Microsoft has entered the burgeoning business of home-energy management with Hohm, a free web application designed to show consumers how to conserve electricity and natural gas.
Microsoft's chief research and strategy officer, Craig Mundie, introduced Hohm and discussed the company's energy strategy at the Edison Electric Institute utility industry conference on Wednesday.
Hohm stands to shake up home-energy monitoring, a business that dozens of start-ups and IT industry heavyweights, including Google, Cisco and Verizon, are moving towards. There are already several advice websites that give consumers tips on how to save money by providing guidance on conserving energy at home.
However, Microsoft designed Hohm as a cloud-computing application — built on Azure online operating system and the Bing search engine — so users can tap into back-end data analytics for more tailored advice. Hohm provides tips based on models licensed from the US Department of Energy and Lawrence Berkeley National Laboratory, which were developed with years of data, according to Microsoft.
Microsoft also plans to make a software-development kit available to utility companies, which would allow a customer's bill information to be fed automatically into the application. Initially, most users need to input data manually, but over time, Microsoft expects many utilities to provide that service.
Troy Batterberry, product unit manager for Hohm, said: "It's analogous to financial applications… now you'd be hard-pressed to find a bank that doesn't export data to Quicken or another common format. We see energy going down the same route."
The recommendations from Hohm should get better over time as more people use it, which will improve the underlying analytics, he added.
The first utilities to sign up for Hohm use are Puget Sound Energy, Sacramento Municipal Utility District, Seattle City Light and Xcel Energy. Two smart meter vendors — Itron and Landis+Gyr — are also partnering with Microsoft to provide more detailed information.
Business model of the future?
Microsoft has been developing a business around residential energy management for about two years and has been working on Hohm for about a year, Batterberry said. He anticipates it will be in beta testing for about nine months.
Initially, the company plans to sell contextual ads to make some revenue. However, it anticipates Hohm can become a sort of information broker between customers and utilities looking for ways to improve efficiency for their customers. For example, many utilities have energy-efficiency programs that offer customers discounts to upgrade home equipment, such as hot-water heaters.
As part of their smart-grid programs, some utilities are also testing what are called demand-response programs where, with a customer's permission, they can temporarily turn down an air conditioner thermostat or turn off a hot water heater. This allows the utility to dial back the demand for energy during peak times in exchange for a credit of some sort to consumers.
In a few years, Microsoft expects to aggregate information from several households willing to participate in efficiency programs to utilities. This 'demand-side management' service would tell utilities they can expect a reduction of electricity use during peak times, explained Batterberry.
Personal information will be secured by the same service used by Microsoft's HealthVault healthcare platform. But Batterberry said not everyone will want to cede control of its main appliances.
"Allowing customers to shed load is an interesting way to keep them in control of their energy usage, but there will be a significant class of consumer that will have issues with centralised control," he said.
Bringing scale home
In the near term, Microsoft expects it can help consumers even if they just want a better dashboard to view home-energy usage. The software giant, along with other home energy monitoring companies, plan on working with device manufacturers to collect energy information from thermostats and 'smart plugs'. This would allow a person to attach a smart plug to a refrigerator or dishwasher to get usage information in real time to a home network or web application. Over time, those appliances could be controlled to dial down usage during peak times.
Microsoft also hopes to have more vendors of smart meters, which have two-way communications built in, to support Hohm's data formats, Batterberry said.
Although there is plenty of available information for how to save energy at home, products that provide consumers more detailed usage information or automate tasks are relatively new. The business models to take advantage of efficiency programs in many cases are still under development as well.
Microsoft, like Google and many other vendors, are betting that consumers will take a more active role in conserving energy at home. Tools like Hohm will allow them to have better information and take advantage of energy efficiency programs offered by utilities, Batterberry said.
"Customers are motivated to save money, but one of the problems with this industry is just a lack of awareness," he said.
