U.S. market for ‘smart home’ devices to triple to $75 billion by 2025
Energize Weekly, September 25, 2019
The U.S. market for “smart home” devices will more than triple by 2025, reaching $75 billion, according to data analytics company GlobalData.
The growth will be driven by the increased use of smart thermostats, which consumers see as an energy-saving device and utilities as one that can help manage load.
GlobalData is projecting an 18 percent compound annual growth rate for the device market with smart thermostats accounting for 36 percent of the market by 2025.
In 2018, the so-called automated home device market was $23 billion with $7 billion of that coming in the sale of smart thermostats, which can be programmed and controlled by a mobile phone.
In addition to the home-linked market, GlobalData said there will also be growth in the utility-linked thermostat market.
“Utilities and electricity retailers have been attempting to enter the automated home market the same way telecom and cable companies have done so, by leveraging their large existing customer base,” according to GlobalData.
This is part of a business model shift for utilities. “Utilities have slowly moved from passively supplying electricity to consumers to innovating new business avenues and offering a wide array of energy and other products,” Harshavardhan Reddy Nagatham, GlobalData senior analyst, said in a statement.
Utilities have already entered home rooftop solar array and electricity storage markets, as well as the energy management systems market. “The automated home is a new market that a few utilities including Xcel Energy, Georgia Power, and EDF have started to explore,” Nagatham said.
With their large customers bases, utilities have the advantage of not having to spend money on customer acquisition. The most effective way of leveraging this advantage is for a utility to form a strategic partnership with home automatic device manufacturers, GlobalData said.
“Utilities that sway consumers to install smart meters also gather and process data from them in order to better match demand and supply,” Nagatham said.
The lure is that these smart devices can significantly trim electricity bills. Ecobee estimates that its thermostat can cut bills by as much as 23 percent, and Nest puts the savings of its device at 10 percent to 12 percent on heating and 15 percent for cooling.