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How Will Electric Utilities Harness the Smart Home?

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Smart home technology has scaled rapidly over the past few years, going from a futuristic novelty or luxury for affluent consumers to a convenient part of many Americans’ daily lives.

According to a report published in March 2019, there are over 66 million smart speakers in the United States, representing about one-quarter of the adult population. Furthermore, according to an internal analysis from Google, smart speakers are on track to become the fastest-growing household technology in recent U.S. history, outpacing the advent of the internet, smartphones and even color TVs.

At the same time, millennials and Generation Z consumers, who are “digital natives” and expect easy-to-use digital solutions from companies they do business with, are comprising a greater proportion of total U.S. consumers. As electricity providers continue their journeys to becoming more customer centric, it will increasingly be these younger generations that they will need to cater to.

Given these mega-trends that are shaping the energy industry (and, likewise, society as a whole), it seems likely that smart home technology – particularly smart speakers or other devices that serve as a central “hub” – will play a major role in how electricity providers connect with and engage their customers.

However, at this stage, the rise of smart home technology brings as many questions as it does solutions. For example, who will own the relationship with customers: the utility or the technology company? Will customers be inclined to utilize their smart speakers for energy-related tasks or use them for just entertainment? And will smart home technology result in legitimate energy savings over time for residential consumers? Or will it primarily appeal to customers who love the technology?

While it may be some time before the industry sorts out definitive answers to the questions, looking at the experiences so far of two technology companies, Google and Powerley, and one utility, CenterPoint Energy, might reveal some indications of where this space will be headed in the coming years.

Google: Developing seamless partnerships with electricity providers

With its Google Home smart speakers and touchscreen displays and the Nest line of products (acquired in early 2014), Google has been a clear leader in the nascent smart home market, and in the energy corner of this space, their efforts have been focused on building partnerships both with electricity providers and other energy service providers.

In early April, the company announced its Energy-focused Developer Program, which is essentially a faster, easier way for energy companies to seamlessly integrate with Google Assistant. The Developer Program provides electric utilities with a “template” to leverage to more easily create Google Assistant experiences that give customers insights into billing and usage information.

Through either the Google Home touchscreen or smart speaker, utility customers can view and pay their monthly bill, and through new features coming soon, they will also be able to view their current and projected energy usage and receive proactive alerts if their bills are going to be higher than normal.

The information is utility branded and coming from the utility's system – not Google. Google has the capabilities to integrate directly with the utility's system, but they can also partner with third-party companies, like Oracle and SAP. On top of the “foundational features” of billing and usage, Google is also enabling easier integration with energy technology companies, like Tendril or Powerley, and through these partnerships, will offer additional advanced customer experiences.

With Xcel Energy and Reliant as its early access partners, Google already has some momentum in its efforts to bring smart speakers to the energy industry. And, integrations are already underway with Con Edison, American Electric Power and others, so although it seems like we’re at the beginning of the smart speaker/smart home journey, there should be a lot more movement in this area in the months ahead.

Powerley: Bridging the smart grid with the smart home

While Google’s smart speakers are initially focused on providing the foundational experience of billing and usage, Powerley is a home energy management provider that is specifically aiming to bridge the smart grid with the smart home.

Using home energy technology that provides granular data on the home and combining that with information from the grid, Powerley – who has already implemented a partnership with AEP Ohio, the largest utility in that state – seeks to seamlessly blend the needs of the electric utility with those of consumers today.

Working with other smart home product providers, including Philips Hue lighting, Nest thermostats, Ring home security and more, Powerley can create a cohesive ecosystem where energy plays the central role for the consumer. With energy data from both the smart meter and disaggregation, Powerley's platform can provide insights needed for consumers to make intelligent decisions in their smart home.

Within this energy-focused ecosystem, Powerley sees voice assistants as a valuable channel for customer engagement. Particularly, voice assistants can be useful in delivering insights on home energy usage that are not generic but based off the wealth of data noted above. For example, a customer could ask “Alexa, how can I reduce my electric bill?”, and rather than generic energy-efficiency tips, the voice assistant can provide consumers with personalized insights that relate to specific tasks or changes in their home.

In addition, voice assistants’ ability to seamlessly connect with many smart home devices can make taking action on the personalized insights easier for customers. For example, a customer could ask “Alexa, turn my air conditioning up to 77 degrees” after learning that their air-conditioning usage is slightly higher than normal. By enabling customers to turn insights into action through a single platform, using normal conversational language, electric utilities can remove several of the barriers for participation in energy-saving actions.

CenterPoint Energy: Creating a new, convenient channel for customers

For CenterPoint Energy, one of the largest electricity and natural gas utilities in the United States, smart home technology – and particularly voice assistants – represents another medium for continuing the customer-focused transformation that’s driven the organization in recent years.

Recently, the utility entered to into a partnership with Google for its voice assistant technology, and according to Gregory Knight, the chief customer officer at CenterPoint, voice assistants will be a cornerstone of CenterPoint's customer-driven strategy in the coming years.

Going back to 2013, CenterPoint began a transformational shift in how they think about their customers and divided the ideal customer experience into four main areas:

Value My Time: Addressing the needs of a customer on their first contact is the most important factor in a superior service experience.

Value My Money: Consumers are not just looking for the lowest cost but the best value in their customer interactions.

Value Me: Consumers feel entitled to good service and want to feel like a valued customer.

Value My Preferences: Demand is growing for multichannel customer care that combines agent-assisted service with automation and self-service options.

To achieve these goals, CenterPoint has already made considerable investments in improving the digital experience for its customers, and the partnership with Google will add Google Assistant to an already artificial intelligence-enabled voice assistant capability that CenterPoint has independently developed and that is already highly rated by customers. These aren’t entirely new capabilities for CenterPoint, but simply a continuation of a journey.

According to Knight, CenterPoint’s central objective related to customer engagement and experience is to deliver a single, cohesive brand experience that allows the utility to meet the customer’s channel of choice expectation. With the millennial and Gen Z customers becoming more important in the coming years, the utility needs to evolve to meet their needs (while, of course, still keeping in mind the needs of older generations). It’s essential that customers can interact with the utility how and when they want to, and the Google Assistant capability represents one important channel among many from a big-picture customer experience perspective.

Conclusion

Given the unprecedented proliferation of smart speakers over the past few years, it seems likely that these devices (along with other smart home technology) will become a mainstay of utilities’ customer engagement efforts. As millennial and Generation Z consumers form greater proportions of the utility customer base, the use of artificial intelligence-enabled interactions will likely be amplified. Although it is not certain this will have a positive impact on increasing customer satisfaction, early indications seem likely. Most consumers generally do want more actionable energy data on what’s going on in their homes, and consumers also highly value convenience, comfort and saving money – all things that can be supported by smart speakers and smart home technology (e.g., smart lighting, smart thermostats). If utilities effectively integrate smart home hubs (either voice assistants or touchscreens) into their greater customer-centric digital strategies, as demonstrated by CenterPoint above, these devices may be a key part in driving high satisfaction and engagement with customers in the years ahead.

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