The HEM Market Unraveled
- Bryan Jungers: Author
- Carol L. Stimmel: Founder and Managing Director
How Techno-Fetishism Unraveled the HEM Market and How Services Will Mend It
Over the last decade, many analysts have continued to produce myriad Home Energy Management (HEM) market forecasts, yet they have largely failed to materialize. This is because there has been a widespread belief among industry thought leaders that with enough education, proof, and insight of the negative impacts of energy wastage on the environment and the consumer wallet and information about how to change it, that home energy management technologies would simply take hold. This has been as effective as feeding cauliflower to a child who doesn’t like vegetables. The reason that these models have not risen to the level of expected buoyancy is a poor recognition of the emerging role of the service sector that increasingly drives the North American consumer purchasing decisions, including technology for the home.
Our expectations for the future of the HEM market represent a radical departure from this classic model – rather than relying on people to adopt gadgets and new habits, we see a more natural progression in the delivery of HEM services via channels to the home that customers already use and trust.
In the context of home services, total consumer demand for energy management is likely to expand rapidly relative to the limited market reach of product-only channels. We anticipate that the HEM market spending potential in North America via the dominant delivery channels will reach an annual value of $2.2 billion in 2022 and a cumulative market value of $15 billion in the 8 years forecasted, beginning in 2015. Because we are defining a shift from one market scenario to another, we have leveraged a normal baseline from the existing work in the field and driven our model from a familiar point-of-view. These channels include home entertainment, security, new construction, upgrades and retrofits, as well as utility services or programs.
However, we strongly assert that a continuing perspective of techno-fetishism will result in missed opportunities for market offerings that provide the value that consumers are actually seeking within the context of services. In fact, given current market characterizations for HEM, by around 2020 we expect those forecasts to be approaching saturation, whereas the economic shift to advanced services will likely be experiencing the beginning of a sharp rise. With this improved interpretation, we calculate that we will experience a healthy CAGR of 11.8% for the true HEM market beginning in 2015 through 2022.
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