Home Energy Innovation from Direct Energy

Lynne Kiesling

Whirlpool and Direct Energy have long been two of the most forward-looking companies working in the electricity value chain. Whirlpool was the appliance partner on the GridWise Olympic Peninsula transactive network project, and have committed to all of their global products being grid friendly and transactive by 2015. Direct Energy, an energy retailer, has been leading efforts to open retail electricity markets for residential customers; as long-time KP readers know, this continues to be an uphill battle in the face of persistent (and, in my view, deluded) beliefs in regulated, cost-based retail pricing determined by a set of political elites instead of pricing that enables consumers to make product and service choices based on their own values, local knowledge, and preferences.

Last week at the Consumer Electronics Show in Las Vegas, Direct Energy debuted a home energy monitor application that has many features that reflect a lot of the economics and psychology of potential competition that I have emphasized for a long time. This CNet article summarizes the product/service offering, which involves Direct Energy partnering with Whirlpool, OpenPeak (consumer interface device), Best Buy, and Lennox.

Through the OpenPeak device, consumers can control appliances as well as heating and cooling. It will also display real-time energy use and act as central hub for a wireless home network.

Direct Energy plans to gather energy data and provide recommendations on how consumers can cut energy use, said David Dollihite, vice president of product development at the company.

“We don’t want to give people technology to manage energy but try to integrate energy management into their existing lifestyle with things they actually enjoy doing,” he said. For example, Direct Energy could recommend a thermostat change which a consumer could quickly act on without sacrificing overall comfort. …

Once information is available on Direct Energy’s servers, consumers can access the data from multiple points, such as a PC, TV, or smartphone.

In other words: automated home energy management — there’s an app for that! See also this article from the Dallas Morning News on the Direct Energy HEM offering.

As usual, Katie Fehrenbacher at Earth2Tech gets to the heart of the matter — the innovation in these value-oriented, consumer-focused products and services is going to occur disproportionately in truly deregulated retail markets like Texas:

… the HEM center device would be unique in two ways: It will focus on the consumer and will offer more than just energy information. Compared to previous pilots and products that are more utility-focused, the HEM center will be focused on what the consumer wants, said Woods. Direct Energy is a power supplier, operating in the deregulated Texas market — not a traditional utility — and hopes to win over new customers with the device.

The device will also offer communication and social network information (like Facebook) says Woods, because a single one-off energy device will be ignored by consumers. Energy-specific devices will land in the drawers of consumers after a couple weeks, predicted Woods. The device will also be compatible with Whirlpool smart energy dryers and Lennox smart thermostats.

The HEM center product is interesting in that fact that it’s coming from a energy reseller in a deregulated market. Competitor Texas-based TXU Energy is also offering its own energy management tools, including the iThermostat, which hooks into the customer’s home broadband connection and enables people to go online to program and monitor energy consumption related to their heating and cooling. Germany’s utility Yello Strom (Germany is also a deregulated market) also makes a smart meter and energy management products.

Note the experimentation that is occurring in Texas, the only meaningfully deregulated state in the U.S., and is in large part enabled by the installation of digital meters that will facilitate the communication of price signals to consumers; as these meters proliferate, retailers are evolving their products to incorporate more dynamic pricing and other forms of product differentiation. Are Direct Energy correct in their approach of integrating energy applications with other communication and network activities of consumers, or are energy-only devices and applications going to succeed because of interoperability and the growing ability to see all sorts of applications through home area networks (HANs)? Both approaches may survive, but I’m inclined to think that the integration of energy applications into consumer lifestyles is likely to be more successful.