Declining chipset costs, improving data analytics, and ubiquitous broadband are driving the onslaught of connected devices. Taken together we’re entering the brave new world of the internet of things (IoT), where significant venture capital will flow toward business models that figure out a way to connect a device, mine its data, and provide valuable services to businesses and consumers.
What does this trend mean for cleantech? The ability to connect “things” will result in the possibility of automating decision making in a broad endeavor to drive efficiencies in areas ranging from lighting to home appliances to the smart grid. Almost all of these business models will be broad efficiency plays and carry the advantage of having much less technology risk than other cleantech sectors like next-generation batteries or solar.
Key findings from the report include:
- No single company dominates home energy management, and many players, from utilities to broadband providers, are becoming increasingly important partners in the ecosystem. There is tension in the market among those companies offering a single point solution like Nest and those attempting to fully connect the home under one automation system.
- Efficient and connected lighting is coming, particularly in the commercial and industrial space. LEDs are expensive, but lighting-as-a-service models could make them more attractive to customers.
- The smart grid epitomizes the data services theme, connecting energy users’ data to the network with smart metering. Look for two-way communication, decentralized power generation, and a much more controllable and flexible demand side of the grid to change how energy is distributed and consumed.
- Environmental sensors will become increasingly widespread as they are made more compact and function on less power. Startups with simple, elegant, and creative solutions to producing value from that sensor data will find customers.