The Promise of Smart Home Energy Management

The first EPA certified Smart Home Energy Management System (SHEMS) hit the market in 2020, offering new hope in the fight against climate change. For years before, the smart home found its value in convenience and security primarily, with automations taking care of repetitive tasks and warning the homeowner when something was amiss. With the addition of SHEMS, a greater purpose for the smart home was born, one with global implications.

What can a SHEMS system do?

Context

Prior to SHEMS, some devices reported energy consumption, but the information typically lacked context. Data without context is useful in research but offers little value to the average consumer. Understanding which systems in the home use the most energy, when they use it, and how much that energy costs the homeowner is much more useful and actionable. SmartThings Energy, a SHEMS system from Samsung SmartThings, can even forecast your bill using average energy prices based on zip code.

Whole Home Approach

A key first step in the fight against climate change was the introduction of the smart thermostat, enabling energy savings when occupants are asleep or away from home. With roughly 50% of energy consumption in a home arising from heating and cooling of the home, smart thermostat rebate programs offered a simple and effective, albeit limited, first step. By involving more systems within the home, such as appliances, water heat, and lighting, SHEMS can now impact nearly 100% of a home’s energy footprint.

Automation

Although whole home impact is a key advancement for SHEMS, relying upon humans to consistently remember to reduce consumption would lead to limited results. In a SHEMS system, the full potential for savings are possible through automated actions based on a time of day, temperature reading, occupancy, or other triggering event. Automations ensure repeatable results and offer fine-tuned control that enables the homeowner to perfectly balance comfort and efficiency.

Utility integration

One key way to leverage automation is by tying your system to the electrical grid, enabling coordinated saving among SHEMS connected homes for the purpose of reducing an energy utility’s peak demand. Demand response programs and time-of-use rate structures take different approaches to the same goal, but both serve to flatten the energy demand curve by shifting energy demand to lower use periods during the day. This reduces the need to build new power generation or to buy power for peak load at higher prices. 

SHEMS systems use automated actions, like deferring a load of laundry or charging an EV until the rate period changes or demand response event ends, as the means to shift this demand. The connection with the utility provides one of the most valuable benefits of SHEMS, because it enables coordinated action for the greatest potential impact, and a means by which incentives can be offered which promote broad participation.

Big Promise, Tough Challenges

With 21% of America’s energy consumption being used in residential environments, the potential of SHEMS-powered homes across America in the fight against climate change is tremendous. Along with more efficient mechanical systems, and tighter building envelopes, automation through SHEMS closes the last key gap in building performance. Even though we are off to a great start, the full potential of SHEMS will only be realized through mass adoption, requiring further advances in three key areas, standardization, incentives, and user experience.

Standardization

The smart home has been plagued by fragmentation for years now, with multiple standards competing for dominance, and multiple platforms pushing the boundaries of what’s possible, but in proprietary ways. Because fragmentation increases risk for smart home vendors, and confuses and frustrates customers, it slows adoption and potential impact.

The Matter standard, a product of the Connectivity Standards Alliance, aims to change all that by enabling smart devices to work across popular smart home platforms, which all agree to adopt the standard. In doing so, a major hurdle to mass market adoption will be removed, enabling a more seamless experience for users. With the Matter 1.3 specification, a new standard for energy monitoring is being defined, which could standardize the way devices and smart home platforms utilize energy data. This would proliferate the use of energy monitoring within devices, enhancing choice and flexibility for consumers, while erasing barriers to adoption.

Fragmentation in the energy sector is another hurdle that must be overcome. In the US, despite some consolidation, most consumers receive their energy from a local utility or coop, of which there are hundreds. These utilities typically use 3rd party companies to manage consumer engagement, such as demand response and other incentive and marketing programs, making it even more challenging to integrate smart home technology across the country. Certain standards, like Open ADR (automated demand response), are designed to combat this issue, and are key to enabling integration and accelerating participation.

Even with a standardized approach to integration with demand response, a further challenge is to quantify the energy saving potential of a SHEMS system in a way that satisfies regulators nationwide who must justify program expenditures and ensure results. Comprehensive research of SHEMS system performance should be prioritized at a national level to prove out its effectiveness and accelerate mass adoption by utilities nationwide. This will be the key to building awareness with consumers and enabling integration to the grid which enables incentives that further accelerate adoption.

Incentives

Passage of the Inflation Reduction Act in 2022 provided massive funding to fight climate change, such as rebates to Americans for purchase of energy efficient heat pumps. Incentives are an age old method for accelerating technology adoption in areas where a societal imperative demands it. Enhancing current consumer demand response programs to incentivize a whole home approach like SHEMS, would have a dual impact. It would greatly expand energy conservation within each home, and offer full control to the homeowner, enabling them to balance comfort and efficiency to their own preferences.

By taking a whole home approach, SHEMS also becomes the best fit for incentive programs targeting new homebuilders and apartment developers. It’s much more difficult and expensive to upgrade multiple major systems in an existing home, whereas new construction provides a unique opportunity to enhance performance while only needing to cover the incremental cost of the more efficient, SHEMS-connected systems. These costs can more easily be covered through incentives, which mitigate the risk for builders of investing in these enhancements and provide the needed infrastructure for consumers to participate in SHEMS-based demand response and other consumer focused programs upon move-in.

Another way to incentivize builders is to change the formula for HERS (Home Energy Rating System) ratings to account for SHEMS benefits. Currently, these scores are based on physical attributes of the home and its systems, but do not account for the saving potential from a pen automated SHEMS system. If builders can achieve lower HERS ratings by accounting for SHEMS, the additional home value resulting from a lower score can help justify the additional investment made by the builder.

Although most homes in the US are single family residences, multifamily accounts for 31% of homes in the US, making it an important target for energy conservation. Some systems, like Samsung SmartThings, can offer SHEMS benefits to residents of multifamily, while offering additional benefits to the property itself, which pays the energy bills for common areas and vacant units. Major multifamily operators are taking climate action seriously, focusing on sustainability through ESG (environmental, social, and governance) teams which spearhead programs to meet ambitious goals. With local and state authorities enforcing their climate action plans, multifamily operators are under increasing pressure from the threat of fines, if they do not reduce emissions in areas under their control directly and potentially indirectly (resident consumption). Incentive programs that offset the necessary investment in equipment and motivate participation in demand response by multifamily properties and their residents will have an immense impact long term.

User experience

It’s one thing to make an app, and a completely different thing to make it  easy to install, set up, and use. So often in technology development, simply  launching a product into the market in a timely way is a monumental challenge, with ease of use and other factors often being dealt with incrementally over time. But one of the key challenges of smart home technology has always been the user experience, and this will be key to unlocking the full potential of SHEMS.

Simplicity, Context, and Deployability

SHEMS is a new category of application, with considerable room for enhancement in all three key areas. The key to mass adoption and regular use is to enable frictionless installation and setup processes, create interfaces that are intuitive and customizable, and to put data into context that enables understanding and calls the user to take action. These refinements will take time, but offer the prospect of wider adoption, more regular use and action by the user to optimize results.

The Future is Bright

With early efforts like SmartThings Energy demonstrating strong adoption and rapid evolution, it’s time for the energy sector and the smart home industry to work together to increase competition and improve integration. Establishing standards and incentives that invite broader participation and accelerated adoption are key, as is the maturation of those applications. With advancements in AI (artificial intelligence) offering the promise of automated optimization of SHEMS, and solar power and battery integration enabling distributed energy production to further offset peak demand, the future looks very bright. But, it remains our collective responsibility to battle climate change, and we must act with urgency and intention to win that fight.