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9 March 2018

Centrica’s Hive nets OhmConnect deal for smart home Demand-Response

Centrica has notched up another win in its Hive expansion strategy, signing a deal with Demand-Response (DR) startup OhmConnect to push discounted Hive devices to OhmConnect users. Having expanded from the UK, into the US, and Italy, Centrica is pitching the hardware as both a direct-to-consumer offering and as a way for utilities to lay the foundation for cost-reducing DR systems.

OhmConnect is a free subscription service that essentially lets a home allow utilities to optimize the home’s energy usage in return for cash. Effectively Demand-Response as a Service, OhmConnect is taking the customer acquisition work off of the utility’s hand, but still providing the utility with the DR capabilities that allow a utility to more efficiently run its grid and lower its operating costs.

The new partnership with Centrica will see OhmConnect customers get a 20% discount on Hive smart home bundles, with up to 4,000 OhmCredit points if they activate the Hive Welcome Home, Hive Heating, or Hive Cooling packs. The utilities are going to be most interested in the HVAC systems, as this will give them access to one of the most energy-intensive appliances in the home.

While being able to DR a single home is of very little benefit to a utility, when large proportions of a village or neighborhood sign up to such a service, the utility gets access to a much larger pool of resources – which it can control to help it avoid firing up an expensive reserve energy source, or to divert a surplus of solar or wind energy into the homes to offset later demand.

Broadly, a home isn’t going to notice if the utility reaches in and changes the temperature by a degree. When hundreds or thousands of homes all make that small change, it can really add up to big savings for the utility – who then pays those homes a cut of that saving in exchange. Other DR examples could include firing up hot water heater tanks, delaying or starting electric vehicle charging cycles, and doing the same for white goods appliances.

The biggest step-change will come when homes begin integrating battery storage themselves, as this will give the utility much more capacity for storing cheaply produced electricity for later use – which should dramatically reduce the need for that expensive reserve/peak generation. Incentives and rebates, perhaps in partnership with the likes of OhmConnect, will be key in driving customer adoption – but B2C storage vendors will also be pushing batteries in a similar fashion as they have done with solar panels, by selling the cost-saving benefits for a customer’s energy bills.

In the current model, OhmConnect sends notifications to its customers in peak hours, to alert them that they can begin earning OhmCredits if they reduce their usage. This gamification essentially prompts them to reduce their AC usage or avoid firing up a washing machine until that peak has passed, earning those credits that can be traded for cash.

The evolution of this process would see a smart home system take over for the consumer, using some sort of rules engine to negotiate directly with the utility for its owner’s benefit – trying to get the bills as low as possible within tolerable limits. Obviously, smart home devices play a huge rule in this transition, and there will be big revenue-sharing opportunities between these platforms and the utilities.

There is a hint of this evolution in the Hive integration, as this will let OhmConnect remotely connect with the Hive devices in the home, and prompt a customer to remotely adjust the thermostat – something they can’t do if they are away from home and don’t have a connected thermostat.

Currently, OhmConnect is only available in California. Running since 2014, the company has ‘thousands’ of customers, and relationships with the three major Californian utilities – Pacific Gas and Electric (PG&E), Southern California Edison (SGC), and San Diego Gas and Electric (SDG&E). Key to its success is California’s energy regulations, which incentivize the utilities to cut fossil fuel emissions and promote renewables.

For Centrica, the energy giant has announced plans to invest £500m in its Hive platform by 2020, and has been pushing the devices in the US. It says that it has installed 900,000 Hive Hubs to date, up some 71% since the beginning of 2017. In addition to the hubs and thermostats, Hive recently launched a new smart home camera call the View, and offers a range of Hive-branded door, window, and motion sensors. Connected light bulbs, power plugs, and a leak sensor, flesh out the range.

Notably, Hive isn’t integrating with third-parties, meaning that this is something of a closed ecosystem. Hive’s support website says they ‘aren’t compatible with other home devices yet,’ which might indicate that it has plans up its sleeves, but there are forum posts of users that have managed some level of integration via services like IFTTT.

Centrica will be looking to leverage its position in the energy markets to sell into utilities, which will likely be more receptive to its advances than a startup smart home vendor. Of course, Centrica is a rival in some parts, so utilities may favor an approach from the likes of Deutsche Telekom’s Qivicon or Comcast’ Xfinity Home, and potentially the non-aaS offerings from the likes of the Amazon, Google, Apple, or Samsung ecosystems. Fostering a BYOB ecosystem for their customers could be quite a burden for these utilities, and so it seems more likely that they would opt for a bundled platform approach.

“Designed to make the smart home accessible, the Hive smart home experience will allow OhmConnect customers to conveniently manage their homes and their energy more easily,” said Roy Vella, VP and GM North America, at Centrica Hive. “We are proud to work with a partner like OhmConnect in the U.S. to help reduce stress on the grid.”

“OhmConnect is excited to announce our partnership with Hive,” said Matt Duesterberg, CEO of OhmConnect. “Their best-in-class smart home products, combined with our energy sharing service, paves the way to a sustainable energy future and smart homes for everyone.”