The connected home: can smart technology reduce your energy bills?

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Explore the growth in smart devices and consider the arguments for and against the use of smart home technology.

The UK energy market shake-up continues with the rise of smart technology and increased consumer demand for flexible energy arrangements. Tech giants such as Amazon, Google, and Apple are all competing for a share of the market, releasing a range of tech gadgets aimed to change the way homes manage their power usage. With applied intelligence (AI) software, voice activation, and wireless connectivity, households can now control multiple devices simultaneously from their smart phone. The smart speaker has become an integral part of the smart home and intelligent hands-free software can control heating, lighting, and much more. Consumers have embraced the smart home revolution and the trend is set to continue. Spending on smart devices has more than doubled over the last two years, and estimates suggest by 2022, 56% of UK households will own at least one smart device.[1] However, can smart technology reduce energy consumption and contribute to an increase in annual cost savings? This blog will explore the growth in smart devices and consider the arguments for and against the use of smart home technology.

“Alexa, turn my heating on!”

The proliferation of smart home technology has offered energy providers the opportunity to partner with companies such as Amazon and Google to optimize energy use. Renewable provider Octopus Energy recently partnered with Amazon to integrate with their smart home technology to allow households to control energy output. Octopus Energy designed a time-of-use tariff which charges higher or lower rates at certain times of the night or day.[2] Customers will be able to ask Alexa a number of questions, such as when electricity prices are at their highest or lowest rate, to save money. Octopus Energy claims customers who use the features included within Amazon Alexa and opt for a flexible time-of-use tariff could save up to £229 a year compared to standard fixed or variable contract. The CEO of Octopus Energy argues, “Our integration with Amazon Alexa lets customers interact with their energy in an entirely new way,” and will “save customers money in the process.”[3]

The advent of smart heating systems and the ability to control devices with the use of phone applications has inevitably changed the way households consume energy. Customers can now control the temperature of their house at their fingertips to enable greater flexibility. Installing dedicated sensors throughout the house can also allow customers to only heat the rooms that are in use. In certain cases, smart devices can track a phone’s GPS location so that the heating system switches on when a family member is close to home or switches off when the last person leaves. Hive or Nest smart devices have built-in AI to monitor customer behavior and can set preferred temperatures to create customized program settings. Certain Nest devices also track predicted weather conditions to reduce energy consumption and generate additional carbon savings. Installing smart devices around the home is predicted to allow savings of up to 10–20% on yearly bills, however, it all depends on which system you choose, the types of embedded features included, how effective they are, and most importantly, how much is spent on the system itself.[4]

Smart tech can’t do all the work

Investing in smart home technology isn’t cheap, with initial upfront starting at £200 for the basic equipment. To amend the temperature per room, additional sensors will need to be fitted to heaters throughout the house to avoid heating rooms unnecessarily. To control electrical equipment such as lighting and plug sockets, smart plugs will have to be purchased to enable customers to control electricity consumption using their phone. Smart speakers are also required if customers want to add voice automation to the mix. Calculating the cost of smart home technology, customers could be spending anything between £300–£500 to benefit from all the supposed energy cost savings. Therefore, the initial upfront investment will take at least a couple of years to break-even before the savings start to accrue. Instead of investing in smart technology, turning the heating down a notch and stocking up on fleeces, thermals, and blankets in the winter could be the answer?

Cost-saving or convenience?

Investing in a smart heating system has a number of advantages, but the savings generated will not lead to a positive return on investment (ROI). Counting the cost and number of smart devices required throughout the home suggests that it could take between three to five years before customers would break even. Therefore, if customers are looking for a quick, short-term solution to save money, switching to smart home technology is not the answer. However, in many cases the cost-saving aspect will not be the only influencing factor which determines whether to switch over to smart home technology. Consumers demand convenience and easy-to-use applications that can be synchronized to a central hub within the house. Moreover, some customers demand energy providers support smart devices which aim to reduce overall carbon output. Inevitably, the switch to smart devices will continue to expand due to rapid improvements in both the technology itself and voice automation. Therefore, the convenience factor is a key influencer for customers who wish to integrate smart technology within the home. The next blog in this series will explore the security implications of smart home technology.

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