Seeking a new source of domestic customer data, Google and Amazon are taking steps to expand into the electricity business. Both firms plan to leverage their customers’ home energy data to bolster their respective connected home and smart speaker technologies, most notably the Amazon Echo and Google Home.
While some industry leaders expect a future home technology ecosystem that incorporates solar panels, battery storage, and electric automobiles, others are less optimistic. However, the company that controls the software and systems that deliver energy would have a formidable position in the market if those predictions ever came to fruition.
“In 10 or 20 years, the dominant retail electric provider in the United States is going to be Amazon or Google,” says David Crane, the former Chief Executive of NRG Energy. “They can provide lower cost and better service.”
Home-energy management is an industry that Google and Amazon have recently become involved in, as both companies saw their smart speakers take off in popularity. Google bought Nest Labs, a maker of home-security cameras and thermostats, for $3.2 billion in 2014. Last year, Amazon bought Ring, a maker of video doorbells, in a deal valued at more than $1 billion. In March, Amazon joined a 61-million-dollar investment funding round into smart thermostat maker Ecobee.
“We want to mobilize consumers,” says Jeff Hamel, Director of Global Energy and Enterprise Partnerships at Google. “If we can make, collectively, a lot of small changes across a large number of people, that has a large benefit to power providers, the grid, the environment, and the consumer.”
Consulting firm Wood Mackenzie estimated that spending on home-energy devices exceeded $40 billion in 2018 and is set to double in the next five years.
Google has taken steps for a wider adoption of its connected devices, striking partnerships with utilities providers in the United Kingdom and the Netherlands, as well as in Illinois, California, and Texas. It also has a deal in place with Reliant Energy, a Texas electricity provider owned by NRG.
Amazon, on the other hand, has begun using its home-installation business, Amazon Home Services, to help consumers manage a smart home. The company has also begun talks regarding utility partnerships and small investments in startups working in the space.
Certain devices such as digital thermostats and accompanying smart devices can help consumers save money by regulating time management for utilities by helping suggest alternative times for cheaper usage. Analytics see tech companies having a huge effect on lowering costs for consumers.
“It’s still a resource that remains untapped,” says Elta Kolo, Research Manager for Wood Mackenzie. “This technology is already in the home. That’s the beauty of it. The opportunity is orchestrating it.”