IoT: the Internet of Things
The Internet of Things, or IoT, has been defined as “a development of the Internet in which everyday objects have network connectivity, allowing them to send and receive data.” According to the research firm Gartner, 3.9 billion connected things were used in 2014 and by 2020, it is expected to rise to 25 billion. First it was computers, and then phones, TVs, and cars. The new ideas of what will be connected is endless. Most recently, I became aware of a wifi-enabled basketball hoop. Why will we connect everything to the internet? Because it’s easy, because it’s fun, and because there is money to be made in the IoT.
Consumer goods are one key area where evolution toward the IoT has occurred, mainly because early adopters reward innovation. In some instances, technology innovations sprint ahead of adoption. Smart home devices fall into this category as they have been part of the IoT for several years, but are just now becoming more popular with the general public. The connected home movement is now buoyed by energy companies who discovered that they could greatly benefit from consumers with smart home devices. Energy providers are rewarding customers who purchase connected energy-control devices. As customers increasingly adopt these technologies, the connected home movement continues to push forward and gain momentum.
IoT Personalizes the Energy Experience
IoT consumers enjoy convenience, control, and ease of connectivity. From fitness trackers to TVs, technology is deeply integrated into daily routines and is constantly transforming human habits. Over time, the general population will only become more tech-savvy and more accustomed to rapid delivery of quality service derived from IoT devices.
In response to this, companies have recognized the need to market products to consumers by catering to their electronic habits and already-owned technologies. Enter the smart home phenomenon, including products such as the smart thermostat and wifi plug control devices. Really? Who wants a wifi-enabled plug control device? Not exactly fun or cool on first blush. So why are smart home devices starting to become popular?
Since customers foot the bill for energy-saving products, they want to recognize the future energy-saving potential of the purchase. Conservation-minded individuals value control devices since they can save energy, save money, and save resources. IoT devices accomplish this by personalizing devices according to consumer habits. For example, one consumer may follow a “set-and-forget” consumption pattern, meaning they prefer automation of home devices. Another may want constant access to devices and the ability to change settings at any moment in time. People like the ease of use to turn things on and off remotely whether from 10 feet away or 10 states away. The smart device market fulfills consumer subsets with products that cater to any and all energy preferences.
The Power of the Consumer
The IoT empowers consumers in new ways. Besides the convenience of remote control, consumers realize power in relation to their energy provider. With a wifi-enabled thermostat or plug controller, consumers hold a valuable key to the capacity-strapped electricity grid, and electricity providers are ready to pay. In this instance, individuals understand the direct financial reward from bringing their wifi-controlled assets into the relationship with their energy provider. In other words: cash rewards. The IoT has flipped the relationship between energy provider and consumer where now cash flows both ways through efficiency and demand response programs.
The smart home revolution is a win-win for customers and utilities. Customers can understand their energy usage and exercise more control over their spending while utilities have resources that allow them to increase engagement and improve demand response. The two parties share the goal of increasing energy efficiency and conservation, which means that any tools that contribute to these goals are valuable.
Future of Smart Homes
Connected devices hold a lot of potential for the future of energy from both the customer and energy company standpoints. A recent Accenture report revealed that more than half of consumers stated that they are interested in purchasing or signing up for a connected home product or service in the next five years. Interest in smart devices clearly exists, but utilities still need to create enhanced and interactive channels to explain the value of connected homes to consumers. Utilities must respect the power of the consumer in considering how consumers bring their assets to the electricity grid and engage with smart home devices. In the end, utilities rely on the consumer to adopt energy-saving technologies, improve their wasteful habits, and participate in the smart home revolution. They should not rely on industry jargon like demand response, smart grid and peak demand hours but instead use meaningful terms like cost savings, environmentally friendly, and conservation. Utilities can take this a step further by applying product value in even more general terms by emphasizing consumer benefits such as awareness, understanding, control, and simplicity. It is important that these benefits are translated into terms that consumers understand and, more importantly, value. We may not be able to predict how exactly the smart home revolution will grow, but they are truly becoming less of a far-fetched sci-fi fantasy and more of a sought-after reality.