproducts12Studyshowssavingsreducingovertime


peryear.EnergysavingsintheUScouldbearound15.7–23.5Mtoeperyearandcouldgrowinexcessof30Mtoewith40%deployment.Figure4PotentialenergysavingsintheUKfromenergyefficientsmarthomedeployment

Source:OwncalculationsbasedonIEAenergybalancedata.TheIEAforecaststhatsmarttechnologiescouldbetween2017and2040lowerenergyconsumptionofthebuildingssectorgloballybyasmuchas10%leadingtocumulativeenergysavingsovertheperiodto2040of65PWh(or5589Mtoe)–equaltomorethanallthetotalfinalenergyconsumedinnon-OECDcountriesin2015(IEA,2017d).

3.2 Benefits in terms of collecting and analyzing data Smarthomeenergymanagementdevicesandsystemsprovidenewopportunitiesforevaluation,measurementandverification.Thiswouldenableidentificationofenergysavingsordemandresponseopportunities,monitoringandprogrammeevaluationatavastlylowercostthantraditionalmethods.Shortintervaldatacanbeusedasatooltoevaluatesavingsfrominstalledmeasureswithgreateraccuracyandtoevaluatesavingsdeliveredthroughenergyefficiencyordemandresponseprogrammes.Analysisofthesedatacanalsohelpidentifyandfixprogrammeissuesmid-cycle(LamoureauxandReeves,2016).Suchdatacouldalsobeusedperformremoteauditstoidentifyopportunitiesforenergyefficiencyanddemandresponse.Suchauditscanidentifypotentialforindividualhomes,aswellascustomizedestimatesoftheenergysavingspotentialandpaybackperiodofretrofits(Fraunhofer,2016).Post-retrofitdatacouldbeusedtoconfirmthattheretrofithadbeensuccessfullycompletedandprovideremoteevaluation,measurementandverification(EM&V)ofactualenergysavingsanddemandreduction(Fraunhofer,2016).Smarthomedatacouldalsobeusedbypolicymakerstogetinformationthatwouldhelpdesignmoreeffectiveenergyefficiencyprogrammessuchasdataontheactualenergyuseofappliances,householdbehaviours,andotherfactorsthatimpactonenergyconsumption.

0.71.5

2.22.9

3.74.4

1.1

2.2

3.3

4.4

5.5

6.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

10% 20% 30% 40% 50% 60%

EnergysavedMtoe

Smarthomedeploymentrate

20%

30%

savingsperhome


3.3 Energy system benefits Smarthomescanprovideawiderangeofbenefitstoenergyprovidersandelectricitysystemoperation.Benefitsinclude:• Accesstodatathatenablesbetterforecastingofdemandtohelpbetterplanandprepareto

meetdemandmoreefficiently.• Moresophisticateddevice-leveldemandresponseandhelpshiftloadsfrompeaktooff-peak

timeswithmoreefficientgenerationorrenewablegenerationsources.• Reductionoftheneedtoinstalladditionalgenerationviademandresponse.• Preventionofsupplyinterruptionsviademandresponse.• Reductionofgridcongestionviademandresponsetherebydecreasinglinelossesand

contributingtoimprovedefficiency.• Facilitatingtheuseandintegrationofin-homeorotherdistributedrenewablesgeneration.• Helpingenergyprovidersmanageimpactondemandbyelectricvehiclesbymakingsurethat

chargingdoesnotaddtopeakloadstressonthegrid.• Providingbalancingservicesbyshiftingoperationandadaptingenergyconsumptiontoshort

termpositiveornegativediscrepanciesbetweenforecastedandrealgenerationbyintermittentrenewableenergysources(IBE,2012;EC,2017a).

3.3.1 Quantification of benefits to energy systems Thereareanumberofsmarthomedemandresponseprogrammesandpilotsthathavebeencarriedoutthatprovidesomeindicationofthepotentialbenefits.However,themagnitudeandvalueofthesebenefitsdependonthesizeofthegrid,energymix,optionsforpeakdemandmanagement,thenumberofsmarthomesandtheextenttowhichsmarthomesparticipateindemandresponse.Benefitsincreasewithincreasedinvolvementofsmarthomesintheenergysystem.Programmesindicatethatevenarelativelylowpenetrationandinvolvementofsmarthomescanprovidevalue.AccordingtotheIEA,inallregions,mostofthecurrentandfuturetechnicalpotentialofdemandresponseatloweroverallcost(upfrontandopportunitycosts)liesinthebuildingssector,especiallyinspaceandwaterheatingandcooling.Assessmentsindicatethat,providedthatallenablingconditionsareinplace,demandresponsecouldbeappliedtoalmostafifthofannualelectricitydemandintheEUandtheUS(IEA,2016c).Globally,about3600TWhofcurrentelectricityconsumptionistechnicallyavailablefordemandresponse,anditisexpectedtodoubleby2040toaround6400TWh,oralmost20%ofelectricityconsumptionworldwide(IEA,2017d).TheIEAforecaststhatby2040,globally,1billionhouseholdscouldactivelyparticipateininterconnectedelectricitysystemsproviding185GWofsystemflexibilitysavingUSD270billionofinvestmentinnewpowerplants(IEA,2017d).ThevolumeofcontrollableloadbysmartappliancesintheEUisestimatedtobeatleast60GW,ofwhich40GWisassessedtobeeconomicallyviable.Theshiftofthisloadfrompeaktimestootherperiodscouldreducepeak-generationintheEUby10%(BertoldiandSerrenho,2017).Ongoingprogrammes,pilotandresearchprojectsconfirmthatsmarthomeenabledpeakreductionscanbesignificant,forexample:• 20%ofelectricitycustomersinCaliforniaparticipateindemand-sideprogrammes,contributing

5%oftotalpeakdemandsavings(IEA,2016c).• InJapan,fourpilotprojectsimplementedbetween2011and2015haveshownpeakreduction

levelsof10%to20%byrelyingonacombinationoftechnologiessuchasHEMS,aswellastime-of-use(TOU)orcritical-peakpricing(CPP)(Bloomberg,2016).


• InSweden,thepeakreductionpotentialofdishwashingandlaundryisbetween150MWto300MWandremainsthesamethroughouttheyear.Expressedasapercentage,thepeakloadinSwedencouldbereducedby1.1–2.3%.(Puranik,2014).

• InGermany,theprojecteTelligenceusedatimeofusetariffwithtwopricelevels(pricespreadof0,26€/kWh)incombinationwithbonus(0€/kWh)andmalusevents(1,2€/kWh)thatwerebasedontheavailabilityofrenewableenergy(announcedday-ahead).Electricitysavingsupto20%incaseofmaluseventsandadditionalelectricityconsumptionupto30%duringbonuseventswereobserved(EC,2017a).

• TheGermanprojectMoMaprojecttestedareal-timepricingtariffwithdailypriceupdates(pricespreadof0,075€/kWh).Theprojectshowedthat,onaverage,adoublinginpriceresultedareductionofdemandofaround10%(EC,2017a).

Thevalueofdemandresponsevariesbutisconsiderable,forexample,intheUS,100hoursofpeakdemandcomprise10-20%ofannualelectricitycosts(ERC,2013).Therearealsopotentialclimatebenefitsofpeakdemandreductionasitcanenabletheretirementofoldergenerationfacilitiesthatarekeptinoperationtocoverpeakdemand.Forexample,intheUS,shuttingdown10%oftheplantsthatarenecessaryonlybecauseofpeakconditionscouldprevent100millionto200millionmetrictonsofgreenhousegasesannually(NDRC,2016).Therearecurrentlynostudiesthatquantifythepotentialcontributionofsmarthomestoavoidanceofsupplyinterruption.However,thecostofblackoutstoenergyprovidersandtoeconomiesisconsiderable.Studiesindicatethatcountriestendtolose1to2percentofGDPgrowthpotentialduetoblackouts,over-investmentinbackupelectricitygenerators,andinefficientuseofresources(UnitedNationsDevelopmentProgramme2010).IntheUS,gridfailurecostsapproximatelyUSD150billionayear(USDepartmentofEnergy,2014).


4 Energy costs of smart homes

Aswithallelectricalappliancesandelectronicdevices,smarthometechnologiesrequireenergythroughouttheirlife-cycle,frommaterialsextractionandmanufacturingtouseanddisposal.Allnetworkconnectedtechnologiesalsocontributetotheenergydemandofnetworks,servers,datacentresandotherICTinfrastructure.Studiesshowthatnetworkconnecteddevices,includingsmarthometechnologies,willberesponsibleforagrowingshareofresidentialenergyuse.Forexample,theIEAassessesthat50%ofhouseholdelectricitydemandforappliancesby2040isexpectedtocomefromconnecteddevices(IEA,2017d).13Thereasonsforthisareseveral:

• Conventionaldeviceswillbereplacedbyconnecteddevices.

• Connecteddevicesgenerallyneedtobeonorathigherpowermodesforextendedperiodsoftimetomaintainconnectivity,increasingtheirenergyconsumption.

• Connecteddevicesoffernew functionsandserviceswhichmay lead to intensifieduseandincreasedenergydemand.

Akeyissueofconcernisthestandbyenergyconsumptionofsmarthomedevices.Tofunction,smarthometechnologiesneedtobeonorathigherpowermodesforextendedperiodsoftimetomaintainconnectivity.Consequently,networkconnectivityiscausingadditionalenergydemand.In2014,theIEAforecastthat,ifleftunchecked,theenergydemandofnetworkconnecteddevicesinhomesandofficescouldgrowfrom616TWh/yearin2013to1140TWh/yearby2025(IEA,2014).Sincethisforecast,policiesandprogrammestoreducenetworkstandbypowerenergyconsumptionhavebeenputinplaceinseveraljurisdictions(e.g.EU,USandSouthKorea).Recentstudiesindicatethatthepowerrequiredfornetworkstandbyhasreducedsignificantlyinmanyproducts.AstudyfocusingoncompliancetoECregulationsonnetworkedstandbymeasuredagamesconsoledrawing0.2watts(W)andavideogamesconsoledrawing0.3Winnetworkstandby,whilea2010modelgamesconsolerequired10W(EDNA,2017b;IEA,2014).Thestudyalsoshowedvariationsintermsofnetworkstandbyforsimilarproducts,forexample,onewirelessBluetoothspeakerrequiring0.9Wwhileanotherrequired5.2W–indicatingthatthereisfurtherscopeforreducingnetworkstandbyinsomeproductcategories(EDNA,2017b).Thereiscurrentlynocomprehensivestudyonthestandbypowerrequirementsandenergyconsumptionofsmarthometechnologies.Consideringthepotentiallylargequantityofsmarthomedevicespersmarthome,networkstandbycouldamounttoaconsiderableenergydemandperhomeandcumulatively.Thereisariskthatincreaseddeploymentofsmarthomeswilloffsetpartoftheenergysavingsthatsmarthometechnologiescanenable.Thefollowingexamplesindicateanorderofmagnitude:

• Smart lighting-standbypowerrangesfrom0.15Wtoover2.71W,potentiallyconsumingasmuchas25kilowatthours(kWh)perlightfixtureorbulb(IEA4E,2016).

• Home automation technologies - globally currently use in the region of 12 TWhwhile instandbyandcouldincreaseto36TWhby2025(EDNA,2016b).

• Networked audio products - global annual energy consumption in the lowest responsivepowermodecouldbealmost11TWhin2018(EDNA,2016a).

13IEAcentralscenario


• Smartappliances(excludinglighting)-couldbesettogloballyuse7TWhannuallyby2025(EDNA,2016b).

• Smart devices (excluding televisions and computers) - the standby power energyconsumption ofmains-connected smart devices is projected to grow to 46 TWhby 2025,with36TWhcomingfromhomeautomation(IEA,2017d).

• Energy storage – may have a high stand-by consumption due to the controllers, powerelectronicsandinternetconnection.Thereisalargespreadinstandbyrequirements:5to80W(averageis30±20W)(EC,2017a).

Smarthomesalsodriveenergyconsumptionbyprovidingnewservices(e.g.,pre-heatinghomesorrunningautomatedsecurityroutines)orbyintensifyingexistingservices(e.g.,audiovisualentertainment).Therearecurrentlynostudiesontheenergyimplicationsofnewservicesornewpatternsofusage.


5 Barriers to implementation

Thereareanumberofbarriershinderingtheuptakeofsmarthomedevicesandsystems.Moststudieslistbarrierssuchas:lackofawarenessorinterest,costs,uncertaintyaroundbenefits,privacyconcerns,cybersecurityconcerns,andtechnologyrisk(e.g.GfK,2016,Houzz,2016,PWC,2017).Inthecontextofenablingaconduciveenvironment,therearealsoarangeofbarriersandgapsincluding:slowrolloutofsmartmeters,smartmetersthatarenotcompatiblewithothersmarttechnologies,absenceofdynamicenergypricing,highshareofelectricitycostbeingfixedcosts,highpriceoftechnologiesfordistributedrenewableenergygeneration,lackoffeed-intariffs,highpriceofelectricvehiclesandlackofcharginginfrastructure.

5.1 Barriers to implementation pathway Ifsmarthomesaretobeintegralplayersinsmartenergysystems,therearearangeofhurdlesthatneedtobeovercome.Asmentionedearlier,thetrajectorytoenergy-savingsmarthomesisnotlinear-partsoftheimplementationneedotherpartstobeinplace.Forexample,thebusinesscaseforconsumerstoinvestinsmarttechnologiesisimprovediftheycanbenefitfromdemandresponseopportunities.Thishoweverrequiressmartmetersanddemandresponseprogrammestobeinplace.Table4liststheknownbarrierstoenergy-savingsmarthomes.Table4Barrierstotheimplementationpathwayofsmarthomes

Elementrequired/Whathastohappen:

Barriersthataffectthis:

UptakeofsmarthometechnologiesInstallationofsmarthomedevices(e.g.smartlighting,smartthermostats)

Costofdevices,lowconsumerawareness,lackofinterest,benefitsareuncleartoconsumers,longreplacementcycles,mistrustoftechnology,cybersecurityconcerns,dataprivacyconcerns,lackoftrustinenergyproviders(fordemandresponseenableddevices)

Installationofsensorsandcontrols

Costs,complexity,lackofinteroperability

Installationofhomeenergymanagementsystem(HEMS)

Costofthesystem,costofservices,unclearwhatthebenefitsareandiftheywillbeachieved,cybersecurityconcerns,dataprivacyconcerns,lackoftrustinproviders,lackofincentives(lackdynamicpricing,lackofdemandresponseprogrammes,lowenergypricesinsomejurisdictions)

Developmentoffullinteroperabilityofsmarthomedevices,sensorsandcontrolswithHEMS

Lackofstandardsandcommunicationprotocolsthatenabledevicesfromdifferentmanufacturerstointeract,mightrequireexternalassistancetosetupthesystems,useoftechnologiesfromdifferentmanufacturersmayleadtoproblemsgettingtechnicalsupport

Commissioningandoperation Costofservices,lackofserviceproviderexpertiseinorinterestinhowtooptimiseforenergyefficiency,lowqualityofservices,insufficientproductsupportservices

OptimisationanduseofHEMS Complexity,lackofinteroperability,lackofuser-friendlyinterface,sometimesneedtouseseparatedisplaysandcontrols

EstablishmentofsmartgridelementsDevelopmentofsmartenergygridcapability

RequireslargeinvestmentsinICTandotherenablingtechnologies,regulationsneedtobechanged,newregulationsmaybeneeded,newformsofcooperationneedtobeestablished

Installationofsmartmeters Customeropposition(privacyissues,costissues),technicalissues,partofthesmartmetersrolledoutarenotsuitablefordemandresponseandadditionaltechnologiesneedtobeinstalled,andrequiresenergyprovidertobecapableoffinancingtheinstallation


Sources:NEEP,2015;PG&E(2015);PWC(2017);IEA(2016c);IEA(2017a);IEA(2017b);IEA(2017d);Eurelectric(2017).

5.2 Barriers To the uptake of smart home technologies Arelativelylargenumberofconsumersurveyshavebeencarriedouttounderstandreasonsforwhyconsumersarenotpurchasingsmarthometechnologies.Resultsvarybutmostlistthefollowingkeybarriers(e.g.PWC,2017):

• Highcostsandunclearbenefits• Privacy,trustandcybersecurity• Complexityandtechnologyrisk

5.2.1 High Costs and unclear benefits Smarthomedevicescostmorethantraditionaldevices,forexample,intheUSanaveragepriceforasmartthermostatisintheregionofUSD250,whereasatraditional,basicprogrammablethermostatcostsUSD25.Inadditiontothecostofdevices,thereareofteninstallationcostsandinsomecasesservicecosts.Thereiscurrentlyalackofsolutionssuchasbundlingwithotherservicesorleasingthatcouldhelpconsumersreducetheupfrontcostoftheinvestment.Non-monetarycostscanalsoactasadeterrent,forexample,timeandeffortassociatedtosearchingforacontractorormissingworktobeathomeduringinstallation.Anotheraspectdeterringpurchaseofsmarttechnologiesisthatmosthomesarefullyequippedwithfunctioningconventionaldevicesandconsumersarefacedwiththedecisionwhethertodiscardfunctioningnon-connecteddevicesandpurchaseasmartdeviceorwaituntiltheconventionaldevicestopsworking.Akeybarrierconstrainingconsumerinterestinsmarthomedevicesandsystemsisalackofclarityabouttheenergybenefits.Averylimitednumberoffieldstudiesabouttheimpactsofsmarthomeshavebeencarriedout.Consequently,thereisalackofindependentlyverifiedempiricaldataon

Developmentoffullinteroperabilitybetweensmartmeters,smarthomedevicesandHEMS

Lackofstandardsthatenabledevicesfromdifferentbrandstointeract,somesmartmetersarenotcompatiblewithhomeenergymanagementsystems

Establishmentofdemandresponseprogrammes

Absenceofenablingtechnologye.g.loadcontroldevices.Lackofstandardisedmethodologies,regulatorybarriers(e.g.toenableenergysavingstobepartofcapacitymarket)

Establishmentofdynamicpricingforenergy

Absenceofenablingtechnologye.g.manysmartmetersneedtobeequippedwithadditionalsystems,regulationsmayneedtobechanged

Establishmentofflexibilitymarkets

Frameworkconditionstoenablenewmarketparticipantstoparticipateinthemarketneedtobeestablished

Householderengageindemandresponsee.g.respondtotariffsignals,etc.

Complexityofdesignandfunctionality,fallawayinconsumerinterestifbenefitsarenotapparentorifitistootimeconsumingorcomplicated,lackofconfidenceintheorganisationthatispermittedtocontrolsmarthomedevices,energypricestructuremayconstrainbenefitstohouseholdsfromshiftingconsumption/makingenergysavings

Installationofin-homerenewableenergygeneration

Upfrontcost,technologyrisk,lackoffeed-intariffs,uncertaintyabouttariffstructureandincentives,lackofspace,needtogetagreementfrombuildingowners,needtoreachagreementswithallhouseholdsofmulti-tenanthouses

Installationofhomeenergystorage

Upfrontcost,lackofspace,needtogetagreementfrombuildingowners,needtoreachagreementswithallhouseholdsofmulti-tenanthouses

Purchaseofelectricvehicle(s) Cost,technologyrisk,lackofcharginginfrastructure,rateofturnoverofstock,limiteddrivingrangepercharge


savingsimpacts(Fraunhofer,2016).Whilemanufacturersprovidesomequantificationsofsavings,measurementmethodologiesaretypicallynotharmonisedacrosstheindustryandvarybymanufacturer(CDA,2016).Energycostsarenotasignificantexpenseformanyhouseholdsandsavingenergymaynotbeasufficientlycompellingargumentaloneforinvestinginsmarthomedevicesandsystems.Benefits(e.g.energycostsavings)maynotoutweightheinvestmentcostsandotherbarriers.Forexample,atypicalUShouseholdspends8-14%oftheirincomeonenergy.Heatingandcoolingcostsareapproximately3-5%ofgrossannualincome(Zhaoetal.,2016).Asmartthermostatthatisclaimedtosave23%ofheatingandcoolingenergywouldprovidethehouseholdwithsavingsintheregionof0.7–1.15%i.e.correspondingtoUSD39–64(comparedtoUSmedianhouseholdincomeUSD55,775).WithanaveragepriceofUSD250thisgivesapaybackperiodof4–6years,whichmightbeconsideredlonginlightofhowlongthesmartthermostatwillactuallyworkbeforeneedingtobereplacedorhowlongpeoplestayinthesamehome.Dynamicpricingcouldenhancethebenefits(costsavingsorotherincentives)ofusingahomeenergymanagementsystem–however,thisrequiresdemandresponseprogrammesandtoolstoenableconsumerstoparticipateinthemarket.Thevalueofotherbenefitsofsmarthometechnologies(increasedcomfort,security,control)couldcontributetoamorecompellingcaseforinvesting,however,thereisalackofinformationabouthowsmarthomeenergymanagementcanhelpcontributetotheattainmentofthesebenefits.Earlyadoptersofsmarthometechnologieshavesocio-demographiccharacteristicswhicharesimilartothoseofinformationcommunicationandtechnologiesmoregenerally(Wilsonetal.,2017).Thereisariskthatsmarthometechnologiesreinforcethedigitaldivideassociatedwithinformationcommunicationtechnologiesfurtherintohomes.

Impact: Without clear and reliable information about the energy benefits of smart hometechnologies, thecaseforconsumersto invest inordertomakeenergysavingsremainsweak.Theinvestmentcostsfortechnologiesarestillrelativelyhighconsideringthemonetaryvalueofpotentialenergysavings.

5.2.2 Privacy, trust and Cyber security Privacyandtrust-relatedissueshaveinsomecasesdelayedorhaltedsmart-meterrollouts(AlAbdulkarimandLukszo,2011;Hoenkampetal.,2011).Similarissuesmayarisewithdatacollectedbysmarthometechnologies(Cavoukianetal.,2010;Balta-Ozkanetal.,2013b).Oncedevicesareconnectedtotheinternet,informationabouthowandwhendevicesareusediscommunicatedonlineandoftenstoredincloudservers.Thisdatacanrevealpersonalidentities,behaviours,locationandhealthandcouldbeaccessedandutilisedbynon-authorisedparties(e.g.burglars,identitythieves).Recentlargedatabreecheshaveleftmanyconsumerswonderinghowsafetheirprivateinformationisinthecloud(NEEP,2015).Manyconsumershaveconcernsabouthowmuchoftheirinformationisbeingtransmittedelectronically,andwhoisreceivingit(NEEP,2015).Beyondunauthorisedaccess,someconsumersareinprinciplenotcomfortablewithhavingothers(energyproviders,internetproviders,serviceproviders)havingaccesstotheirdata.Lackoftrustinenergyprovidersrepresentskeybarrierinadoptingdemandresponseenabledappliances(NEEP,2015).Fordemandresponsepurposes,energyprovidersmayenterintoagreementswithconsumersthattheycanremotelyshutdownorreducetheenergydrawoftheirsmarthomedevicesifneededfor


theelectricitysystem.Consumershaveconcernsthatthiswillhaveanegativeimpactoncomfortorservices(e.g.foodspoilinginthefridgeorclothesgettingruinedinthewashingmachine)ifenergyprovidersmakechangesinhowdevicesoperateatinappropriatetimes. Recentlargescalehackingoperationsthathavebeenintenselycoveredinmediaareboundtointensifyconcernsrelatedtohackingandhavingnon-authorisedpersonsaccessingdataorcontrollingtheirhomedevicesformaliciouspurposes.Becauseoftheirlimitedcomputingcapacitymostsmarthometechnologieshavenotbeendesignedwithproperprotectioncapabilitiessoaresusceptibletohackingattacks.Inthecasedeviceshaveadvancedprotection,consumersmaynotunderstandhowtousethesecuritysettingstoprotectthemselves.Impact:Withoutproperfeedbackloops,failsafes,andnetworksecurity,thepotentialforunwanteduse,accessandinteractioncanbeoff-puttingforconsumersandpotentiallydangerous(NEEP,2015).

5.2.3 Complexity and technology risk Connectingdevicesandsystemsmakesthemcomplexandmoredifficulttomanagethanconventionalproducts.Increasedcomplexityaddstorisksofthingsgoingwrong.Thereisagreaterriskforerror-pronenessofsmarthometechnologiesbecauseofadditionaltechnicalcomponents.Smarthomedevicesutilisenewtechnologies,makingthemsusceptibletoproblems.AsurveyintheUSin2016foundthat28%ofsmarthomedeviceownersreportedexperiencingproblemswiththeirdevicesorsystems.In2017,thatnumberincreasedto34%ofconsumershavingissues.Thetopproblemsreportedwereconnectivityanddeviceperformanceissues(Martin,2017).Box4Smarthomeautomation–openvsclosedloopsystems

Understandinghowautomationworkscanhelp identify thecauses for someof theproblemswithsmart home technologies. In general, there are two types of control systems, namely, open loopcontrolsystemsandclosedloopcontrolsystems.Inclosedloopcontrolsystems,theoutputissensedandgivenasfeedbackalongwithinputtothesystem.Meanwhile,inopenloopsystems,theinputisgiventothesystemthatgeneratesoutputbuttheoutputisnotsensedorfedback.

Source:Shetab(2017)Forexample,asmartthermostatwithaclosedloopcontrolsystemwoulduseinput(readingsfromsensors on indoor andoutdoor temperature, occupancy andother parameters) tomake a change(e.g.adjust temperatureupordown)andthencollect informationontheresult (i.e.newreadingsfromsensors)andthenmakeadditionaladjustmentsifrequired.Comparedtoclosedloopcontrolsystems,openloopcontrolsystemsaresimplerintheirlayout,cheaper,morestableandeasiertoconstruct.Notallsmarthometechnologiesuseclosedloopcontroland,consequently,maynotprovidetheservicelevelthatusersmaywishfor.


Homeownersarealsoincreasinglyscepticalofwirelessinternetandcableprovidersandtheirabilitytoreliablydeliverservice(NEEP,2015).Thiscontributestoconcernsthatsmarthometechnologiesmaystopworkinginthecaseofserviceinterruptions.Forexample,asmartlightingsystemcouldstopworkingwhenWiFiisdown.Furtherconcernsarehowthesetechnologieswillperformincaseofaccidentssuchasfireorflooding.Glitchesinsoftwareupdatescanleadtodevicesorthesystemmalfunctioning.Forexample,inAugust2017,asoftwareupdatefromawell-knownTVbrandledtothousandsofnewlypurchasedsmartTVsetsintheUKtostopworkingforseveraldays.Theneedforsoftwareupdatesalsoleadstoconcernsthatsmartappliancessoftwareupdatescouldchangesettings(e.g.differentdefaultstandbymode,higherwashtemperature,brighterscreen,etc.)(EC,2017a).Atthecentreofmanybarriersconstrainingsmarthomeuptakeisthelackofinteroperability.Therearecurrentlymanynetworks,standardsandtypesofdevicesthatcreateinteroperabilityproblemsandconfusionforconsumersneedingtosetupandcontrolmultipledevices.Thereareeffortsunderwaytoestablishcommunicationprotocolsthatcanenableallsmartdevicestocommunicatewitheachother.Somecompaniesandorganisationshaveformedalliancestopromoteinteroperabilityamongsolutions(PG&E,2015).However,manymanufacturersarestillusingproprietarytechnologyi.e.theirsmarthomedeviceswillonlycommunicatewithdevicesfromthesamebrand.Whyisinteroperabilitycrucial?Interoperability is necessary to allow householders to switch systems, strategies, suppliers andindividual appliances irrespective of their previous purchases and contracts. To enable demandresponse, interoperability isneededtoensurethatsmarthometechnologyhardwareandsoftwaredesignscancommunicatewithsmartmetersorviaotherchannelswithenergyproviders.Thiswouldenablesmarthometechnologycontrolalgorithmstorespondtosupplyconstraintsbyshiftingtime-flexibledomesticloads.Promoting theuseof open source communicationprotocols (as opposed to proprietary solutions)enables other actors to develop solutions that can ensure communication between devices fromdifferent manufacturers. Use of open source also enables other parties to develop solutions e.g.additionalsoftwaretohelpusersanalysetheirdataandidentifyenergysavingsopportunities.Forconsumers,lackofinteroperabilityposesariskforvendorlock-in,aswellasinabilitytoaccessfullbenefitsbothintermsofcontrollabilityandenergysavings.Evenwherethesamecommunicationprotocolisusedfordifferentproducts,theusermaystillhavetousedifferentsoftwareapplications(apps)tocontroleachproduct(IEA4E,2016).Insomecases,consumersmayhavetodealwithmultiplesystemsandinterfaces,forexample,smartmeterdisplay,lightingcontroldisplay,heatingandcoolingcontroldisplay,windowsystemdisplayetc.).Thisnotonlynegativelyaffectsuserexperienceswithsmarthometechnologiesbutmightresultinfatigueandleadtousersnotmakingeffortstomonitorandmanageenergyuse.


Figure5Illustrationofasmarthomewithmultiplesmartsystems

Smarthometechnologiesareevolving,newproductversionsarebeingdevelopedandmarketedandmanynewactorsarelaunchingnewproductsontothemarket.Thisleadstoasituationwheresolutionsarerelativelyquicklyreplacedbynewsolutions.Asaconsequence,consumersmayprefertowaituntilthemarketismorematurebeforemakingacommitmenttosmarthometechnologies.Someofthemanufacturersofsmarthometechnologiesarealsonewmarketentrants,whichincombinationwithanimmaturemarketcanleadtoariskofcompaniesgoingoutofbusiness.Ifamanufacturergoesoutofbusiness,thenaconsumercanfacetheriskhavingpartsofortheentiresmarthomesystembecomingobsolete.Itisalsounclearwhatthelifespansofdifferentsmarthometechnologiesare.Thereisariskthatdevelopmentsininformationandcommunicationtechnologiescouldrendersmarthometechnologiesobsoletequickerthanconventionalnon-connectedcounterparts.Settingupasmarthomesystemiscomplicatedandmayrequireexpertassistance.Thequalityofsuchserviceshasanimpactonsystemperformance.Poorqualityservicecanactasabarrierforfurtheruptakeordeterpotentialconsumers.Impact:Thelackofstandardisationtoensurecompatibilityandenableconsumerstoeasilychooseandswaptechnologieswithoutimpactingtheirinteroperabilitycausesproblemsforconsumers(BPIE,2017b).Problemswithsmarthometechnologiesreceivealotofattentionparticularlyinonlinenewsandsocialmedia.Negativepublicitycanactasastrongdeterrentforhouseholdstoinvestinsmarthomes.Oftensmarthomedevelopmentoccursincrementallyratherthanatthewholehomelevelatonce,iftheuserexperiencesproblemsthismaydeterthepurchaseoffurthersmarthometechnologies.


5.3 Establishment of smart grid elements and markets Thefullenergybenefitsofsmarthomescanonlybeaccessedifsmarthomesareanintegratedpartofawidersmartgrid.Whileelementsofthesmartgridarestillbeingdeployed,thereisnofullyoperationalsmartgridinplace.Therearecurrentlygapsintechnologies,methodologies,infrastructure,aswellasinmechanismsthatwouldenableandincentivisehouseholdstoparticipateinasmartgrid.Therearenumerousbarriersconstrainingthedevelopmentanddeploymentofsmartgridelements.Rolloutofsmartmetersandcompatibility Mostdevelopedcountriesareintheprocessofimplementingarolloutprogramforsmartmeters.Someconsumersarechoosingto‘opt-out’duetocostorprivacyconcerns,withtheresultthattheyforgothepotentialbenefits.Thereisconsiderablediversityinthecapabilitiesofthesemetersandtheircommunicationtechnologies,whichmaylimittheircapacitytobeusedfordemandresponseprogrammesandtheircapacitytocommunicatewithothersmarthometechnologies.Thereisalsocurrentlyalackofstandardisedcommunicationprotocolsallowinginteroperability.Demandresponseprogrammes,dynamicpricingandgettinghouseholdstoengageindemandresponseAkeybarriertoestablishingdemandresponseprogrammesistheabsenceofenablingtechnology(meteringequipmentandrelatedinformationcommunicationinfrastructure)andprocesses.Manycountrieslackstandardisedmeasurementandbaselinemethodologies,orhavemethodologieswhicharedesignedforgeneratorsanddonotaccuratelymeasureconsumptionchanges.Withoutpropermethodologies,consumerscannotreceivepaymentforthedemandresponseservicestheydeliver(SEDC,2015).Anotherbarrierislackofincentivessuchaslowerenergybillsduetodynamicpricing.Dynamicpricingreferstoretailelectricitypricesthatpassthroughatleastpartofthewholesalepricevolatilitiestotheenduser.Dynamicpricingcanincludetime-of-usepricing,criticalpeakpricingandreal-timepricing(RTP)ortimeofusepricing.Dynamicpricingistodateusedonlyinveryfewjurisdictions14.Eveninjurisdictionswheretherearetimeofusetariffs,theymaynotprovideconsumerswithsufficientincentivetosubscribetodynamicpricingandtomodifybehaviour.Togetconsumersinterestedindynamicpricingtheyneedtobewellinformedandschemesneedtobedesignedinaneasy-to-usewaytomakesavingsachievable.Withoutinformationabouttheirlevelofexposuretopricevolatility,i.e.knowingthatwhenelectricitypricesincrease,theymaypotentiallyfacesignificantincreasesintheirbillsduringcertainmonths.Forexample,inthecaseofrealtimepricingwithadirectexpositiontospotprices,customersneedtobeawarethattheycouldononedaypaymorefortheirelectricitythanfortherestofyear(Eurelectric,2017).Consumersmayfinddynamicpricesandrespondingtothemtoocomplex,resultinginresponsefatigueandonlyverylimitedbehaviouralchanges(Eurelectric,2017).Thereisalackofautomatedsolutionsthatwouldenableconsumerstomoreeasilyengageinthemarketandadjusttheirconsumption.Forexample,theresultsoftheAlpEnergyprojectinGermany,indicatethatinthecaseofsystemsrequiringhouseholdstokeeptrackoftariffsandmodifybehaviouraccordingly(i.e.notautomatedsystems),complexitycanlimitconsumerengagement.Theprojecttrialledtwotimeofusetariffs-asimplerstatictypewith2timeblocksandanannualpriceupdate,andamoredynamic

14Forexample,intheEuropeanUnion,spotbasedpricingexistsforresidentialconsumersonlyintheNordic,EstonianandSpanishelectricitymarkets


tariffwith5timeblocksandapriceupdateevery36hours.Resultsshowedanaverageloadshiftof2%forthemorestatictariffandanaverageloadshiftofonly1%forthemoredynamictariff(EC,2017a)Evenwithdynamicpricinginplace,insufficientorevennosavingscanoccur,duetoweakpricesignals(Eurelectric,2017).Thereareseveralreasonswhythiscouldoccur:

• Pricesinthewholesalemarketmaynotbehighandvolatileenough.• Theenergy component representsonlypartof electricity bills. For example, in the EU the

energy component is only a third of the bill, the remaining 2/3 of the bill are regulatedcharges,includingnetworkcostsandtaxesandlevies(Eurelectric,2017).

• Lackofincentivestoshifttoe.g.electricheating(thatwouldenablethemtoparticipatetoalargerextentindemandresponseprogrammes)(Eurelectric,2017).

Purchaseofin-homerenewableenergygeneration,energystorageandelectricvehiclesDistributedin-homerenewableenergygeneration,homeenergystorageandelectricvehiclesareseeinganincreaseinuptakebutthisisstillrelativelylimited.Barriersconstrainconsumerinterestandfurthersolutionsareneededtoenabletheoptimalusageoftheseresourcesforthebenefitofconsumersandtheenergysystem.Costandtechnologyriskarekeybarriersaffectingin-homerenewables,homeenergystorageandelectricvehicles.Bothin-homerenewablesandstoragerequirespaceandmayrequirepermitsfromauthoritiesandenergyprovidersandpermissionfrombuildingowners.Obtainingpermissiontoinstallandoperateanenergystoragedevicecanbeacomplicated,expensive,anduncertainprocess(NREL,2016).Adecisivebarriertoin-homegenerationislackoffeed-intariffsorinsecurityoverthelongevityoffeed-intariffs.Electricvehicleuptakeisconstrainedbylackofcharginginfrastructure,rateofturnoverofstock,limiteddrivingrangeperchargeTosupportlargescaledeploymentofdistributedrenewableenergygeneration,changesareneededinelectricitysystems,especiallyintheareasrelatedtobalancing,reliability,flexibility,resilienceorenvironmentalconstraintswhichrequirere-optimisingtransmissionanddistributionnetworks(ETPSmartGrids,2016).


6 Policy rationale

Smarthometechnologiespresentanewchallengeforenergyefficiencypolicymakers.Thetechnologiesaremorecomplexandintangiblethanconventionalhomeappliancesbecausetheyarepartofnetworkedsystems.Technologydevelopmentisrapidwithmanynewproductsenteringthemarketeveryyear.Theirbenefitsintermsofenergysavingsandtheirownenergyusedependonahighernumberoffactorsthanconventionalnon-connecteddevices.Smarthomesinterfacewithsmartgrids,withdistributedrenewableenergygeneration,energystorageandelectricvehicles.Smarthometechnologiesarealsoanareaofinnovationandpotentialeconomicgrowthintermsofenterprisedevelopmentandemploymentcreation.Inconsequence,energyefficiencypolicymakersarefacedwithanevolvingsituationthatintersectswithareaswherepoliciesarealreadyinplaceorarebeingdeveloped.Energyefficiencypolicymakinginthisarearequiresdevelopingapproachesenablingcooperationandsynergiesbetweenpolicyareasthatmaynottypicallyhaveworkedtogetherinthepast,suchasenergyefficientproductpolicy,buildingregulations,telecommunications,andenergysupplyanddistribution.

6.1 Benefits of action Thereisastrongcaseforpolicyaction.Aproactiveapproachcouldacceleratethedevelopmentanddeploymentofsmarthometechnologiesthatareoptimisedforenergysavingsanddemandresponse.Benefitsinclude:

• Significantenergy savings couldbemade, contributing toa rangeofpolicyobjectives (e.g.energysecurity,climatechangemitigation)

• Significant energy system benefits (e.g. peakmanagement,more efficient supply, supportintegrationofrenewables)

• Opportunitytoinfluencethedevelopmentofdevicesandsystemstowardsachievinggreaterenergysavings.

6.1.1 Possible risks of action Therearerisksassociatedwithaproactivepolicyapproachatthisstageoftechnologyandmarketdevelopment.Thesecouldforinstanceinclude:

• Backlashiftechnologiesdonotmeetexpectationsintermsofenergysavings• Backlashifsomeoftheissueswithsmarthometechnologiesarenotfixede.g.homesecurity

breaches, spread of personal information, cyber-attacks or hacking causing damages tohouseholds

• Making a push for demand response when the market conditions are not in place couldmakehouseholdsdisenchantedanduninterestedinfutureofferings

• Rapid technological changecouldmakepreparatorypolicyeffortsobsoleteas technologiesevolve and the products considered become something else (e.g. smart lighting gatewayscouldpotentiallyevolveintowholehomemanagementsystems).

Furtherdrawbacksincludetheneedforsignificantresourcesintermsoftimeandefforttosourceandcommissioninformationaboutsmarthometechnologies,andtheresourcesrequiredtoengagewithrelevantactors.


6.2 A case for delaying action? Consideringthecomplexityofthetopicandtheresourcerequirementsforpolicymakingandthepotentialrisks,oneoptionistodelaypolicymakingtoapointwherethemarketandtechnologysituationisdeemedtobemorestable.Benefitsofdelayedpolicymakinginclude:

• Withtimethemarketwillmatureanditmaybeeasiertounderstandwhichtechnologiestofocuson.

• Othercountriesmayhavealreadyputpolicies inplaceandadaptation/replicationcouldbeexplored.

Intheabsenceofactiveenergyefficiencypolicymaking,technologyandmarketdevelopmentswilltakeplaceandotherpolicieswillbeplannedandimplemented.Evenwithoutenergyefficiencypolicies,somesmarthomeenergyefficiencysavingswouldbeachieved,butwithoutafocusonthedevelopment,uptakeandoptimisationofenergymanagementsystems,itwouldbearelativelylowreductionandalargershareofthesavingscouldbeoffsetbyenergyintensification.However,thereareriskswithdelayingactionincluding:

• Missedresidentialenergyefficiencyopportunities.• Householdsdonotachievesignificantenergysavingsandbecomedisenchantedwithsmart

homeenabledenergyefficiency.• Missedopportunitiestopromotethedevelopmentofenergyefficientandenergyefficiency

enablingtechnologies.• Technologieswilldevelopwithoutconsiderationtoenergyefficiencyandlimitfutureenergy

efficiencyopportunities.• Energy efficiency is not a core consideration in smart grid development and that

technologicallock-inpreventaccessingenergyefficiencyopportunities.Increasinguptakeofsmarthometechnologieswillhappen.Basedupontrendsandtheforecastsbymarketresearchcompanies,connectivitywillbeacommonfunctioninmostappliancessoldfrom2020onwards(HISMarkit,2016).However,thistendencydoesnotnecessarilymeanthattheseapplianceswillbeinteroperable,supportenergyefficiencyorwillprovidedemandresponsefunctionality.Somesurveysindicatethatconsumersaremoreinterestedinsmartentertainment,comfortandsecuritythansmartenergymanagement(e.gPWC,2017).Thereisariskthattheenergyefficiencyopportunitiesthatcouldbeenabledbysmarthometechnologieswillnotbeattained,productsenablingenergyefficiencywillnotbedevelopedduetoperceivedlowconsumerinterest.Serviceprovidersinstallingsmarthometechnologiesandsystemswouldnotconsiderenergyefficiencyintermsofdefaultsettingsandadvicetousers.Therewouldbeasmarthomedrivenintensificationofdemandduetomoreconnecteddevicesandlackoffocusonenergymanagement.Actorsworkingonsmartgriddevelopmentwillcontinuewiththeirprojectedcourseofaction.Thiscouldpotentiallyleadtowide-scaledeploymentofsmartmetersthatarenotcompatiblewithothersmartenergysavinghometechnologies,leadingtolostsavingsopportunitiesorsituationswherehouseholdshavemultiplesmartsystemsforenergymonitoringandmanagementandloseinteresttoengageinthemduetocomplexityandinteroperabilityissues.Orthiscouldalsoleadtoasituationwherehouseholdshavemoredevicesthannecessaryforenergymanagementthatdrawenergytoprovidethesameservices.Demandresponseprogrammescouldbedevelopedwithoutnecessarilytakingintoconsiderationopportunitiesforenergyefficiencyandoverallenergysavings.Thenetimpactonenergy


consumptiondependsonhowtheprogrammesaredesignedi.e.iftheyalsoprovideassistanceorincentivestoreduceoverallconsumption.


7 Possible policy actions

Realisingtheenergybenefitsofsmarthomesrequiresaportfolioofpoliciesandmeasures.Energyefficiencypolicymakerscanplayanimportantroleinaddressingsomeofthebarriersandsupportingtheenergymanagementpotentialofsmarthomes.Thecombinationofmeasuresthatcouldbeconsideredwilldependoncountryspecificcircumstancessuchaspolicypriorities,mandatesforpolicymaking,themarketforsmarthometechnologiesandtheenergysystem.Someoftheactionsrequiredarenotinthemandateofenergyefficiencypolicymakers,suchasensuringsafeguardsagainstpotentialcyber-attacksanddevelopingelectricitymarketsthatincentivisedemandresponse.Thissectionofthereportfocusesonthetypesofactionsthataretypicallyinthemandateofenergyefficiencypolicymakersdealingwithpoliciesforenergyusingappliances,equipmentanddevices.Someoftheactionsthatcouldberequiredbutarenotwithinthescopeofenergyefficiencypolicymakersarecoveredastheyarerelevanttoboostingtheuptakeofsmarthomes,andtheremaybeopportunitiestodeveloppolicysolutionsjointlywithotherpolicyactors.Thekeybarriersforsmarthomeuptakeidentifiedinthiscasestudyare:

• Highcostsandunclearbenefits• Privacy,trustandcybersecurity• Complexityandtechnologyrisk

Otherbarriersdiscussedinthecasestudyinclude:

• Lack of smart grid capabilities and electricity market conditions that would enable smarthomes to become and integrated part of smart grid and effectively contribute to theattainmentofenergysystembenefits.

7.1 Vision and engagement Astartingpointforenergyefficiencypolicyactionsinthisareacouldbetodevelopavisionorroadmapforsmarthomeenergyefficiency.Thiscouldhelpclarifypolicyobjectives,communicatetherationaleforpolicymakingandprovidesomethingagainstwhichtotrackprogress.Engagingwithotheractorstostimulateeffortstowardsincreasingenergyefficiencyshouldbeapriority.Thereareanumberoforganisationsoractorsthatcouldberelevanttoconsiderinthiscontext,including:

• Policy makers in other areas (smart grids, energy systems, renewables, climate changemitigation,buildingregulations,etc.)

• Energyproviders(includingregulators)• Standardisationorganisations• Smarttechnologymanufacturers

Otheractorscouldalsohaverolestoplaysuchasinsurancecompanies(provideincentives),housingcompanies (procurement of technologies, technical assistance to households), energy servicecompanies(provisionoffinancingsolutions),municipalities(facilitateaccessforlowincomeorsocialhousinghouseholds to smarthome technologies toe.g. counteract fuelpovertyanddigitaldivide)andacademia(technologyresearch,modelling,impactassessments,fieldstudies).


Box5Mappingofexistingstandardsandongoingstandardisationinitiatives

StandardisationinitiativesTechnical standards play an important part in energy efficiency policy making. In terms of smarthomes,technicalstandardscansupportthedevelopmentoftestproceduresandmethodologiesforlaboratory and field measurements. Technical standards can also be instrumental in developingsolutionstoprivacyandcybersecurityissues.Technicalstandardslieatthecoreofinteroperabilityandareanessentialpartofdevelopingsmartgridcapabilitiesandcanevenplayarole inensuringthedevelopmentofeffectivemarketmechanisms.Akeyrecommendationofthisreportistoengageinstandardisationprocessestoensurethatenergyefficiency is a priority and that solutions that promote energy efficiency are developed. Thestandardisation landscape inregardtosmarthomes iscomplex.Therearenumerousorganisationsworkingonnational,regionalandinternationallevelsthataredevelopingstandardsthatarerelevanttosmarthomes,includingcommunicationsprotocols.Amappingofrelevantinitiativescouldprovideagoodstartingpoint fordeterminingwhere itmakessense to focuseffort.Concertedefforts,e.g.undertheauspicesofEDNA,wouldmakesensefromaresourceefficiencyperspectiveaswellasinlightofthevalueofthedevelopmentanduptakeofinternationalstandards.Astartingpointcouldbeconsultation with national standardisation bodies that partake in international standardisationefforts.BusinessesparticipatingintheConnectedDevicesAlliance(CDA)couldbeavaluablesourceof information regarding international standardisation processes and work conducted by industryalliancesorgroups.AnoverviewofIoTprotocolscanbefoundon:www.postscapes.com/internet-of-things-protocolsFor a mapping exercise, it would be relevant to include at least the following organisations andinitiatives:Internationalstandardisationorganisations/bodiesInternationalTelecommunicationsUnion(ITU),theInternationalOrganisationforStandardization(ISO), the International Electrotechnical Commission (IEC), The Institute of Electrical andElectronicsEngineersStandardsAssociation(IEEE),InternetEngineeringTaskForce(IETF).RegionalCEN,CENELECandETSI(Europe),AsiaPacificEconomicCooperation.Alliances,consortiums,initiativesoneM2M,OpenStand,ThreadGroup,OpenConnectivityFoundation,Z-WaveAlliance,ZigbeeAlliance,OASIS.

7.2 High costs and unclear benefits Lowerup-frontcostsThereareanumberofpolicymeasuresthatcouldbeusedtostimulatemarketdevelopment,reduceupfront costs and help finance investments in smart home technologies. Examples includeprocurementofenergysavingsmarthometechnologies(forexampleforsocialhousing)orprovisionof subsidies or grants for the purchase of energy saving smart home technologies. This has beendone,forexample,inOntarioin2017,wherethegovernmentagencyGreenOntarioFundlaunchedaprogramme providing free smart thermostats together with free energy reviews to 100,000households(GreenOntarioFund,2017)andJapanhasbeenprovidingasubsidyforHEMSsince2001(IEA PAMS, 2017). Other options include supporting financing schemes e.g. “pay as you save” forsmart home technologies and the development of reliable and user-friendly payback periodcalculators. Some efforts are already underway to develop suitable financial mechanisms. Forexample,theRockyMountain Institute intheUS,hasexploredhowtheuseofresidentialpropertyassessedcleanenergy(R-PACE)couldbeusedtopromotetheuptakeofnetzeroenergyhomes(RMI,2017).


ImprovethevaluepropositionTheperceptionofhighcostsandunwillingnesstopayupfrontcostsiscloselylinkedtoperceivedbenefits.Thereareanumberofmeasuresthatcouldbetakentoimprovethebusinesscaseforsmarthometechnologies.Thevaluepropositionforsmarthomeenabledenergyefficiencycouldbeimprovedbylinkingenergysavingstootherbenefits,howeverthisrequiresthattheyareavailableandcommunicatedtoconsumers.Thebusinesscasecouldbefurtherimprovedbydevelopingmechanismstofairlyshareenergysystem-widecost-savingswithhouseholdsthatenabletheachievementofthesebenefitsi.e.householdsthatparticipateindemandresponseprogrammes.DevelopstandardsandmethodologiestomeasurebenefitsUncertaintyaroundbenefitscouldbeaddressedbythedevelopmentofteststandardsandfieldmeasurementmethodologiesandthedevelopmentofsuitableevaluation,measurementandverificationprotocols.Effortsarealreadyunderway,forexample,theEuropeanUnionstandardprEN15232establishesmethodsforestimatingtheimpactofautomation,controlandmanagementonenergyperformanceandenergyuseinbuildings(EDNA,2017a).TheChinaSmartHomeIndustryAllianceplanstoestablishasetofsmarthomesystemregulationswhichwillbelinkedtoaverificationplatformtotestandverifysmarthometechnologies.Thiswillcontributetoenablingthereplacementofproducts(duetosametechnicalspecification)andtostandardisationofthesmarthometechnologyvaluechain(CSHIA,2017).ENERGYSTAR®hasalsodevelopedenergymeasurementprotocolsforsmartthermostats.ConductresearchonbenefitsCommonmethodologiesandstandardscouldthenbeusedtocommissionandpublishreliableandcomparablestudiesonbenefits(energysavings,costsavings,otherbenefits,energysystembenefits)ofsmarthometechnologiesandsmarthomes.Policymakerscouldhelpdevelopastrongercaseforenergyefficiencybycompilingandprovidinginformationonhowenergyefficiencyenablingtechnologiescancontributetootherbenefitssuchasincreasedcomfort,betterindoorairqualityandenhancedhomesecurity.SuchworkcouldbuildonworkdonebytheIEAsecretariatandtheIEADemand-SideManagementTechnologyCollaborationProgrammeonmultiplebenefits. ConductresearchonenergyconsumptionResearchontheenergyconsumptionofsmarthometechnologies(particularlyonenergymanagementrelatedtechnologies)wouldhelpconveyreliableinformationonthenetenergybenefitsofsmarthomes.Demonstrationandinsituresearchprogrammescouldfurthercontributetoreliablequantificationsofbenefits.Astheattainmentofpartoftheenergyandcostsavingsbenefitscanbeconstrainedbysub-optimalinstallationandconfiguration,informationonbestpracticescouldbecollectedtodevelopguidanceformanufacturers,consumersandinstallers.ExploreopportunitiestoaccessandusesmarthomeenergydataEnergyefficiencypolicymakers,couldinvestigateopportunitiesforhowtogainaccesstogranulardatafromsmarthomes(viaHEMSorfromenergyprovidersviasmartmeters)thatcouldbeusedtotrackenergyefficiencyprogressandinformfuturepolicymaking.Thiswouldrequireanexplorationoftoolsandexpertiseneededanalysebigdatasetstogetinsightsintodevicelevelenergyefficiencyimprovements,behaviouralimpactsandotheraspectsthatcanhelpinformpolicymakingandbeusedtoevaluatetheimpactoffuturepolicymeasures.Theuseofbigenergydatarequiresfindingsolutionsforthefollowing:

• Collection,storageandmanagementofbigenergydata• Methodsforhowtoanalyseandminebigenergydata• Howtousebigenergydatatosupportmoreeffectiveandefficientdecisionmaking• Preventionofrisksandadequateprivacyprotection(Zhouetal.,2016).


DeveloplabelstoinformconsumersUncertaintycouldalsobeaddressedbydevelopinglabelsorcertificationsthatcanservebothasasealofapproval,andasamechanismtorecognisefeaturesandbenefits(EDNA,2017a).Aninformationlabelcouldprovideafoundationonwhichtobuildaminimumenergyperformancerequirementatalaterdate,providingconsistencytomanufacturersandclaritytoconsumers.Forexample,intheUS,productsthatsatisfytheenergyefficiency,connectivity,anddemandresponsecriteriasetbyEPA,canbecertifiedasENERGYSTAR®connectedproducts,alabelthatconveystoconsumersaproduct’sreliabilityandsuperiorperformance.TheEPAlabelhelpscreateconsumerconfidenceinconnecteddevices(EDNA,2017a).InGermany,thereisasmartgridreadylabelavailableforheatpumpsandasearchabledatabaseofproductsthatthatthelabel.ThelabelhasbeendevelopedbytheGermanheatpumpindustryassociation(BWP,2017).Smartfunctionalitiescanbeincludedasrequirementforcertainlabelclasses.Forinstance,theSouthKoreanregulationforairconditionersandmultiheatpumpsystemsrequirethat,togettheenergylabel‘grade1’,theindoorunitsofairconditionersof4-10kWandtheindoorunitsofmultiheatpumpsystemsof1-30kWinsizemustincludesmartfunctionsi.e.displaypowerconsumptionusingasmartphone,tabletorcomputerapplication,andtheabilityfortheusertocontrolthemode,temperature,airvolume,andotherfunctionsusingtheapplicationFigure6GermanheatpumpindustryassociationSmartGridReadylabel

Source:BWP(2017)PromoteenergyefficiencyandenergysavingsSmarthometechnologymanufacturerswillprioritiseenergyefficiencyifthereisacleardemand.Asthisreportindicates,consumerdemandforenergysavingandenergyefficientsmarthometechnologiescouldbewaning,andtherecouldbeacaseforpolicymakerstopromotethedevelopmentofenergyefficientsolutions.Thiscouldbedoneviaregulationbutcouldalsobeachievedthroughengagementanddialogue.Energyefficiencypolicymakerscouldforinstance,incooperationwithsmarthomedeviceandsystemmanufacturersandotherrelevantparties(e.g.ITserviceproviders,energyproviderassociations,componentandsoftwaredevelopers)developguidingprinciples(e.g.modelledontheCDAVoluntaryGuidingPrinciplesforEnergyEfficientConnectedDevices)forenergyefficientsmarthomes.Lessonslearnedonsuchanapproachcouldbe,forinstance,drawnfromtheUnitedKingdomwheretheDepartmentofEnergyandClimateChange(DECC)wasintegraltoanindustry-wideefforttosetdesignandoperatingstandards,andofferin-homedisplaysasanintegralpartofthesmartmeterinstallationprocess(DECC,2014;DECC,2015).Furthermeasurescouldincludeinvestigatingfutureopportunitiesforenergysavingsandotherenergysystembenefitsindialoguewithsmarthomedeviceandsystemmanufacturersandotherrelevantparties(e.g.ITserviceproviders,energyproviderassociations,componentandsoftware


developers).Measurescouldbetakentoincentivisemanufacturerstoincludeenergyefficientfeaturesinproducts.Forexample,severalUSENERGYSTARspecificationsforappliances(clotheswashers,clothesdryers,dishwashers,refrigeratorsandfreezers,roomairconditioners,andpoolpumps)havecontentonenergyawarenessandenergyreporting(EDNA,2016c).Energyefficiencypolicymakerscouldalsodevelopprogrammesfortrainingandqualificationsintheconstructionandelectronicsinstallationsectortoensurequalityandthatenergymanagementopportunitiesareenabledandcommunicatedtohouseholds.Effortsinthisareaarealreadyunderwayinsomejurisdictions.Forexample,ChinaSmartHomeIndustryAlliance(CSHIA)launchedthe"smarthomesystemsengineer"trainingin2012.Studentsreceivea"smarthomesystemsengineer"certificateissuedjointlybytheMinistryofIndustryandthesmarthomeindustryalliance,andrecordintheMinistryofEducationandExaminationCenter(CSHIA,2017).CurtailenergyintensificationAnaspectofpromotingenergysavingsisensuringthattheparasiticenergyconsumptionofsmarthometechnologiesandsmarthomes(e.g.duetonetworkcommunicationsfunction)iskeptataminimum.Smarthomescanalsoleadtoanincreaseinenergyconsumption(posingariskofenergyintensification)thoughincreaseduseoftechnologies(e.g.toturnonairconditioningorotherservicesbeforeyougethome),increasednumberofdevicesandincreasedenergyconsumptionofdevices(duetobeingonhigherlevelsofpowerforlongerperiodsoftime).Toaddresstheriskofenergyintensification,thereisaneedformethodologiestomeasuretheenergydemandofsmarthometechnologiesandtocommissionresearchtomeasurehowmuchenergyisusedinactualconditions.Intermsofhomeenergymanagementsystems,researchcouldbecommissionedtounderstandwhatisactuallyneededtomanagehomeenergyandtocheckwhetherequivalentresultscanbeachievedwithfewerdevices(Wilsonetal.,2017).Afurthermeasureinthisareacouldbetodevelopguidelinesforenergyoptimisationtosteerindustrytoincludedesignfeaturesinsmarthometechnologiesthatmitigatethepotentialforenergyintensification(Wilsonetal.,2017).Othermeasurescouldbetoenterintodialoguewithsmarthomedeviceandsystemmanufacturersabouthowfutureproductscouldbedevelopedtomaximisesavingsandminimiseownenergydemand.Energyefficiencypolicymakerscouldalsodemandthatmanufacturersensureenergyefficientsettingsasadefaultandprovideinformationtoconsumersaboutwhichsettingsaremostenergyefficientandimpactonsavingsifsettingsarechanged.Guidelinesforuserscouldbedevelopedoutliningtheenergycostoftheuseofdifferenttypesofservicesandsettings.Policymakerscouldalsocommissionresearchontheextenttowhichenergy-managementalgorithmscanautomatecertainfunctionstoavoidrisksofenergyintensification(Wilsonetal.,2017).Finally,policymakerscouldconsiderinitiatingpreparatorystudiesorconsultationsonthefeasibilityandvalueofminimumenergyperformancerequirementsforsmarthomedevicesandsystem.Forexample,theEuropeanCommissionRegulation(EU801/2013)placesminimumenergyperformancerequirementslimitingnetworkstandbyofnetwork-connecteddevices.

7.3 Privacy, trust and cyber security Privacyandcybersecurityconcernsarenotlimitedtosmarthometechnologiesbutareanissuerelevanttoallthingsconnectedtonetworks.Whileitmakessensetoaddresstheseissuesatanoverarchinglevelbydevelopingsolutionsforall“InternetofThings”applications,effortsfocusingonsmarthomescouldalsobeinitiatedorpromoted.Thiscouldincludethedevelopmentofguidelinesonsmarthomedatacollection,useandprivacyprotection.Forexample,theEuropeanUnionAgencyforNetworkandInformationSecurity(ENISA)hasissuedareportongoodpracticesandrecommendationsonsecurityandresilienceofsmarthomeenvironments(ENISA,2015).


Effortscouldalsobemadetorequirethatmanufacturers,serviceprovidersandenergyprovidersdevelopandclearlycommunicateprivacypoliciesthatclarifywhatinformationisbeingcollected;whoownstheinformation;whohasarighttoseeit;whohasarighttouseit;and,whereinformationsharingisanticipated,towhom,forwhatpurposeandunderwhatconditions.Minimumrequirementsonsecurityanddataencryptioncouldbeincludedinspecifications,standardsorvoluntaryagreements.International,regionalandnationalstandardisationorganisationsareworkingonissuesrelatedtocybersecurityforIoTapplications.Forexample,theEuropeanTelecommunicationStandardsInstitute(ETSI)isworkingcloselywithrelevantstakeholderstodevelopstandardsforhorizontalandcross-domainapplicability,aswellasforthesecurityofinfrastructures,devices,servicesandprotocolsandsecuritytoolsandtechniques(ETSI,2017).Workonsecurityisalsounderway,forinstance,withintheInternationalOrganisationforStandardization,theInternationalElectrotechnicalCommissionandtheInternationalTelecommunicationUnion.Energyefficiencypolicymakerscouldsupportthedevelopmentofprivacyandsecuritysolutionsforsmarthometechnologiesthroughmappingexistinginitiatives,identifyinggapsandopportunitiesandengagingwithrelevantactorstoensurethatsolutionsforsmarthometechnologiesarecovered.

7.4 Complexity and technology risks Thedevelopmentandadoptionoftechnicalstandardsliesattheheartaddressingcomplexityandtechnologyrisks.Thedevelopmentofinternationalteststandardscanplayanimportantroleintheprovisionoftransparentandcomparableinformationandhelpalleviateriskperceptions.Thesecould,forinstance,alsoincludelife-timeandfatigueteststohelpaddressconcernsaboutthedurabilityofsmarthometechnologies.Effortsareunderwayonnational,regional,internationalandprivatesectorlevelstoaddresstheissueofinteroperability.Energyefficiencypolicymakerscouldstimulateprogressinthisareabymappingexistingstandardsandstandardprojectsandtheirstatusandcoverageandidentifygapsandopportunities.Somemappinghasalreadybeenconductedthatcouldbeusedasabasis,forexample,anoverviewofexistingstandardshasbeenpublishedaspartoftheEcodesignPreparatoryStudyonSmartAppliancesperformedfortheEuropeanCommission(EC,2017a).Energyefficiencypolicymakerscouldform,leadorsupportcollaborativeeffortstodevelop(preferablyinternational)technicalstandards,opensourcesoftwareplatformsandcommoncommunicationprotocolsfornetworksanddevices.AnumberofsmarthomerelatedtechnicalstandardssuchasGreenButtonandGreenButtonConnect,OpenADR,BACnetandmanyISOandIECstandardshavebenefittedfromtheleadershipandparticipationofgovernmentagenciesoverextendedperiodsoftime(EDNA,2017a).Theuseofproprietaryprotocolscanconstraininteroperability.Energyefficiencypolicymakerscanrequireorencouragetheuseofcommonstandardsandopensourceprotocols.Insomejurisdictions,policymakerscanplayanactiveroleinensuringinteroperability,forexample,inJapan,theMinistryofEconomyTradeandIndustry(METI)approvescommunicationprotocolstobeusedbetweensmartmetersandHEMScontrollers(JapanIndustryNews,2016).Voluntaryapproachestoencourageinteroperabilitycanalsobeeffective.Forexample,theUSEnvironmentalProtectionAgency’sENERGYSTARconnectedthermostatprogramme,hastakenmeasurestopromoteinteroperabilityandsupportdemandresponse.Inthisinitiative,manufacturersareencouragedtoincludecommoninterfacesintheirproductsandensuretheabilitytorespondtodemandresponsesignalsfromenergyproviders(EDNA,2017a).Informationlabelscouldalsobeusedtoencouragetheuseofopensourceprotocols.Forexample,theUSENERGYSTARhasdevelopedrequirementsforconnectedproductsinENERGYSTARproductspecificationswhere


compliantproductsmustuseopenstandardsbasedcommunications(exceptforremotecontrollability)(Kaplan,2016).Furtheractionstoaddressrisksorriskperceptionscouldincludedevelopingqualitycontrolstandardsandmechanismsandensuringrightsorrecourseforinstallations.Initiatingdemonstrationandpilotprojectsandprovidingtransparentinformationaboutissues,solutionsandresultscouldalsohelpmitigaterisks.

7.5 Lack of smart grid capabilities and enabling market Thefullrangeofbenefitsforhouseholds,fortheenergysystemandforsocietyintermsofe.g.carbondioxideemissionreductionscanonlybeaccessedinasituationwhereasmarthomeisconnectedtoasmartgridandwheremarketconditionsencourageon-siterenewables,storage,electricvehiclesandparticipationindemandresponseprogrammes.Thismeansthatprogressintermsofsmartgridelementsandmarketdevelopmentsareakeyaspecttoacceleratingtheuptakeofsmarthomes(andattainmentofassociatedenergysavings).Thisisanareawhereenergyefficiencypolicymakersdealingwithproductpolicyaretypicallynotactive.However,thereareopportunitiestoviadialogueandengagementexplorepossiblewaystocontributetodevelopments.SmartmeterrolloutIntermsofsmartmeters,policyguidelinesorrequirementscouldbedevelopedtoensuresmarthometechnologyhardwareandsoftwaredesignsarecompatiblewithsmartmeter-enabledcommunicationsfromenergyproviders.Smartmeterrolloutschemescouldbeusedtopromotetheuptakeofenergysavingtechnologiessuchassmartthermostatsorhomeenergymanagementsystemsoratleastwithinformationaboutsmarthomeenabledpossibilities.LinkdemandresponseandenergyefficiencyIntermsofdemandresponse,energyefficiencypolicymakerscouldexplorehowsynergiesbetweensmarthomeenableddemandresponseandenergyefficiencycanbemaximised.Demandresponseandenergyefficiencycanbecomplementary,withenergyefficiencyreducingbothenergyuseandpeakdemand,whiledemandresponseprovidesadditionalpeakdemandreductions.Bycombiningtherevenuestreamofdemandresponsewiththeenergysavingsprovidedbyenergyefficiency,householdscouldgetbetterfinancialoutcomesthanwouldbepossiblewitheitherapproachalone.Bothdemandresponseandenergysavingsrequirethemeasurementandverificationofsavings.Therecouldbeopportunitiestosharetheunderlyingdatastructure.Furthermore,theavailabilityofalmostreal-timeenergyconsumptiondatacreatesaplatformfromwhichfurtherenergysavingsopportunitiesmaybediscovered(USEPA,2010).DevelopstandardisedapproachesfordemandresponseenableddevicesMeasurescouldbetakentodevelopstandardsforconnectivityandcontrollabilityandmandateorprovideotherincentivesformakingdevices“demandresponseready”(whichshouldencompass“smarthomeready”orviceversa)andforhouseholdstopurchasesuchdevices.Forexample,Australiahasbeenworkingfor12yearsonasuitofstandardstoenabledemandresponse.Increasinglyproductssuchasairconditioners,waterheaters,poolpumpcontrollersandelectricvehiclesupplyequipmentaresoldwithabuilt-instandardisedinterface,whichwillallowthemtoconnecttoacommunicationssystemandparticipateindemandresponseschemes.AnyAS/NZS4755compliantappliancecanworkwithanyothercompliantdevice(UtilityMagazine,2017).In2016,StandardsAustraliapublishedastandardrelatingtothedemandresponseofenergystoragesystems.Itsupportsthedevelopmentofthestoragemarket,openinguprewardsforstorageownersandmanufacturerswhointroducecomplyingproducts(StandardsAustralia,2016).ENERGYSTAR®


specificationsforawiderangeofequipmentalsocontainoptionalrequirementsfordeviceenergyreportingandsmartgridcontrollability.TheEuropeanCommission´sEcodesignPreparatoryStudyonSmartAppliances(Lot33)isanalysingthetechnical,economic,marketandsocietalaspectsthatarerelevantforabroadmarketintroductionofsmartappliancesthatcouldsupportdemandresponse.ImprovethevaluepropositionofdemandresponseThebusinesscaseforhouseholdstoengageindemandresponseneedstobedeveloped,whichincludesmechanismstosharethebenefitsfromdemandresponsewithhouseholds.Studiesondemandresponsecostsandbenefitsincludingcostsandbenefitsforhouseholdscouldbeausefulstepindevelopingabusinesscaseforsmarthomeenableddemandresponse.Furtherstepscouldincludethedevelopmentofstandardisedprocessesforinformationexchange,transferofenergyandfinancialsettlementincludingfairmechanismstosharebenefits.Otheractionstoimprovetheattractivenessofdemandresponseforhouseholdscouldincludeloweringthefixedcomponentofelectricitypricee.g.byfinancingpolicysupportcostthroughalternativemeanssuchastaxcreditsorspreadingcostsoverotherfuels(Eurelectric,2017).Otherwaysofengaginghouseholdsindemandresponseisbyofferingsubsidiesorotherincentives.Forinstance,Energex(asubsidiaryofEnergyQueenslandLimited,aStategovernment-ownedcorporationinAustralia)thatbuilds,operatesandmaintainstheelectricitydistributionnetworkoffersrewardsfordemandresponse.Consumersareofferedarebateonthecostofanairconditionerifitiscompliantwithademandresponseplatformandactivatedatinstallation.Thedemandresponseisautomatedi.e.shiftedtolowerperformancemodewhenthenetworkisunderstress(Energex,2017).Similarly,intheUS,AustinEnergyandCPSEnergyofferconsumersafreethermostatorathermostatrebateinexchangefordemandresponsecontroloftheair-conditioning(EC,2017a).Promotein-homerenewables,in-homeenergystorageandEVsThereareanumberofactionsthatcouldbetakentopromotetheuptakeofrenewables,energystorageandEVsaspartofasmarthome.Solutions(technicalandadministrative)arestillneededintermsofrenewablesandstorageformulti-tenantbuildings.Asignificantbarriertouptakecanbeoverlycomplexpermittingprocesses.Feedintariffsandsecurityintermsofthelongevityoftariffsarealsoimportantfactors.Subsidiescanbeaneffectivetooltopromoteuptake.Forinstance,inGermany,asubsidyschemeforresidentialenergystorage(upto30%ofinitialinvestmentissubsidised),makesahomebatterysystemattractive.Estimatespredictthatby2018,theGermanmarketwillhavestabilizedwithonaverage100,000unitsperyear.By2020,atotalof500,000unitsareexpectedtobeinstalledinGermany(EC,2017a).Agreaterinterconnectionbetweenenergyefficiencyandhomesolar(orotherrenewable)policiesandprogrammeswouldbebeneficial.Forexample,theCanadianGovernmentofAlbertaagencyEnergyEfficiencyAlbertadesignsanddeliversprogrammesrelatedtoenergyefficiency,energyconservationandthedevelopmentofmicro-generationandsmallscaleenergysystems(EnergyEfficiencyAlberta,2017).TheuptakeofEVscanbepromotedbypurchaseincentivessuchasuseandcirculationincentives,waiversonaccessrestrictions.Promotingthedevelopmentanduseofuniformandnon-proprietarycommunicationsmessagingprotocolsbetweenEVsandsmarthomesisanimportantstepinensuringthatEVscanbeusedasenergystorageandthatsmartchargingsolutionscanbeimplemented.


8. Conclusions and recommendations

Smarthomescanprovidesignificantenergysavingsforhouseholdsaswellasbenefitsfortheenergysystem.Currently,theuptakeofsmarthometechnologiesisstilllimited.Thereareanumberofbarriersconstraininguptakethatneedtobeaddressed.Thereisacaseforenergyefficiencypolicymakerstobeactiveinthisarea.Delayedactioncouldresultinthelossofenergysavingsopportunities,especiallyifthesolutionsdevelopedanddeployeddonottakeintoconsiderationenergyefficiency.Ataminimum,energyefficiencypolicymakersshouldtakeactiontosourcesufficientknowledgeofdevelopmentsintheareasofIntelligentEfficiency,InternetofThings,smarthomesandsmartgrids.Thisisneededtoassessenergyimplicationsandtobeabletoquicklydeploypoliciessoasnottoforgoenergyefficiencyopportunities.Inthiscontext,therearetwokeycoursesofaction–commissioningresearchandenteringintodialoguewithotherrelevantactors.Energyefficiencypolicymakerscanalsoplayanimportantroleinimprovingthevaluepropositionforsmarthomes,bysupportingthedevelopmentofmethodologiesandstudiesquantifyingbenefitsandtheprovisionofaccessibleinformationtoconsumersvialabelsorothermechanisms.Thevaluepropositionforsmarthomeenergymanagementcouldbeimprovedifitislinkedtodemandresponseprogrammes.However,smarthomedemandresponseisstillatanearlystageofdevelopmentandarangeofgapsandbarriersneedtobeaddressedtoenablehouseholdstoactivelyparticipateinelectricitymarketsandtoreapthebenefitsofparticipation.Inthiscontext,policymakerscouldconsiderthedevelopmentofstandardsandapproachesthatensurethatrelevantdevicesare“demandresponseready”aswellas“smarthomeready”(theseshouldideallybethesamething).ExperiencesfromAustralia,theUSandthecurrentEuropeanEcodesignpreparatorystudycouldprovidevaluableguidanceonhowtoproceedinthisarea.Thereisastrongcaseforinternationalcooperationtopoolresources,developapproachesandengageinahigh-leveldialogue.EDNAandtheCDAareexcellentplatformsforensuringthis.


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