The Residential Energy Paradigm Shift

The residential energy paradigm is undergoing a shift as homeowners invest in emerging smart home technologies and distributed energy resources. The single-family home, for example, is no longer simply a metered source of energy demand but instead has become a source of energy supply and demand management potential and even a focal point for tackling climate change. The potential revenue tied to this rapidly growing marketplace has garnered the attention of a host of solutions providers, many of whom built their market presence completely outside the world of energy. 

Pivot or Be Left Behind

Just this week, I received a promotional email from the Xfinity/Sunrun team on how I can work with these partners in energy and smart home tech to install solar on my home, and better yet, in some states (not here in Colorado) tack on battery storage. Xfinity has been expanding its play into the smart home and energy management arena for a handful of years. This pivot strategy reflects the ongoing disruption to the cable industry with online competition, a great analog to the transition underway in the energy world. 

Online retail upended brick-and-mortar businesses, the sharing economy is transforming the hospitality industry, and online streaming has rocked cable companies. These three examples have one important commonality—technology-enabled experience made possible by new business models is the pathway to the new platform economy. Legacy industry incumbents that created empires on product sales and single offerings are either pivoting to expand their offerings or being left in the dust.  

Three Factors to Bolster Success

It’s not an easy path, but the rules of engagement for success are becoming clear. Three factors bolster the success in the pivot to platform offerings:

• Offer open systems and strive for interoperability. Lowes is becoming a cautionary tale. The big box home improvement chain will be discontinuing its Iris smart home platform on March 31. As a recent Tech Hive article points out, proprietary systems will be the downfall of attempts at innovation. 
  

• Harness the broad appeal of the smart home. That Xfinity promotional mailer I mentioned earlier led me to the program landing page to explain just why this non-utility partnership should be my answer to smart home and solar investment: “Sunrun is the nation’s leader in residential solar energy, delivering service to more than 160,000 customers. Now Xfinity, a leader in home innovation, is teaming up with Sunrun to bring the benefits of solar to even more homes across the country. So you can power your Xfinity services—and your connected home—with clean, sustainable energy.” This messaging showcases what customers demand: technology-enhanced experience, convenience, and a contribution to the greater challenge of climate change.
  

• Build partnerships and capabilities to employ domain knowledge, channels, and services. The smart home platform is built around an IT and communication infrastructure, software analytics, hardware, and services. Curating best-in-class offerings in each of these layers is no small feat, and few, if any, vendors can bring a complete solution to market alone. Beyond the headlines of major partnerships such as E.ON and Microsoft, smaller innovators can find traction with strategic investments. Centrica’s venture business just announced investment in home energy management provider GreenCom Networks and hot water system provider Mixergy. “These investments are an important step forward to a time when [Internet of Things]-enabled technology in the home will operate as a single unit to ensure that energy is used in the most effective way,” explained Sam Salisbury, director of Centrica Innovations Labs.
  

There is huge opportunity in the burgeoning smart home market, and careful investment in solution design, business models, and execution can create significant top-line revenue for providers ready to pivot and move quickly.