This article was written by Daphne Tomlinson of Tomlinson Business Research.
Last week, Nest launched the 3rd generation learning thermostat in Europe with new remote hot water control and improved compatibility with OpenTherm heating systems. Their presence in Europe is also expanded through partnerships with energy companies, a variety of retail channels, professional distributors, and directly through Nest Pro installers. Unlike the US, the main route to market in Europe for smart thermostat manufacturers is through energy utility companies.
For utilities, these platforms offer a new way to interact with their customers and help them make the transition into an energy services company. In the UK, smart thermostats are also seen by energy companies as one way towards meeting the Energy Company Obligation, a 2013 measure that requires them to help customers to reduce heating costs and carbon emissions.
With thermostats being offered at a discount or at no cost at all, Nest alliances in place include Direct Energie and ENGIE in France, Electric Ireland in the Republic of Ireland, Essent in both the Netherlands and Belgium, Lampiris in Belgium, and nPower in the UK.
Nest, backed by Google, is clearly a formidable competitor for the 20 or so companies, who have developed similar products to control heating and cooling in smart homes in Europe. However, there is increased competition in Europe for Nest as smart thermostat startups gain funding, new routes to market and new ownership
Smart thermostat startups have been able to attract funding from several different sources this year. Energy companies have partnered with these technology companies and several have then gone on to acquire full ownership. Major European companies such as Legrand, Saint Gobain and Siemens have invested in thermostat and home automation startups, as have venture capital and private equity companies.
British Gas, who first became a strategic investor in AlertMe in October 2010, acquired the company on 13 February this year. With a 21% stake already, British Gas paid an additional £44 million for the remaining shareholding, taking its total investment in AlertMe to £65 million. The company is using AlertMe technology to power its Hive Active Heating thermostat.
The geo-aware smart phone app from Munich-based tado°, a leading player in smart thermostats, announced a partnership on 9 February this year with energy provider SSE, the UK’s second largest supplier of electricity and natural gas. The smart thermostat is offered to SSE’s 9 million customers with a free of charge installation service.
In Oct 2015, the company closed a $17.1 million financing round from leading venture capital funds and European blue chip companies bringing their total funding to $34 million. The funding from the Venture Capital Unit of Siemens, Statkraft Ventures, Target Partners, Shortcut Ventures and BayBG will accelerate product innovations and international growth.
Netatmo, a French specialist in connected thermostats, secured a round of financing on 5 November 2015 totaling €30 million from investors including Legrand, Bpifrance and Iris Capital. It was announced as the most significant fundraise on the French venture capital market in the IoT space in 2015. The investment by Legrand will facilitate potential future collaboration between Legrand and Netatmo in the emerging market for smart homes. On 11 Dec 2014, Netatmo announced a partnership with EDF Energy to bring its Philippe Starck designed thermostat into the UK via the HeatSmart programme.
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Nantes-based connected hardware startup Qivivo raised €900,000 from investors including Saint Gobain, Go Capital & BPI France, in February 2015 to bring their intelligent thermostat to market to compete against Netatmo & Nest.
Quby is the Amsterdam based technology developer of the Toon thermostat offered by Eneco, a sustainable energy company. Since 2013, Eneco had a 53% interest in Quby. On 26 October 2015, the company acquired full ownership and declared its intention to expand to other European markets. They have an installed base of 175,000 Toon thermostats in the Netherlands and have a target of one million Toon users in Europe by 2017. In addition to the Netherlands they will target homes in the United Kingdom, France, Germany, Italy and Belgium. The company is currently in discussions with several utilities in the UK about securing a partnership which will see its device made available to that utility’s customers.There are many other participants in the crowded emerging smart home market in Europe: Honeywell and Danfoss are the long-established incumbents, while new entrants include eq-3, Heat Genius, Ngenic, Green Momit, Climote, Plugwise, Heatapp, There and Wattio. It will be interesting to see whether or not any of them are able to compete successfully against Google.