Home Energy Management Systems (HEMS) Market Analysis By Technology (Wi-Fi, ZigBee, Wireless M-Bus, HomePlug, Z-Wave), By Component (Enabling Technologies, User Interface, Control Devices) And Segment Forecasts To 2020

Industry Insights

The need to achieve energy efficiency is the primary factor that is expected to drive the home energy management systems market growth over the next few years. Growing inclination towards efficient energy management is expected to play a key role in market development. Ongoing technology trends such as declining computation, sensor, and display cost along with the roll-out of smart utility meters provide several growth opportunities.

The home energy management systems market is still in its nascent stage and is characterized by low consumer acceptance. Therefore, several market players such as Google, Microsoft, and Cisco arrived at a decision to exit this market. However, government mandates and initiatives to educate consumers regarding the benefits of these products offer several avenues for growth. For instance, Canadian utility Hydro Ottawa charges their end-users based on the energy-usage and rewards them on utilizing minimal energy during peak times. Further, several utilities such as EDF in France and Vattenfall-Nuon in Sweden provide basic HEMS to their customers; wherein they can connect devices with wireless plugs and monitor usage.

Key initiatives such as availability of smart meters, customer reward programs, and time-based electricity pricing are expected to positively impact the product demand over the forecast period. In their bid to gain market acceptance, utilities focus on providing information to the end-users. Mergers, strategic alliances or partnerships play a promising role in the industry.

These systems hold the potential to decrease energy cost, increase energy-efficiency, and decrease carbon footprint. The proliferation of web-based cloud computing applications may also provide several growth opportunities over the forecast period.

Changes in end-user electricity pricing structure and shifting trends from fixed tariffs to dynamic prices based on usage is a key strategy that may increase market penetration. Further, provision of financial incentives may also be a key factor instigating the adoption over the foreseeable future. Increased connectivity offered by HEMS devices is also expected to impel product demand over the next few years. End-users are often reluctant in adopting these solutions owing to the lack of technical know-how and significant investment that goes into the deployment, for example, displays, sensors, and software. Further, a few of these solutions are difficult to install and require professionals, thereby increasing costs, which may pose a challenge to industry growth.

Component Insights

HEMS components can be broadly classified into the user interface, control devices, and enabling technologies. Control devices enable utilities or consumers control their energy usage and offer a high degree of automation. The user interface provides energy feedback to the end-users; whereas enabling technologies support processing and communicating information pertaining to energy-usage.

Technology Insights

Key HEMS technologies include ZigBee, Wi-Fi, Z-Wave, HomePlug, and Wireless M-Bus. Increasing usage of internet is a key factor that is expected to drive demand across the Wi-Fi segment over the forecast period. HomePlug, which is a standard power line carrier, targets applications such as gaming, IPTV, and internet content.

Regional Insights

Europe, home energy management systems market, emerged as the largest regional industry in 2013 accounting for over 35% of global revenue. Rising pressure to meet energy-efficiency is expected to fuel regional demand. For example, In June 2011, an EU directive called for stringent measures to improve energy-efficiency beginning from energy transformation and distribution to final consumption. Aging power infrastructure is estimated to be a key factor that drives growth across North America.

Competitive Insights

The industry is characterized by constant technology innovation and new product development. A few utilities focus on providing realtime data to home-owners, along with several pricing structures and load reduction requests. For example ComEd. Furthermore, several companies are incorporating web-based user interface allowing homeowners to adjust the thermostat setting or even turn-off lights using a smartphone. Cisco Systems Inc., Sharp Corporation, Panasonic Corporation, Intel Corporation, Honeywell International, and General Electric dominate home energy management system market share. Companies focus on innovation and increased R&D efforts as a part of their core business strategy.