This post is one in a series of feature stories on trends shaping advanced energy markets in the U.S. and around the world, drawn from Advanced Energy Now 2015 Market Report, which was prepared for AEE by Navigant Research. 

Today’s consumers have more tools at their disposal than ever before – for reducing consumption, managing energy use, and generating power for their homes. New residential-focused technologies, cost reductions, and business models are creating opportunities for advanced energy companies while saving money for homeowners.

While the growth in solar PV may have garnered the most attention in the residential energy sector, several other technologies are now hitting the market and generating strong returns. Indeed, the global residential lighting market is on the verge of a major transformation. High efficiency light-emitting diode (LED) lamps adoption is accelerating at an astonishing rate, while remote control of connected lights is on the cusp of becoming commonplace. Additionally, the movement toward more all-encompassing home energy management systems (HEMS) and – to an even greater extent – home automation, of which smart lighting is a part, is steadily gathering pace. U.S. revenue from HEMS leaped from $44 million in 2011 to $150 million in 2012, and has grown steadily since, reaching an estimated $366 million in 2014.  

U.S. Building Efficiency Revenue (millions)

A number of factors are working in concert to drive forward the market for residential energy efficient lighting and lighting controls. Falling LED costs, various regulations and codes, and the rise of the smart home are some of the most important. Still more expensive than compact fluorescent bulbs (though longer lasting and higher in efficiency), LEDs are coming down in price quickly, as vendors are locked in a fierce race to produce the lowest-cost products. Start-up Cree made a splash by introducing the first $10 LED, a 40W equivalent, in March 2013, but the space is increasingly competitive, with active participation from lighting giants like Philips and GE. Quantified now for the first time, the U.S. residential energy efficient lighting market is estimated by Navigant Research at $9.7 billion, the largest product category by revenue in the Building Efficiency industry segment.

One key aspect of these residential energy innovations will be the software tools and cloud-based services used to integrate and manage the systems. Currently, energy management software is focused mainly on a single application. For instance, plug-in electric vehicles (PEV) have embedded software for managing the flow of energy from the grid, and HEM software focuses on energy consumption and ways to be more efficient. However, integrated systems – where solar PV arrays, battery storage systems, PEVs, and smart appliances talk to each other – create the need for tools that manage a more complex environment.

To date, few companies have tackled this problem in a comprehensive fashion, mainly because the market is immature. However, Navigant Research expects energy management software (and firmware) to become a key enabler of market growth, acting as the automated glue that helps systems operate efficiently and in harmony. On the residential side, companies like Opower, Silver Spring Networks, Ford, Toyota, Google (now owner of Nest), EcoFactor, and iControl Networks are the early innovators in the sector and will roll out new services as the residential energy innovation market continues to gain traction.

To read more about the full size and scope of the advanced energy industry, download the full 2015 Market Report: