The US and the European connected home markets have taken off. There is (almost) no debate about this as millions of homes are equipped every year with connected home products. You would think that a developed and English speaking country such as Australia would be on top of this trend. But that’s not the case.
When talking about devices such as smart plugs, connected lighting, connected heating or cooling controls, and connected PV management or Home Energy Management (HEM), Australia only has around 50,000 homes equipped. There are even less customers who have bought connected security solutions.
There are 6 reasons why the market lacks behind:
- It’s a relatively small country in terms of population, with slightly less than 9M homes. Therefore, international players looking to enter new markets haven’t so far prioritised Australia.
- Although Amazon is supposed to launch at the end of 2018, it’s not in Australia just yet. This means Echo hasn’t had the chance to boost the market and that the most popular platform for buying connected home devices isn’t available to Australians.
- The demand for heat is low in Australia, and therefore the connected heating control manufacturers have very little interest in bringing their products to this market. Even if they wanted to, the heating market is very diverse with many different types of heating systems, meaning that the product development resources might not be worth the potential returns.
- On the other hand, the cooling demand is quite high but most of the market is equipped with single split units and there aren’t many solutions available globally to control these appliances remotely.
- There isn’t a large service provider, such as an energy provider or a telco, committed to this market. Telstra is the most active telco with two starter packages and several devices available, but the monthly fee (AUD $25) seems quite high to achieve significant sales. AGL and Energy Australia are two of the big 3 energy suppliers who have done some investments in smart management of solar PV or storage, but they haven’t actually entered the market yet.
- In other regions of the world, local poster-child start-ups have helped raise awareness in the early days, but there are very few really making noise in Australia so far.
Despite this series of discouraging facts, we do believe that the Australian energy industry has a unique chance to create the connected home market and to follow the growth seen in other continents:
- The country has one of the largest residential solar PV markets with over 1.6M homes equipped, and the growth of the market has continued despite cuts in subsidies.
- According to Delta-ee’s Energy Storage Service, the Australian battery market is one of the most promising in the world.
- A few drivers such as the rise of energy prices, the high cooling demand and grid issues (leading to blackouts) increase the demand for smarter management of PV and storage systems
- In some markets, the security services companies lead the way and are a big competition to the energy industry. However, the small professionally monitored security market in Australia means that the security vertical is unlikely to be the single entry point to the Australian connected home market, leaving an opening for the energy players.
In addition, being behind other markets does offer some advantages. For example, some of the most popular connected home devices (such as smart plugs or connected lighting) can be quickly adapted to fit the Australian market. Therefore, companies can find experienced partners in this field fairly quickly. Delta-ee’s experience of following markets since 2010 has also taught us that over time more and more companies are likely to have a growing engagement with this market as they see the value in having connected home in their portfolio.
We do believe that there is enough value for Australian energy suppliers and HVAC manufacturers to get more involved with connected home. The question is – who will grab this opportunity first?
To find out more about the Australian connected home market, send me an email or call on +44 (0)131 285 0777.