Smart homes – the future of home energy management

Did you know that your hot water cylinder likely accounts for around a third of your electricity use? It is constantly working to keep your water heated and ready for use, even when you’re not home to use it. But there is a better system on the way that can make your hot water cylinder and other household appliances smarter.

New Zealand is preparing to introduce a new ‘flexible demand’ service that will help optimise home energy supply and relieve pressure on the national grid. For homes that are connected via a ‘flexibility supplier', this means your appliances will only draw electricity when you use them, and save you money when you don’t. The excess electricity can either be diverted for use somewhere else in your home, by someone else, or never be generated at all.

This new service is expected to be up and running within the next year or so and there are things you can do now to get ready, like installing a home energy management system, or looking for ‘smart’ capability when buying new appliances.

Climate change and the electricity grid

Get a better understanding of New Zealand's mostly-renewable electricity system, and why the time of day we use electricity makes a difference.

The big picture

As New Zealand moves away from fossil fuels to climate-friendly renewable electrical energy, demand for electricity is going to increase. For example, for households that purchase an electric vehicle (EV), this can become the single biggest electrical appliance.

So as EV numbers grow, we will need to think about when and how we use electricity. If we all continue to plug in without considering the overall load on the grid, the current supply may not easily be able to keep up with demand.

The good news is, we can reduce the need for expensive new electricity generation infrastructure – and keep power bills down – by being smarter about how and when we use electricity.

What is a smart home?

A smart home isn’t the building itself, but a clever system that ensures your home electricity use is as efficient as possible. In a fully set up smart home, your electrical appliances communicate with a ‘flexibility supplier’ that manages the supply of electricity to your home – making sure your needs are met while also managing the overall demand on the electricity supply network. The point is to keep your costs down and reduce generation of electricity that isn’t really needed.

For a smart home set-up to work, your appliances need to either have ‘smart’ technology built into them, or be connected via a ‘smart’ plug or thermostat. A fully functional smart home can also include a home energy management system (HEMS), that links all the smart appliances in your home together to maximise efficiency overall.

The components of a smart home

Smart appliances optimise for efficiency, reducing unnecessary power use. For example, a smart thermostat fitted to your hot water cylinder maps your usage patterns and turns off or down when not needed.
A home energy management system (HEMS) enables centralised control within the home, and allows your smart appliances to work together to maximise overall household efficiency.
A flexible demand service that is connected to the electricity supply network communicates with the smart appliances or HEMS. This service optimises household electricity supply based on user needs and overall network demand, keeping household costs down and relieving pressure on the grid.

Learn more about the basics of a smart home

How to make your home smart

For a true smart home, you need to be connected to a ‘flexibility supplier’. In New Zealand this service doesn’t exist yet, but Kiwis can expect it to come within the next year or so. In the meantime, there are things you can do to be prepared, like keeping ‘smartness’ in mind when buying new appliances (see our tips below), getting an electrician to fit your hot water cylinder with a smart thermostat, buying smart plugs for your current appliances and installing a home energy management system (HEMS).

To benefit from maximum cost savings, you should focus on the appliances that use the most electricity. Two thirds of the average household’s electricity use is for heating/cooling and hot water, so that’s what you should consider first. If you have an EV, or plan to get one, then a getting a smart EV charger should also be at the top of your smart home to-do list.

Start making your home smart with these appliances

Smart heat pumps

Great news – if your heat pump is less than 10 years old, it’s probably smart already. Due to regulation, heat pumps in New Zealand have been smart-enabled since 2012. This means they have the in-built capacity to connect to a flexibility supplier when it becomes available. Check with your manufacturer for specific details.

When connected to a flexibility supplier (and with your consent), your heat pump's electricity use can be limited to 75% of full output at high demand times without noticeable impact on your heating needs. The unused 25% can then be made available elsewhere on the network. Used in conjunction with a thermostat, a smart heat pump can be set to automatically regulate your home’s temperature, including preheating your place for when you wake up or arrive home.

Smart water heating

You can fit your hot water cylinder with a smart thermostat that maps your household use over time. Once it knows when hot water is needed, it can identify the best times of the day and night to minimise electricity use. So instead of pointlessly working hard all night to keep your water hot while you’re asleep, it can learn to turn off overnight, and turn back on in time to have your hot water ready for when you wake up.

Alternatively you may consider a heat pump water heater when next purchasing hot water technology. Heat pump water heaters are a very cost-efficient way to heat water and many models come with ‘smart’ features to ensure you can connect them into your smart home system.

Smart plugs – for any appliance

For as little as $20, you can buy a smart plug for any appliance to add ‘smartness’ when the technology is not built in. This is a practical way of getting the energy saving advantages across more of your appliances without having to upgrade them. Like any other smart appliance, a smart plug will communicate with your home energy management system or flexibility supplier to optimise for low-cost electricity when demand on the grid is low.

A usage example of this is with a clothes washing machine. The unit can be set up the night before with clothes and detergent loaded but won’t turn on and start washing until a signal is received – and your washing will be ready to hang out the next morning.

Smart EV chargers

A smart EV charger manages electricity use by reducing the rate of charge (a slower charge uses less electricity), or by delaying a charge to the optimum time when electricity prices are at their lowest.

Some smart EV chargers offer two-way charging capability – known as V2H (vehicle to home) or V2G (vehicle to grid) – and you could even use your EV battery to power other household appliances when you don’t need your car. This advanced functionality is being trialled now and will be available on the NZ electricity network in the future.

Home energy management system

A home energy management system (HEMS) connects all your smart appliances into a network. This enables centralised control and means that your energy efficiency will be optimised for your home as a whole rather than appliance by appliance – which can mean greater savings.

HEMS are available now, so you can get your home all set up and ready to be connected to a flexibility service as soon as the service launches.

What to look for when buying new appliances/devices, and what to avoid

Make sure you’re buying the right kind of ‘smart’

Some devices are sold as ‘smart’ because you can control them remotely using an app on a mobile phone. While this is a great piece of functionality, it doesn’t meet our definition of smart because it can’t communicate back and forth with a flexibility supplier to manage periods of high electricity demand and help reduce your energy costs.
In the future, smart appliances will be labelled to ensure you can identify them (these labels are currently under development for appliances sold in New Zealand). In the meantime, ask your retailer whether a device is configured for ‘demand flexibility’ before deciding whether to buy it.

Learn more about what questions to ask when buying smart appliances(external link)

Buying an EV smart charger

If you’re buying an EV smart charger check for the right kind of smart (as above).
Look for open charge point protocol (OCPP) 1.6 or higher. OCPP 1.6 or higher will allow chargers to send and receive signals with a flexibility supplier. OCPP 2.0 and 2.0.1 are also available and compatible.
If you want two-way charging to use your EV battery to power other household appliances, ensure you’re buying an EV charger with ‘V2H’ or ‘V2G’ capability – but be aware this functionality will take a bit longer to become available in NZ.
You will need an electrician to connect your smart EV charger for you. EVs draw a high electricity load, and wiring circuits and safety devices need to be fully compliant with safety regulations. So, be sure to factor in installation costs on top of the price of the charger. Some EV charger suppliers provide package deals that include the appliance and installation.
Currently EV smart chargers are unregulated in New Zealand, so it’s important you do your homework and buy from a reputable supplier. These suppliers should be following EECA guidance provided in the publicly available specifications for residential EV chargers(external link)

Taking your smart home to the next level

For EV owners

In a smart home, you will eventually be able to use your EV battery to power other appliances.

If you have an electric vehicle, or a home battery unit, that large battery could be used as a power source for other appliances in a smart home system. Batteries can be charged at times of least cost electricity and used during peak demand periods to keep household costs down.

For example, let’s say you have 80% charge left on your EV, and you’ve arrived home from work to start cooking dinner. It’s peak time for the grid around dinner time, so if you’re on an electricity plan with variable pricing, this is when electricity is most expensive. But because you don’t need to drive your car again until the morning, you could use its battery to power your oven and your heater for free during this peak time, and the car can recharge again overnight during off-peak hours when electricity costs from the grid are low.

For this set up you will need:

a smart EV charger with two-way charging capability or a smart home battery unit
a home energy management system (HEMS) to connect your EV charger or home battery in a network with your other home appliances
a connection to a flexibility supplier (this new service is coming to New Zealand soon)

You can purchase smart EV chargers, home battery units and HEMS now. Add in a smart hot water cylinder thermostat and you can get started by optimising electricity use within your home today. Then when flexibility services become available, you will be ready to go. Once connected to a flexibility supplier, your system will be capable of sending and receiving signals about high demand or cheap electricity supply on the grid, optimising your energy use even further.

Whether you go for a fully integrated smart home, or start small by 'smartening up' key appliances, the beauty of a smart home is that once you are set up, you can sit back and let your smart home do the energy saving for you.

Variable electricity pricing

To take advantage of cheaper off-peak electricity, consider a variable pricing plan. Talk to your energy retailer about what would suit you best, or check your plan with Powerswitch.
- Powerswitch

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