Ronald J. Zimmer CAE CABA President & CEO Continental Automated Buildings Association

1. Impact of Smart Grid on Connected Homes Ronald J. Zimmer CAE CABA President & CEO Continental Automated Buildings Association http://www.CABA.org LinkedIn Profile

2. About CABA • Continental Automated Buildings Association • International not-for-profit industry association • Dedicated to the advancement of intelligent home and intelligent building technologies • Membership driven • Provides members with networking and market research opportunities • Celebrating 25th anniversary in 2013

3. CABA Connected Home Council • Continental Automated Buildings Association • Established in 2004 • Initiates and reviews projects that relate to connected home and multiple dwelling unit technologies and applications. • Examines industry opportunities that can accelerate the adoption of new technologies, consumer electronics and broadband services within the burgeoning connected home market. • Oversees “connected home” research activities

4. CABA Research Program • The CABA Research Program offers a range of opt-in technical and advisory research services designed to provide industry stakeholders with collaborative market research and R&D opportunities. • Benefits • Reduced cost of research by working with other industry leaders in a collaborative research environment. • Tailored to member research project development needs and requirements. • Completely formatted research reports that are actionable business tools. • Reduced workload for participating companies. • Collaborative setting without antitrust issues. • Organizations direct research objectives.

5. Impact of Smart Grid on Connected Homes Continental Automated Buildings Association CABA and the following CABA members funded this project: Emerald Sponsors Diamond Sponsors Prepared by:

6. Connected Home Overview • Defining a Connected Home: • Frost & Sullivan’s interactions with the connected home industry, and building upon previous projects undertaken by CABA in the connected home area, the following definition was adopted to define a ‘connected home’: “A residential dwelling unit that uses both technology and process to create a plug-and-play environment that is safe, responsive, adaptive and comfortable for its occupants”. • Key characteristics observed by this research: • Transition from ‘digital’ to connected • Interconnected and intercommunicate • Adaptive to a homeowner’s needs and comforts • Wide variations in “connectedness” depending upon sophistication of the ‘connected network’ • Evolved into ‘Connected Home Platform’ • Customer premise equipment used by service provider to deliver services and applications • Controlled by consumers and/or service provider • Built ad-hoc by tech-savvy consumers • Limited or no unifying/connecting presence

8. Telecommunication Services Home Control Systems, Security, Entertainment Energy Sources - Conventional / Renewable/ Distributed Utility (LAN, WAN, FAN) Smart Meter Communication/ Other Gateway Home Area Network Energy Management, Monitoring, Others Information Technology Applications and Services Source: Frost & Sullivan Analysis. Connected Home Segments • The connected home, and its interconnection with the smart grid, is being conceived as the convergence of four key segments/layers of the industry: • Energy resources • Physical infrastructure components • Data communication • Automation and integration interface

9. Connected Home – Participant Characteristics

10. Connected Home – Presently Active Areas Home Controls/ Monitoring • Providing automation and control of specific home equipment such as HVAC, lighting, security, energy management • Dominated by home automation and controls companies such as ADT, Crestron, AMX, Control4, Schneider Electric, GE, Honeywell • Estimated market size in North America is $2.5 Billion I 2012 Energy Management/ Smart Grid • Combination of energy management and home control services that allows proactive energy use suggestions, integration with smart meters, driven by utilities or consumer • Key players include Utilities in North America, Smart meter providers such as GE, Itron, etc and associated service providers such as Energent, Energate, etc. • Estimated market size in North America is $ 9.6 billion in 2012 Media, Telecom, Managed Services • Providing communication, multimedia and entertainment services to the consumer, with an increasing range of home management services • Key players include Comcast, Bell, AT&T, Verizon, etc • Subscriber base for broadband alone in Q3 2011 is estimated at approx. 92.6 million in North America ($12.1 billion in revenue)

12. Utilities’ Current Decision Making Process – Issues and Changes Required The market is dictated by a lengthy decision-making process. The following illustrates the typical approval process for investor owned utilities (IOU) IOU Procurement Process

13. Utility Initiatives • Full deployment of AMI systems in order to integrate TOU rates with current and future smart home appliances • Open platforms for meter technology to enable wide adoption • Achieving consensus on communication protocols • Increase customer participation Gaps

14. Smart Grid - Key trends in Implementation Smart grid implementation is nascent stage, but has the potential of enabling connected home through wide roll out of TOU rates…

15. Consumer Perceptions This research shows that residential customers are adopting energy management systems in the form of… Type of Energy Management System Currently Owned Functions Controlled by Home Automation and Control System

16. Smart Meter and HAN

17. Smart Meter Installations

18. Integrating Connected Home Devices to the Smart Grid Integrating connected home devices to the grid is currently met by the following challenges…

19. Connected Home – Non-adoption Issues • Cost appears to be one of the most important reasons behind non-adoption or delayed adoption. • Cost-related factors will continue to impose a potential risk to adoption, although the perception of inconvenience has waned since 2009. • Others include: • Limited clarity on energy savings • Inability to justify the cost of new hardware or services. • Investment is either deferred until replacement needs, or availability of incentives. • Upfront the price quoted appears to be a key criterion for customers in deciding which provider to select. • Complexity of solutions made this criterion very important for decision-making.

20. Connected Home – Technology Initiatives

21. Connected Home – Opportunity Areas • Take advantage of “sticky” nature of connected home services • Use residential gateway as pass-through point for additional solutions • Other usage - media servers, home management & support

22. Whirlpool Smart Device Network Architecture

23. Motivating Factors There are very few residential customers on demand response programs. However, this research shows that potential customers are drawn to demand response due to the prospects of cost savings… Motivating Factors for Using Demand-Response or Energy Management Devices (N=1,013)

24. Delivering to the Connected Home

25. Achieving the Connected Home

26. The Home and Beyondfrom a Telecom perspective Courtesy: ZigBee Alliance

27. Emerging Ecosystem

28. Implementing Changes

29. Key Takeaways • The key takeaways of this research are the following: • Limited customer engagement and lack of personalization of solutions, as well as the lack of predictive and self-sensing capability of solutions, will continue to hinder value demonstrations in the connected home industry. • The industry horizon will continue to be dotted by both pure-play and turnkey players. Competitive advantages will, however, depend upon scalability of solutions to accommodate the emerging demand in technology integration. • The connected home’s relationship with energy is likely to be further stressed with the ability of such a home to integrate with the smart grid; however, optimized solutions in this area are currently only demonstrative in nature, with limited initiatives undertaken by the utility industry. • At present, the full service capabilities can be expected to come from Telcos and convergence service providers that are already well-entrenched within the connected home market by way of offering multi-point services to consumers. • Industry participants need to collaborate in a cohesive manner to make smart home solutions work together; however, both conceptual frameworks and technology development initiatives should work simultaneously toward this end.

30. Your Information Source for Home & Building Automation 1173 Cyrville Road, Suite 210 Ottawa, ON K1J 7S6 613.686.1814 Toll free: 888.798.CABA (2222) Fax: 613.744.7833 CABA@CABA.org http://www.twitter.com/caba_news http://www.linkedin.com/groups?gid=2121884 http://www.CABA.org