Pilgrim Beart's presentation to the IET, London 8th March 2011

1. The Smart Home: Built by consumer pull
Pilgrim Beart, Founder Director, AlertMe
Engineering the Smart World, the road to 2020
IET London, 8th March 2011

2. Agenda
• Setting the scene
• Home Energy today
• Consumers are key to a successful transition
• Seizing the opportunity
• Consumer trends & journey
• What does that mean to service providers?
• Propositions
• Technologies
• The view in 2020
• Based on today‟s trajectory
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3. Setting the Scene

4. Home Energy Today - landscape
• Consumer:
• Doesn‟t think about energy
• Reliable supply
• £1200/year average energy bill is quite painful
• 9% of disposable income
• Zero visibility into where that money is going
• In same category as the mortgage/rent
• A choice of energy supplier (but little differentiation)
• Home is “dumb” – nothing connected
• Government:
• Legal requirement to sharply reduce carbon
• Climate Change Act mandates 34% by 2020 (vs. 1990)
• Renewables not coming on stream fast-enough - and are intermittent
• UK becoming a large net importer of energy (energy security issues)
• 50% of all UK energy is consumed directly by consumers (30% in homes)
SETTING THE SCENE
• Utilities:
• Forced to sell less energy
• Energy retail is increasingly a low-margin commodity
• Need differentiation, and other sources of revenue
• Abroad, Smart Meter initiatives have yet to deliver much benefit
• Aimed at solving utilities‟ problems, rather than bigger picture?

5. Home Energy Today - the opportunity
• The UK has a unique opportunity to lead:
• Starting Smart late-enough to learn from mistakes of others
• Deregulated market, so consumer matters
• Which means Telco‟s can play, as well as Utilities
• Consumer products & service bundles evolve fast
• Opportunity for rapid market-driven change (vs. “Soviet”
approach)
• Addressing the demand-side can have big effects, quick & cheap
• Even just a simple in-home display can drive significant reduction
• It can start now (pre-Smart Meters)
SETTING THE SCENE
• …in fact, it already has
• All major UK utilities are rolling-out online consumer energy
engagement programmes
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6. Does UK government “get” it? Positive noises…
SETTING THE SCENE
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7. Consumers are key to a successful transition
…so worth understanding them!

8. Consumers are key - psychology
How do consumers think?
Abstract Concrete
Consuming Energy Using a washing machine
Motivation – Empowerment = Frustration
CONSUMERS ARE KEY
Motivation + Empowerment = Action
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9. Consumers are key - psychology
Motivation: Money!
• Energy bills ≈9% of disposable income
• 90% of householders concerned about bills
• Standing charge is exactly the wrong model
• Rule of thumb: 1W = £1/year
CONSUMERS ARE KEY
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10. Consumers are key - psychology
We are social animals
• Motivated by Competition and Collaboration
CONSUMERS ARE KEY
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11. Consumers are key - empowerment
What empowers consumers?
• Today feel un-empowered - view energy bill as outside their control
• Like mortgage or rent
• Need to bring energy costs into the here-and-now
• Per-use
• Associate cost with use
Visibility Tangibility
CONSUMERS ARE KEY
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12. Consumers are key - empowerment
Analytics – beyond kW and kWh
• from Data into Information
CONSUMERS ARE KEY
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13. Seizing the opportunity

14. Consumer Trends
• It‟s all about being connected
• 100% of people have mobile phones
• 70%+ of homes have broadband
• Therefore, enter the Connected Home
• Usage:
• Fixed PC is largely dead
• Web 1.0 only a subset
• Web pages don‟t work well on mobile
• Consumers too busy to visit portals just for the sake of it
SEIZING THE OPPORTUNITY
• Web 2.0: Apps & Social
• SmartPhones, Tablets, IPTV
• Whereever, whenever
• At home, at work, on holiday, in the kitchen, the living room,
• Even in bed!
• Increasingly: “if it‟s not online, it doesn‟t exist”
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15. Consumer journey
• Price of energy will rise and energy consumption will get more complex with
TOU tariffs, DR and micro generation
• 8%-10% of the average disposable income is spend on energy ( £1200 p.a.) and
approx 20%-25% of consumption is waste
• Provide awareness through real time visibility, control & automation, enabling
consumers to reduce energy use, cost and CO2
Overall home energy usage and bill over time
“Usage Shock” Possible Net Bill Position
Better tariff
SEIZING THE OPPORTUNITY
Turn off standby Reductions necessary to offset likely future
Identify consumer energy price rises
appliances Smarter use
using most More efficient appliances
energy
Use
Sustained usage levels “Free” energy contribution - self
appliances
more cost generation (eg. Solar panels)
effectively
Diagnostics Establishing Active Behaviour Change Self-Generation
Stages of Behaviour Change 14

16. What does this mean to service providers?
The Energy industry is undergoing significant technological change driven by
• The need to provide certainty and security of supply
• De-carbonise supply to meet challenging Governmental/Regulatory targets
Energy Industry • Respond to customer and regulatory pressure on pricing
Consumers must
Investing in Smart Metering Capital Cost believe and see that
Efficiency Smart Grid (passed to consumers) there is a tangible
benefit to them
Smart metering/smart grid holds considerable promise
• Brings operational efficiencies to the utility - reduce overheads,
billing and collection efficiency, smoothing demand, flexible pricing
SEIZING THE OPPORTUNITY
• Need to tap into consumption related efficiencies (Time of Use
Tariffs, Demand response)
… the 60% … the 40%
OPERATIONAL EFFICIENCIES CONSUMPTION RELATED
through technology deployment through Consumer engagement
“60% of the business case for smart meters lies in operational benefits, 40% consumption related ”
Boston Consulting Group, April 2010
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17. Propositions
• Generally:
• Hide the technology
• Turn data into information
• Bring information to the customer
• Make it REALLY easy to use (esp. installation)
• Enable different Modes of use (web, phone)
• Remember we are all different.
• Avoid “Home Automation” pitfall:
• Has a (deservedly) bad reputation, e.g. X10 for rich people & geeks
SEIZING THE OPPORTUNITY
• Instead, offer simple, complete, propositions which “just work” out
of the box and immediately solve real needs (e.g. saving money)
• Creative consumer-oriented service business models, e.g.
• Advice showing where energy spent, help budgeting & reducing
• ESCO
• “Buy this fridge and get its first year of energy free”
• C2C energy trading?!
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18. Places to deliver the UX
• Phones (dumb & smart)
• Tablets
• In-home displays
• TV‟s
• Virtual real-estate
• iGoogle
• desktop
SEIZING THE OPPORTUNITY
• Social apps
All of these are increasingly online
Can‟t predict all the places we might deliver a future UX
But can predict they will all be online
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19. Examples (already on the market)
Electricity + Gas + Microgen
SEIZING THE OPPORTUNITY
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20. Examples (already on the market)
SEIZING THE OPPORTUNITY

21. Technology – In-home Connectivity
• For end-devices (cost £‟s, and have to last years on a tiny battery)
• For appliances (cost £10‟s or £100‟s, generally mains-powered)
• Today
• >70% of homes have always-on IP connection (broadband)
• >46% of homes have WiFi „dialtone‟ [Ofcom Q1 2010]
• >95% of homes have cellular access
• Ultimately…
• It‟s a heterogenous world, with a range of constantly-evolving PHY‟s
• ZigBee SE, HA, Mbus, WiFi (low power), powerline, 3G & 4G…
SEIZING THE OPPORTUNITY
• It‟s all ultimately IP, would be nice not to obsess about the PHY
• However…
• UK Smart Meter PHY is in a quandary
• No-one (Govt, Utils, Tech providers) wants to be seen to be “picking a winner”
• Everyone will benefit if we do pick a winner (not least the Consumer)
• …even if it‟s not perfect
• Whatever is chosen will go out of date (but that‟s not a reason not to pick one!)
• e.g. 10base2 Ethernet spawned a huge market, even though no-one uses it today
• Or by delivering online we could avoid PHY issues entirely
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22. Technology – the Home Hub
• Gateway and local agent
• Platform for multiple Connected Home services
• Home Energy, Heating & Cooling, Peace of Mind, Telecare, …
• Online (but acts locally too, for latency/reliability)
• Initially a new device in the home (for ubiquity)
• But ultimately embedded:
• Smart Meter (if “thick”)
App
App
App
App
App
App
App
App
SEIZING THE OPPORTUNITY
• Broadband router CLOUD
• STB (IPTV) UX UX UX
• Femtocell
App
App
App
App
App
App
App
App
• … Operating Operating Operating
HOME
System System System
PHY
PHY
PHY
PHY
PHY
PHY
PHY
PHY
PHY
PHY
PHY
PHY
THICK THIN HYBRID

23. The view in 2020

24. UK Home Energy in 2020
The Consumer…
• Thinks of energy services like other home services:
• Broadband, TV, mobile, …
• Energy is a part of broad service “bundle” from many providers
• Energy services (e.g. e-commerce, switching etc.) available
separately from energy retail
• Has a Smart Meter (with Time of Use tariff, DR just starting)
• (and 3rd-party services can help manage it)
• Has several HANs (WiFi + others), with some white goods on
them
• Is one of the 5%(?) with microgen (PV, thermal, CHP)
• Is one of the 5%(?) using an (PH)EV (= 3 houses!)
• Has a choice:
CONCLUSION
• Between more complex, more expensive (+60%?) home energy
• Or simpler, cheaper if they opt-in to letting it be managed
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25. Thanks for listening