A decade ago, energy-smart home enthusiasts thought we'd all be obsessively tracking energy markets from specialized terminals placed in every room around our homes.
They were right about one thing: We all now have little screens that help us track everything around us. But energy is still at the bottom of the priority list for homeowners.
Home energy management is facing a bit of an identity crisis.
The hard truth is that homeowners still aren't willing to invest much time into monitoring their energy use in real time just to shave pennies off their utility bills. And the companies hawking smart home solutions still haven't figured out exactly how to get consumers to care in a meaningful way. Oh, and selling software to utilities is a ludicrously tedious process.
As a result, a lot of startups have come and gone, and the remaining ones have pivoted their business plans numerous times. (Or in the case of Opower, have sold themselves to a dominant enterprise software provider.)
"We've seen a weaning of the field a bit. There are really only a few players left doing home energy management, energy information, and that sort of stuff from a field of what felt like 50 at one point," said Adrian Tuck, CEO of Tendril, a company that has made its fair share of pivots.
Tendril has been in the game for a decade now. It's come back from the brink of bankruptcy and changed its business plan multiple times in response to slow utility uptake, shifting consumer preferences and changes in mobile technologies. But Tuck believes the company is hitting its stride.
"Now there are just a few of us left, and the market's coming out pretty well. We have figured out a certain type of customer that works well with us," he said in an interview.
So why is Tuck so optimistic? We sat down with him to talk about the changing attitudes of utilities, where new verticals are emerging for energy data, and why smart home providers need to start acting more like Netflix.
Stephen Lacey: You've worked with a lot of utilities. What are the forward-thinking ones doing differently than others?
Adrian Tuck: The more innovative utilities are starting to think about ways to bundle products and services in a way that might include buying energy like you would buy broadband. Many of those products are not yet on the market, but they're coming.
There are other utilities that are thinking radically differently about how to bring new energy services in the home -- doing that in concert with other service providers in the space, other retail companies, other people who own a relationship with the homeowner, and other technology providers.
The question is how we can tie that all together. That's what we're continuing to work on.
Stephen Lacey: You tried that in a way by creating an Amazon-like platform that would enable utilities to broker energy services. We haven't heard much about that.
Adrian Tuck: It hasn't really taken off. What we found in reality is that people move more cautiously in their purchases. And the vendor certification piece of this is important for the utilities.
So what if a homeowner is looking for an air conditioning tune-up or something, and the vendor comes in and sells $18,000 worth of new air conditioning systems that the homeowner may or may not have needed? Utilities worry about customers complaining to the regulator, or the utility itself being blamed. There are a lot of ways it could get messy.
We still haven't fully figured out how to reach that market. So that puts you back into a fairly safe set of products that you can sell -- like light bulbs. We do lots and lots of that. But we're not really yet at the point where people are comfortable doing the bigger stuff.
Stephen Lacey: Do you think you will get there? Everyone's talking about some kind of platform for this stuff -- but no one has made it work.
Adrian Tuck: I think it'll get there in competitive retail markets. I think it'll get there in New York as part of the REV process. That's where the experimenting will happen I think. But even in New York, I see regulators wishing for more than the utilities are willing to deliver at this point.
Stephen Lacey: What about community solar? That's another area where you've staked a lot of hope. But it's also a slow-moving sector.
Adrian Tuck: So far, there's a ton of interest. These are still small pilots or small systems. We'll be announcing our first customers in community solar before the summer. As part of that, we're acquiring the customers and providing online tools where customers can auto-size their system. And then we're providing the ongoing engagement capability where we take a virtual roofless solar model and present you information just as if solar was on your roof.
The lesson we've learned from wind credits -- which are sort of virtual -- is that you need to show them what exactly they represent, or else you lose consumer interest over time.
Stephen Lacey: How important is distributed generation to Tendril? You started with home energy efficiency and now everyone seems to be talking about DG integration.
Adrian Tuck: We've refined our strategy. Our customer is now anybody who has an energy value proposition in their home. So that's predominantly utilities, but increasingly the third parties that sell the homes and other products into the home. No matter what kind of customer, we're thinking about three types of value.
The first is [acquisition], which is all around using data to identify [suitable] customers for different solutions. That could mean participants in a community solar program or specific homeowners for rooftop solar.
The second piece is engagement. This is all about retention, cross-selling and up-selling new products and services. A product like behavioral energy efficiency is really just a stepping stone into a conversation -- the real aim should be to drive higher customer satisfaction and cross-sell more products and services from the utility.
Third is orchestration. This is providing a level of intelligence around management of smart products in the home, whether they're solar systems, home batteries, thermostats and so on. We'll be announcing some products in that area later this year.
So yes, the concept of energy management in the home has changed.
Stephen Lacey: We've seen a lot of interesting changes and continued turmoil in the market. There's been a shakeout with the analytic providers, and there are a lot more companies focused on point solutions, which is easier because everyone has a smartphone. Then you have competitive retailer providers like NRG struggling to build home energy management businesses. What does all this add up to?
Adrian Tuck: The road to home automation is littered with corpses. But I think device proliferation is going to be interesting to watch now that the devices are everywhere and the standards are coming together.
Nest's thread is helping bring together lots of new interoperable smart home products. And Apple's HomeKit will drive a proliferation of new products and services. I was at the Consumer Electronics Show this year and was amazed by the number of products, from blinds to ceiling fans, that have this capability built in. It feels almost a bit like when Bluetooth first came out -- none of it's actually turned on yet, but everybody knows they need it in the next version of their product.
I also think that the company to watch in this space is Amazon. They know a lot about what's in the home because of what you purchase. And they're also developing the Amazon Echo to control lighting, entertainment, etc. Google and Apple will also fight it out heavily in a way like they did with iOS and Android.
The combination of general device proliferation, improvements in voice-control function, and the fact that everybody has a smartphone now means that I'm more optimistic about intelligent products in the home than I've ever been.
Stephen Lacey: You once wanted to make those devices. And now you don't have to make them.
Adrian Tuck: Yeah, that's right. We absolutely and unequivocally aren't intending to make any devices. We think that there are people who are far better than us at making beautiful devices. Our plan is to be able to talk to as many of them as we can and turn them into value for our utility customers.
If you're a utility, I would argue that you really don't want to be in the business of picking Nest versus ecobee versus Tesla Batteries. You really want to create a construct that enables you to simply interact with those kind of systems, and allow that level of choice to happen at the customer level. So there are important pieces of software that need to exist in order to extract that complexity away from the utility. A lot of the capabilities that we're focused around at the first level are being able to solve that problem.
Stephen Lacey: So how will the energy smart home actually work? Energy-only offerings haven't been that successful. Most believe energy will succeed as one piece of a broader range of services. How do you view that?
Adrian Tuck: I agree. I think if we're successful here, people won't think about what we do. To that extent, I'm pretty critical of programs that are designed to bring energy to the front of people's minds at times that are not necessarily convenient for the consumer, but are convenient for the network -- things like residential demand response.
That's not to say there won't be an ability to modulate demand, but not in the way it's done at the moment.
Under today's demand response -- whether you are turning someone's air conditioning off or sending them a message to do something else -- you are really just making a problem on the network the customer's problem. Nobody else does that.
Netflix is an example that I often use. Netflix often has huge capacity-constraint issues, but they don't tell you not to watch a movie on Saturday night or charge you more during a peak time. They just do really clever things behind the scenes. It might take slightly longer to spool the movie up on a Saturday night than it does on a Tuesday morning, or the pixelation on the movie is not quite as good as it would be -- but they manage all of that to ensure the service.
The utility equivalent would be to tell people not to watch a movie on Saturday night. I think a fixed-price model -- say $200 per month based on what you use -- is better than a time-of-use rate. Time-of-use just takes a problem on the network and makes it a customer's problem. I think the company that uses all these smart technologies to deliver a flat price of energy, and to take away demand response or time-of-use, is going to succeed in the market.
There are ways to granularly manage the system entirely behind the scenes -- producing an outcome that's better for the customer, better for the utility, and better for a bunch of other vendors that want to sell products into the system. That's what we continue to work on.