The first two industries have operated for nearly half a century in both smart homes and smart buildings. Some of the major suppliers span both markets.
Energy management systems, security systems and other automation technologies are gathering under the banner of home automation networks. Home automation and energy management failed to get off the ground over the past two decades, although there were several false starts. In 2012, home automation and energy management finally moved forward. The combination of these services under the wider home area network umbrella could become the driving force for the sector, lowering costs and improving operational efficiencies.
There are two reasons for this. First, the introduction of video surveillance as a service, which is becoming an attractive solution in physical security because it delivers a lower point cost and providers can host multiple customers on a shared cloud-based infrastructure. This platform can now collect data and connect energy management control devices, again saving installation costs and providing additional benefits.
Second, the energy management system passes the regional wholesale electricity pricing information along to smart appliances, which can then delay a cycle depending on the cost of energy at the time. This reduces the homeowners's energy bill and allows utilities to shave peak demand down. So in this case the internet is replacing AMI smart meters through an internet-connected home area network, thus saving utilities investment money.
In addition to whole-house energy management systems with possible tie-ins to other systems such as security, lighting control, HVAC, motorized shading and home automation, looks very appealing. Where smart meters are already installed, they could communicate pricing, outage and other signals directly to smart appliances, but this is now looking to be an expensive solution. However, the utility industry badly needs detailed information from the energy management systems if they are to achieve optimal control over the distribution network.
On the supply side of home automation and energy management, despite the many failures over the last 15 years, there is now a strong belief that through interfacing with smart grid together with energy efficiency through these controls, will deliver savings that will provide a satisfactory return on investment. This has given rise to a renewed interest in HAN, where we are now seeing a plethora of new companies setting up and no shortage of interst from the investment community to supply funds.
In the smart building commercial sector, the connection with the smart grid should be more appealing to utility companies because these buildings are already equipped with sophisticated energy management systems, so the possibility of connecting them to distributed energy is there for the taking. However, the smart building to smart grid interface business is still in its infancy. The technology is, for the most part, already in place on the smart building side.
The major suppliers to the smart grid market, while confident about the long-term future, have for years known that there could be some long delays in full deployment. Their concerns have hinged on the immense technical and financial challenge that utilities face.
The smarter utilities came to the conclusion that with the aid of smart building owners, they could circumvent some of these roadblocks. By interfacing smart buildings with smart grid, even at the latter's current stage of development, energy conservation and demand response could reduce the electrical load. Also, where the site generated relatively clean distributed energy, this could be sent back to the grid.
All of this could be achieved for an investment of no more than 1 percent of the total investment needed to deliver a comprehensive smart grid. More important is the fact that it would not require money from the public purse as private financing would be available for about 70 percent of the investment.
Most of the major suppliers driving the smart building to smart grid interface business are manufacturer/installers of sophisticated building and electrical management controls. To complete the full spectrum of technical and commercial attributes and offer a total solution, they have carefully build up the expertise needed through acquisition.
The four leading companies in the smart grid and smart building controls industries include Schneider Electric, ABB, Siemens and Honeywell. The portfolio of acquisition of these companies in the last two years extends much further into the smart grid arena and our analysis shows that control management and hardware acquisitions grew by a factor of 10 in 2011.