How to make LED lighting mainstream: make it a service

LED lighting, though, expensive, is supposed to reduce energy use and electric bills for its owner over time. Startup Digital Lumens is looking at doing more than selling its smart LED lighting equipment — it plans to sell it as a service, too.

Design matters when it comes to sustainability

When Apple’s former Chief Architect Tony Fadell, who designed 18 generations of the iPod and 3 generations of the iPhone, took the stage at GigaOM’s RoadMap event last Thursday, he did so with a spring in his step. Why? After 18 months of operating in stealth mode at his new company, Nest, he emerged with a product that he felt was revolutionary. And it isn’t a tablet or some other ingenious design that will change how we listen to music, watch movies or access information. Instead, it’s a thermostat.
Nest estimates that its smart thermostat can reduce its customers’ home energy use by 20–25 percent, or about $250 dollars on an average annual home heating and cooling bill of $1,200.
But before we dive into how home energy management (HEM) can save consumers energy and money, we should consider why HEM has struggled, despite the clear advantages, and whether Nest can show the industry what it can do better.
I see three important strategies that distinguish Nest from others.

  1. Start with design, not sustainability. Fadell has spoken about how his children have caused him to think about the environment they will inhabit, but he went after the HEM market from a product-design perspective. Describing the thermostats he saw when building his new home, he said, “They looked like PCs from the 90s. They were all square, beige, the same kind of LCDs, the same kind of interfaces, nothing innovative at all, and they were very expensive.” He set out to design something unique, simple and beautiful. Tesla, one of the few great design companies with a sustainability angle, took a similar tack when it designed a one-of-a-kind electric vehicle, the Roadster, at $109,000. Now that it has established itself as the brand for innovation in electric cars, it is going after a larger market with its base-model S sedan ($49,000 after U.S. federal tax credit), which is due next year. Starting with exceptional design makes the sustainability pitch a lot easier.
  2. Market to the consumer. One of the reasons that thermostats are ugly and unimaginative is that they are chosen by contractors, not homeowners. Only because Fadell was building his own home did he look at hundreds of thermostats and decide to build his own. The problem of smart, energy-saving devices not being marketed at consumers transcends HEM. Think about smart meters and how they are designed for utilities. It’s not a coincidence that Best Buy is rolling out HEM sections at the same time the Nest thermostat is being released. Best Buy is selling what it believes is a must-have product.
  3. Imagine the entire product. In 2005, Fadell noted, “You have to imagine the entire product in advance before you build it.” In the past two years, both Tendril and GE have shelved HEM products, explaining that they were too expensive to build and pivoting toward minimal hardware combined with software that runs on iPads and iPhones. While I think these companies did the right thing by leveraging great existing hardware devices, I could never imagine such a move taking place at Nest or Apple. The culture at these companies is to consider the design process and the final product before building. From the product design to the cost of production to the value to the consumer to the marketing, it all has to be imagined in advance.

The thermostat market represents 10 million units sold per year. Fadell wouldn’t give numbers, but he said that designing Nest cost about as much as designing the iPod. If Nest can grab 5 percent of the market, it will have revenue of about $125 million per year toward making up that investment. More importantly, it could do what Tesla did for the EV and what Fadell did for portable music: It could take something ordinary and make it beautiful, easy to use and, yes, energy saving.

Question of the week

Can great product design reinvigorate the home energy management market?

Serious Energy snaps up Agilewaves

Green building and energy efficiency company Serious Energy has acquired building energy management startup Agilewaves. Is the building energy shopping spree starting up again?

Opportunities in California’s smart grid deployment plans

Last week, California’s big three utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — released in-depth smart grid deployment roadmaps that include about $5.6 billion in smart grid spending over the coming decade. For smart grid companies, it’s about the closest thing to a detailed plan of attack one could ask for. Of course, much of that money is tied up in ongoing smart meter deployments, and another huge chunk is for transmission and distribution grid projects with a limited range of potential competitors. Still, that leaves plenty of opportunities for nimble companies with key software, networking or hardware technologies to fill the gaps that remain. Here are some of them.

Google pulls the plug on PowerMeter energy tool

Google has officially pulled the plug on its web energy management tool PowerMeter. The project, which Google launched two years ago, just “didn’t catch on the way we would have hoped,” said Google.

Today in Cleantech

Monday brings news of some big money for home security automation with energy management on the side. IControl, a startup backed by Comcast, General Electric, Cisco, Kleiner Perkins and others, has raised a $50 million series D round, bringing its total haul to more than $100 million. As I mentioned last week, iControl is one of the startups that’s tackling low-cost home automation from the home security front, while also allowing levels of energy management via thermostat, lighting and other electrical load controls. People have yet to have a chance to prove they’re willing to pay for cutting their energy use through technology, but home security is a proven, existing market. It’s also a market that’s being pushed by a whole host of big corporate backers, including Comcast’s new Xfinity Home Security service. I’m guessing iControl’s new $50 million will be supporting the startup’s leading role in Comcast’s rollout of that service. I’m curious to see to what extent energy savings plays a part in how the service is laid out to its customers, in terms of its emphasis on the dashboards that customers look at, and the reports they’re delivered at the end of the month.