How to win the Home Energy Management business battle

The growth of Home Energy Management (HEM) has led to a burgeoning, heretofore fragmented market, within which rages a business battleground of players large and small. The key to winning, explains Yusuf Latief in Smart Energy International’s Power Playbook column, will be ownership of customer confidence.

According to Market Reports World, the global Home Energy Management Systems Market is expected to witness substantial growth from 2022 to 2028, reaching $3.5 billion by the end of the forecast period, up from $1.7 billion in 2021.

Fuelled by the increasing importance of intelligently managed energy efficiency for our power systems, the forecast for its growth is no surprise.

The potential of under-utilised sources of demand response within the residential sector has been a growing business interest as countries investigate newer, smarter ways of managing grid congestion.

What this has led to is a business battleground and, until recently, a largely fragmented market.

In one corner stand the original equipment manufacturers (OEMs) of clean tech assets, such as Heating, Ventilation and Air Conditioning (HVAC) systems, EVs and their charge points, as well as heat pumps and solar PV panels, to name some of the most popular.

In another are the optimisers and integrators, those companies who coordinate the flows of energy for optimal consumption, at times running interface with grid operators for demand response and flexibility services.

Then finally, we have the energy retailers, who buy electric power from generators at the wholesale level on behalf of their customers.

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For all these players, key to gaining market share will be convincing their customers that their products or services within the space are the most seamless.

For some, take market leaders such as Tesla or Octopus Energy, doing so largely on their own terms has been a very viable course of action.

But for others, whether HVAC providers, smart thermostat manufacturers or PV specialists and energy optimisers, more strategic footwork has been necessary, calling for acquisitions and strategic partnerships to consolidate their positions.

“The real war is about who will take ownership of being the ones that will convince the end customer to use their assets or their services.” So stated George Husni, LCP Delta’s head of business development.

Industry edge

According to Husni, in the battle between smart thermostat manufacturers and HVAC players, the former innovated user interfaces earlier giving them an edge, whereas “HVAC players lagged behind in developing the mobile application for end customers.

“We believe that within five years’ time integrated PV specialists, like 1KOMMA5°, as well as energy suppliers are expected to gain market share by offering a suit of solar-related offerings and innovative business models; smaller installers will be acquired and will phase out of distribution because they will not own the relationship with the final customers.”

Husni referenced key partnerships, acquisitions and strategic moves from the last quarter. Including a consolidation by emobility giant and Texas-based OEM Tesla, who has long dominated the EV realm, in 2023 they integrated the Powerwall system with their EV solar charging infrastructure.

In essence, Tesla owners using Tesla software, namely the Charge on Solar programme, can charge their vehicle using only excess solar power generated by their panels, alleviating stress from the grid of charging the EV and leading to a more energy-efficient home.

Tesla can thus be said to be a go-to case of an OEM leading the market on their own terms, consolidating their business across the Home Energy Management segment while maintaining their position as the EV leader.

Dominance in the realm also brings to mind the case of Octopus Energy, an energy supplier which, under its own retail brand, delivers customer service and energy products to 7.7 million households globally. Add in the influence of Kraken Technologies, Octopus’ tech arm and customer platform, and it is no wonder that the British player has been at the forefront of news headline the past few years.

According to Husni, there is a certain level of ‘concern’ about retailers in the market, about if and when they would decide to properly engage, as they already have an advantage from data and relationships from their customer base; a point made more pertinent by Octopus Energy’s stature.

But, of course, not everyone can be a Tesla or an Octopus.

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Home Energy Management: Consolidatory moves

Husni stressed key moves that have been needed by PV specialists in Europe, such as 1KOMMA5°’s acquisition of solar installers Zonduurzaam to enter the dutch market and experta solar to consolidate in Spain, as well as SolarEdge’s partnership with European heating manufacturer Vaillant to integrate Vaillant heat pumps into the SolarEdge Home ecosystem.

Further cases include the GridX and Sense partnership, focused on leveraging smart meters to provide consumers and utilities with better insights into energy usage and costs, as well as Sonnen integrating Nibe heat pumps into their virtual power plant programme.

On the energy supplier side, states Husni, Heatio partnered with E.on to provide its Energy as a Service solution through a home subscription product. The solution will integrate E.ON Next energy tariff and incentivises homeowners to improve the energy efficiency of their homes.

Take also Samsung’s smart home platform SmartThings, which partnered with energy related companies, such as Eve Systems in 2023 and British Gas earlier this year in January, to integrate products and track consumption.

In the partnership with Eve, SmartThings users will have the ability to reduce power consumption by monitoring individual devices that are connected to Eve’s smart plug, reducing utility bills by creating automation routines and setting timers to optimise energy usage.

The partnership with British Gas, described by British Gas’ parent company Centrica as “the exciting first step in a long-term venture”, sees British Gas’ PeakSave demand flexibility scheme integrate with SmartThings Energy, informing customers on the best times to use appliances to save money.

An energy integrator here, Samsung’s moves further cement its position in the market as an energy flow coordinator, interfacing both with energy companies and utilities to oversee consumption.

Such cases demonstrate the moves market players make to cement their position in the home energy management as it continues to consolidate. What are some of the key acquisitions and strategies you’ve witnessed within and think should be on our radar?

Let us know.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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