Home energy management systems (HEMS) will see moderate growth through 2013, according to ABI Research. But starting in 2014, shipments of these systems are expected to accelerate rapidly until by 2016, nearly 44 million will hit world markets, when they will generate revenue of about $2 billion.
Sam Lucero, M2M connectivity practice director with the analyst firm, explains: "We see utilities as the largest channel for HEMS going to market. Utilities have been focusing their efforts on smart meter deployments. But in the next few years, HEMS will ramp up to deliver the utilities 'demand response' benefits on top of their smart meters. This trend will start to have real impact in 2014."
Utilities will not be making HEMS systems themselves: two groups of vendors provide the actual systems (although the consumer may only deal directly with the utility.) One of these groups is small private HEMS vendors. They now face increasing competition from home automation vendors that offer HEMS as one part of their overall product lineups.
Competing against the home automation vendors wont be easy, Lucero says. He recommends: "The pure-play HEMS vendors should differentiate their offerings to focus on the specific needs of utilities, tying their systems effectively into the utilities' back-end operations. They should also form close relationships and partnerships with the smart grid value chain, and demonstrate a level of vertical energy market expertise that impresses the utilities more than do the home automation vendors."
The home automation vendors are likely to counter that homeowners are already using their systems (or soon will be) and that further specialization is redundant. They can point to their greater variety of paths to market: retail, service provider, dealer-installer, utility. They can partner directly with smart grid.