Sizing the smart appliance opportunity

Most of us have heard the term "smart appliance" thrown around.

And most of us ultimately think of machines such as refrigerators, washing machines, clothes dryers and dishwashers consuming lower energy than a "non-smart" alternative.

There is a more precise definition which, according to the U.S. Association of Home Appliance Manufactures (AHAM), refers to a modernization of the electricity usage system of a home appliance so that it monitors, protects and automatically adjusts its operation to the needs of its owner.

AHAM lists the following six key features associated with smart appliances:

1. Dynamic electricity pricing information is delivered to the user
2. It can respond to utility signals
3. Integrity of its operation is maintained while automatically adjusting its operation to respond to emergency power situations and help prevent brown or blackouts
4. The consumer can override all previously programmed selections or instructions from the Smart Grid, while ensuring the appliance‘s safety functions remain active
5. When connected through a Home Area Network and/or controlled via a Home Energy Management system, smart appliances allow for a total home energy usage approach. This enables the consumer to develop their own energy usage profile and use the data according to how it best benefits them
6. It incorporates features to target renewable energy by allowing for the shifting of power usage to an optimal time for renewable energy generation, i.e., when the wind is blowing or sun is shining

According to a research piece written by Zpryme, the smart appliance market is projected to grow from $3.06 billion in 2011 to $15.12 billion in 2015, with the U.S. accounting for 46.6 percent of that in 2011 and 36 percent in 2015.

By contrast, China is expected to have an 11.6 percent share in 2011 and an 18.2 percent share in 2015.

What's more, there are some strong drivers to smart appliance investment:

1. Pricing: Bringing smart appliances to the mainstream means aligning ecological innovation with affordability
2. Environment: With the build-out of metering and real-time pricing, consumers will see economic and environmental incentives for reducing power consumption first hand with their smart appliances
3. Energy efficiency: When a consumer buys an appliance, they commit to paying both the first cost and the operating cost for the life of the product. And over the existence of the appliance, the energy cost to run it could be significantly greater than the initial cost
4. Smart grid build-out: Smart appliance growth relies heavily on how quickly smart grid infrastructure can be rolled-out and readily accessible to communities
5. Government subsidies: Like the Cash for Appliances program in the U.S., governments could and should play an active role in furthering the smart appliance agenda

The smart appliance space is still relatively untapped. But as expected, large corporations such as General Electric and Whirlpool are aiming to take advantage of this commercial opportunity.

In November 2009, GE began distributing a type of hot water heater that can link into smart electric meters. It was arguably the first mainstream smart appliance sold commercially in the U.S. In 2006, Whirlpool was the first appliance company to conduct a smart grid pilot, deploying 150 specially modified dryers in the Pacific Northwest. Whirlpool created and holds key patents for this type of technology.

Watch this space.