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UK Connected Homes: Heating up for energy providers

UK Connected Homes: Heating up for energy providers
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The Expanding
Connected Home Market

The race to stake a claim in the connected home market is intensifying. Estimates predict there will be more than 300 million households with some form of smart home system in the next decade.

Energy will remain central to the connected home, but traditional energy providers are grappling with fundamental questions about their future role, the right investment strategies and priorities, and where future revenue will come from.

Utilities have a window of opportunity to establish a position in the UK connected home market, but they must act fast and decisively against growing competition. They need to evolve quickly, develop market-beating propositions and deliver value-based services to consumers.

Carving out
and Capturing Value

We see three broad sources of value for the energy providers and their customers in the connected home:

Size of the Prize

While many industry reports have discussed the size of the UK connected home market, to date there has been no clear view of the potential value. Accenture has developed a bottom-up model identifying approximately £2 billion in potential UK revenue opportunity for the energy provider by 2020. Within the total estimated revenue, the potential market opportunities open across three value pools.

Connected Home UK Revenue Potential £2 Billion

Energy solution integration

  • Sales and churn benefit (convenience and advice)
  • Demand response/ Time of use controls
  • Distributed energy and storage

Data-driven savings

  • Connected maintenance
  • Commission from marketing
  • Home insurance data purchase

Adjacent sales

  • Heating control
  • Lighting
  • Security
  • Smart appliances
  • Connected oil tank

This valuation is not exhaustive, but aims to provide a scenario of the potential revenue opportunities. Available margin to the energy provider from each revenue pool will differ materially and each will need to shape the value at stake through its own strategy, scope and connected home roadmap.

Priorities
for the Future

To thrive as a connected energy provider in the UK, we believe there are three key priorities for today’s energy providers seeking growth in the connected home market over the short to medium term.

Establish and guard your position as the connected energy provider

Consider likely return on investment from different rollout strategies

Leverage strategic partnerships to drive innovation and scale

Our research and experience suggest that although connected home product and service opportunities in the UK abound, the future will not be defined by a single product, process, service or solution. Energy providers should create a business model which delivers the flexibility to iterate rapidly and change based on customer and market insights and learnings.

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