A Comprehensive Guide to Home Energy Management Systems

Based on the 2016 Bloomberg New Energy Finance report, American households used less than 4% of their annual household spending on energy (which includes electricity, transport, and heating).

According to experts, these averages represent record lows in the United States. Further, they attribute the falling energy expenditure to some factors including the growing popularity of sustainable energy in the nation, the improvement of the nation’s energy productivity as well as a decrease in the average price of electricity in the nation.

In addition to that, many energy experts agree that sustainable energy technologies have also contributed actively and immensely to the decrease in energy expenditure in American households.

One technology that has emerged in recent years with the purpose of enhancing the sustainability of energy consumption is the smart grid. This technology is the industry’s response to the rising demand for electricity as well as the need to reduce carbon emissions and in so doing, conserve the environment.

Indeed, smart grid technology makes use of computer technology to enhance the functionality of the power system and in so doing, helps to optimize the system’s capabilities.

The smart grid is associated with four major defining features;

  1. Reliability regarding ensuring the availability of high-quality energy on demand.
  2. The capacity to cater adequately to the increasing demand for electricity.
  3. Efficiency in power generation, distribution, transmission and even consumption.
  4. Sustainability through the integration of renewable sources of energy

One of the biggest benefits of the smart grid system is that it allows consumers of energy to have a more active role in the management of their energy consumption. One component of the smart grid system that helps to achieve this benefit in American households is the home energy management system (HEMS).

Also known as home energy monitoring systems, HEMS are defined as a technology that consists of hardware and software which are linked and integrated to monitor energy usage, providing feedback on energy consumption and even enhancing control over appliances and devices that use energy in the home. Simply put, these systems allow households to manage their energy consumption more effectively.

Most importantly, home energy management systems allow users to have more control over power intensive loads and at the same time, customize power consumption to his/her specific needs.

According to research, Americans, as well as other countries in the world, are receiving HEM systems quite well. In 2012 for example, the global home energy management systems industry was worth an estimated $393.8 million a figure which is expected to hit $1,909.4 million by the year 2019.

A more recent report suggested that the global worth of the home energy management systems industry was $864.2 million in 2015. Additionally, the same report projects the size of the global market to grow to $3.515 billion by the year 2022. Whichever way one looks at it, the popularity of home energy monitoring systems is bound to continue growing in the nation and other parts of the world.

As noted in the definition of home energy management systems, the platform is comprised of hardware and software.


Home energy management systems normally consist of a device which serves as the platform upon which communication between the user, the household appliances and devices and sometimes even the utility firm takes place. There are two main ways to install the device; physically on the electrical board of the house or virtually especially in cases where the system operates entirely on a wireless network.

Energy Management Systems


The software used in home energy management systems is responsible for the moderation of incoming and outgoing data and communication. For example, software, through the interface, allows users to have access to the monitoring and controlling functions of the home energy monitoring system. Monitoring allows consumers to get various feedback from the system including which devices are turned on/off and even the individual energy consumption of specific devices.

On the other hand, the control function allows users to control appliances either via a user interface (known as a remote control) or through rule-based control which is based on scheduling and optimization. For example, a user could schedule an appliance to switch on at a certain time.

The Role of Network

One other important component of the home energy system, based on the definition, is the network. Networks play a critical role in ensuring that different technologies are integrated into the home energy management system. The network, therefore, facilitates a link between controllers, sensors, appliances and even control panels.

Types Home Energy Management Systems

Advancements in technology mean that home energy management systems are comprised of several distinct products. In total, research has identified 11 specific product categories which are further classified into three major groups; a user interface, smart hardware, and software platform products.

User Interface Products

Products in this group normally have the core function of facilitating the active participation of the user in the process of managing energy consumption in the home. The products are therefore concerned with providing users with the necessary information and data to help users make better and more sustainable decisions on energy use.

Products in this group may also help to facilitate remote based control. While these products are largely concerned with the provision of feedback to the energy consumer, they can also provide information such as demand response prompts from utility companies. Such information is meant to encourage consumers to change their energy demand patterns.

Under this group, there are three distinct product categories;

1. Energy Portal

Home energy management products under this category are normally integrated with existing hardware such as a smart appliance or a utility meter to collect and transmitting information. Through the use of smartphone apps, websites and computer software, users can;

. Get feedback regarding the use of appliances connected to the portal.

. Get energy saving prompts.

. Implement remote control or automation of devices connected to the portal.

Research suggests that energy portals can lead to electricity savings of between 5.7% and 7.4% as well as gas savings of between 5.7% and 13%.

2. In-Home Display

Products under this category collect data from existing hardware (e.g., smart devices, sensors, utility meter) and provide feedback and prompt on energy use/consumption in real time via a physical display in the home. These products also facilitate remote control and automation of connected devices. In-home display home management systems are arguably the best-known products in the home energy monitoring market.

On top of that, in-home displays come as either a stand-alone unit or as a unit integrated into existing appliances such as a thermostat or even a refrigerator. According to research, in-home displays can lead to electricity and gas savings of between 5% and 22%.

3. Load Monitor

This piece of hardware functions as a proxy between the source of energy and the device/appliance consuming the energy. For example, it could serve as a proxy between a power outlet on a wall and an appliance connected to the outlet. This allows it to collect and display information about the connected appliance’s energy consumption.

This device does not serve a communicative function in that the information collected remains on the load monitor unless the user manually uploads it to a computer through a physical connection. Simply, the information flow in these devices is one way.

Smart Hardware

This group of home energy management systems includes those products that allow households to control their energy demand through the modification of energy demand patterns of certain appliances in the house.

Smart hardware devices allow for monitoring and control through features such as sensors, software, operating systems, communication ports/protocols, and storage. This group of products comprises of products such as;

1. Smart Appliances

These are electric appliances which can receive, interpret and respond to signals received from a home energy management device, utility or even a 3rd party energy service provider. In addition to that, the appliance can automatically modify its moderation based on the contents of the signal received.

Smart appliances may also have built-in displays from which the user can control the appliances settings and also view information on the appliances energy consumption. Many smart appliances can also integrate with mobile phone applications which subsequently allows users to control them from their smartphones or tablets.

2. Smart Thermostats

(Source: Earth911TV)

These are devices which allow users to control the energy consumption of connected heating ventilation and air conditioning (HVAC) units either through remote control or rule-based control mechanisms. Those based on rule-based control are also known as programmable thermostats.

Smart thermostats are an essential home energy management product particularly because heating and cooling often amount to almost half of the average energy consumption in American households. Homes that use smart thermostats can achieve electricity savings of between 2% and 16% and gas savings of between 8% and 12.5%.

3. Smart Lighting

These are products which facilitate increased control over lighting in the house through the incorporation of sensors, microprocessors, and controllable switches/ relays to increase automation.

As such, these products allow for functions such as scheduling of lighting, occupancy control, and daylight harvesting even with traditional lighting solutions. Ultimately, the devices help to counter and reduce over-illumination as well as over-consumption of energy to fulfill lighting demands.

These home energy management systems also facilitate communication between the lighting and the user. The fact that residential lighting is responsible for up to 14% of the total residential electricity consumption in the United States illuminates and underlines the need for smart lighting devices.

4. Smart Plugs

Smart plugs serve the function of acting as a proxy between an energy source and an electricity consuming appliance connected to the source. This allows users to have control and receive feedback from the energy consuming appliance. Some smart plus also allow users to control them remotely from their smartphones, mobile applications, and other internet-enabled devices.

One of the defining characteristics of smart plugs is that they allow users to apply the functionalities and benefits of smart appliances to traditional appliances at a significantly lower cost. Research suggests that smart plugs could result in energy demand savings of between 0.5kW and 1.0 kW per customer and an overall energy saving of between 1% and 4.58%.

5. Smart Hubs

This product category of home energy management systems is comprised of devices that serve the function of facilitating and managing communication and interaction between existing smart appliances in the home.

The smart hub, therefore, creates a network between different smart home devices such that users can control them over a single network and via a single smartphone, tablet or another Internet-enabled device. Smart hubs also allow users of smart devices to connect with the world through the internet.;

Software Platforms

The success of home energy management systems often depends on how well the devices can work together in concert. However, this is often a big challenge especially considering that many people buy smart devices and appliances from different manufacturers.

Because of the importance of communication and integration in home energy management systems, it is necessary to have software platforms that can enhance the flow of information between users, utilities and the hardware in the home.

Energy Management Software

1. Smart Home Platforms

This is a software platform that allows users of smart devices more control over devices and appliances in the home. Additionally, the platform provides a standardized model of interaction between different devices and appliances. Ultimately, users can control devices and appliances with single commands.

2. Data Analytics Platform

As the name suggests, the core function of these software platforms is to analyze data collected from existing home energy management systems. The platform is cloud-based, and it allows for the analysis of data collected from smart devices and utility meters for the main purpose of providing more insight into energy consumption patterns in the household. Data analytics platforms also facilitate warehousing and visualization of data.

3. Web Services Platform

Unlike smart home platforms and data analytics platforms where the application programming interfaces (API) are invisible to end-users, web services platform accords end users more control. Users have access to the API and are also able to monitor and control devices and appliances remotely. Additionally, users can set up notifications and alerts on the smart devices.

Pros And Cons of Home Energy Management Systems to Homeowners

Homeowners stand to benefit in several ways from home energy monitoring systems. The most obvious of these benefits include;

  1. HEM systems allow homeowners to manage their smart homes with much more ease and with more security.
  2. Home, energy management systems, allow homeowners more comfort.
  3. Research has established that these systems are extremely useful in triggering energy and cost savings. This is because they allow for more efficient energy consumption and subsequently, fewer energy costs.
  4. Home, energy management systems, allow homeowners to have more visibility on energy use in the home and subsequently, achieve better control over power consumption in the home. This is achieved primarily through feedback.
  5. Home energy management systems also make use of renewable sources of energy meaning that these systems can enhance and strengthen the resilience of homes to power shortages and outages.
  6. The reduced energy consumption and the resulting reduction in carbon emissions goes a long way in improving and conserving the environment.

Despite the benefits of home energy management systems, some challenges still exist in regards to the market;

  1. First and foremost, these systems are relatively expensive particularly when it comes to the cost of installation and the cost of certain smart devices.
  2. Many homeowners are relatively unaware of the potential and functionality of home energy management systems.
  3. The security of HEM systems is also a major challenge for homeowners especially because these systems are normally connected via “cloud” and the internet. This creates concerns over the trust, privacy and various forms of cybercrime.
  4. Home, energy management systems, are relatively complicated and also require the regular attention of users. This means that many people find these systems difficult to use with some even putting the system away and forgetting about it.

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