With the increasing number of residential energy assets in Europe, home energy management (HEM) is becoming particularly interesting. HEM brings value to residential owners and companies offering the solution but also to the wider electricity systems, by enabling a variety of use cases, from time-of-use or self-consumption optimisation, to flexibility.

In the home energy management space, different companies - and types of companies - must act in synergy

HEM systems have an inherent complexity, as they involve multiple types of companies, operating at different stages of the value chain. For instance, the appliances used within a HEM system are provided by different assets manufacturers: HVAC, chargepoint, battery manufacturers, etc. But then, optimising the energy flows between these assets is usually done by a different company, typically an integration/optimisation specialist. Finally, the company offering the HEM proposition to the end-user – or providing the flexibility services to the grid – can also be a separate player.

To summarise, there are at least four stacks to the provision of a HEM system (see image) and most companies do not cover all of them.

On top of having a complex value chain, HEM remains a space with a lot of technical constraints

On top of having a complex value chain, HEM remains a space with a lot of technical constraints

So far, there has been no standardisation of communication protocols or of assets integration processes. In fact, the integration of loads and the optimisation of energy flows is becoming increasingly complex as HEM covers more and more use cases and appliances. There are different strategies emerging to build compelling HEM systems and some of them are getting good traction:

The technical complexity of HEM is pushing a lot of companies to outsource the development of their solutions to integration specialists

Standardisation of HEM is not going to happen in the next few years. While some actors are trying to develop interesting solutions - such as the plug-and-play environment promoted by the EEBus Initiative - these solutions are still at their early stage. Filling the gap left by the lack of standard, some B2B companies have built an expertise in the development of HEM solutions. They provide services and products to asset manufacturers, utilities and all players willing to have a share of the HEM values.

In the coming years, we believe that the role of integration specialists will become even more important, as companies are increasingly willing to gain value from HEM. This is clearly shown by large utilities investing in this space. For instance, in 2019, Centrica and Engie invested respectively in GreenCom Networks and Tiko.

Providing HEM to end customers is a valuable business to many, but who will win the customer interface?

A lot of the HEM values stem from the customer interface. On top of selling new products to customers, it is also a mean for companies to improve their relationship with customers and use demand side response as a new source of revenue.

willingness to have the customer interface

There are many unsolved technical issues with the development of HEM systems. Despite the efforts of the likes of EEBus, standards are unlikely to be widely accepted in the coming years by the many kinds of players involved in HEM. Therefore, the HEM market will require specialising companies to develop solutions enabling the integration of assets and the optimisation of energy flows. Only the future will tell which companies will win this battle, and the battle for the customer interface.

To discuss Home Energy Management further, contact us.