Policy mixes for more sustainable smart home technologies

Smart home technologies (SHTs) refer to devices and systems of devices that provide digitally connected, or enhanced services to household occupants through the monitoring, management and control of home functions related to energy use, safety and security, health and wellness, entertainment and other aspects of home life that may benefit from automation and control. Popular examples of SHTs include Amazon's Alexa (which offers voice activation for music or internet searches), Nest's thermostat (which enables programmable or automated heating), or Ring's security doorbells (which enable video displays and remote monitoring of who is outside a home).

Market forecasts suggest that the SHT market will grow substantially, and that they could become a defining factor of future energy transitions (Wilson et al 2017). Indeed, Gemserv (2019), an internet security firm, projects that the number of devices connected to the internet will reach 20.4 billion by 2020, and already the global annual market for digitally connected devices and services is estimated at approximately $2 trillion. Frost and Sullivan (2020) more specifically projects that for smart and connected homes the market will grow rapidly, reaching $262 billion by 2025 at a compound annual growth rate of 7.5%. Although this market and growth is dominated by home entertainment, home energy management systems are expected to grow at a compound annual rate of 21.0% until 2025, which demonstrates the rapid evolution of the overall sector (Frost and Sullivan 2020).

Despite the many benefits offered by SHTs, in this study, we critically examine the sustainability risks of SHTs and provide a set of policy recommendations to improve the sustainability of smart home adoption and use. Based on research conducted as part of a project at the Centre for Energy Demand Solutions, we collected primary data from 38 formal, semi-structured research interviews with experts across five different types of institutions in four countries in four different regions (Japan in Asia, United Arab Emirates in the Middle East, the United Kingdom in Europe, and the United States in North America). We supplemented this with an interdisciplinary review of the recent academic and policy literature on smart homes.

Our core contribution is to challenge, contextualize, and contest the idea that SHTs per se will lead to more sustainable and efficient homes. Instead, we call on the need for more comprehensive and progressive policies to achieve sustainability and efficiency and also tease out implications for future SHT innovation and development. Our intent is to elaborate the important notion that smart technology is not an end in itself but rather a means of exploring and achieving a sustainable future for humanity and nature (Zhang and Shenjing 2020).

SHTs hold immense promise for making homes more efficient and sustainable but also can embed unsustainable practices and risks (Sovacool and Furszyfer Del Rio 2020) that extend from the household to the city scale (Ahad et al 2020).

For instance, rewards in the form of economic savings are employed under the premise that individuals will engage in sustainable energy behavior with the objective of achieving financial benefits (Penner et al 2005). However, this assumption has been contested and researchers suggest that to achieve long-lasting energy behaviors from either engaged or disengaged energy users, appealing to elements of behavior such as routines, norms, and values achieves greater results (Allcott and Rogers 2014, De Dominicis et al 2019). That is, deeper motivational drivers behind energy use, such as attaining adequate warmth, protecting the environment, or achieving high standards of luxury can all significantly shape the adoption of use of SHTs. Moreover, the smarter homes become, the more complex and interconnected they are, which can create dependences that can erode reliability. For instance, smart devices may simply not work in an electricity blackout or may confuse a cat with a burglar and trigger false security alarms.

Furthermore, SHTs may introduce vulnerabilities and therefore, inefficiencies and waste, especially when they are from different manufacturers or use different functional protocols that lead to a lack of interoperability. Hargreaves and Wilson framed the interoperability challenge in three dimensions: compatibility with non-smart home devices and appliances, compatibility with busy lives and routines, and compatibility with existing support systems (Hargreaves and Wilson 2017). Interoperability becomes especially acute when one 'inherits' a bundle of SHTs when moving into, or purchasing, a new house. Thus, interoperability requires not only technologies to work together, but also different SHT manufacturers and operators to ensure that SHTs items can be replaced without disrupting the operational performance of a smart home (Jungwoo et al 2018).

The literature also distinguishes between different types of learning necessary for adoption: practical learning (how to configure and use the technology), cognitive learning (understanding what they can do or be used for), and symbolic learning (incorporating devices into routines and practices) (Hargreaves and Wilson 2017). When any of these forms of learning break down, users can become frustrated and as a result, cease to use SHTs or even misuse or abuse them (Nicholls et al 2020, Strengers and Kennedy 2020).

There is a final risk that increasing data and the 'internet-of-things' (IoT) could require a 'tsunami of data' and greatly increase global electricity usage from the devices that collect these data as well as from the hardware that runs the algorithms that process these data (Vidal 2017). Strengers and Nicholls (2017) show how the convenience of smart devices could transform everyday practices in ways that increase not only energy consumption, but also household labor for use of the devices while additionally leading to more energy consumption for activities like air conditioning or electricity use in general (Strengers 2013), Tirado Herrero et al (2018) also find that SHTs can reinforce unsustainable energy consumption.

As a result of these concerns, a substantial policy architecture has emerged, especially in the European Union (EU), to regulate smart grids and the smart homes that connect to them (see table 1). However, much of this policy focuses on things like interconnection standards or EV charging, with only a small sample of policies focused on data protection and none explicitly looking at how to make smart homes more sustainable.

It is precisely this gap of defined and clear policy to increase the sustainability of smart homes that we seek to fill with our study. To do so, we relied on qualitative expert interviews in four countries—Japan, the United Arab Emirates, the United Kingdom, and the United States. Our sampling strategy was designed to include experts from five different types of institutions: government, academic, private sector, civil society, and intergovernmental organizations. In total, we conducted 38 interviews from November 2018 to August 2020 (see table 2). One of the questions we asked in every interview concerned which technology or policy advances are needed to make smart homes more acceptable and sustainable.

Drawing from our interview material, by far the most strongly suggested policy domains recommended for improvement were consumer protection, privacy, and data security. Indeed, the data protection policy frameworks internationally and in the countries we studied are highly fragmented (see figure 1). The interview responses covered many aspects of SHTs, from data control and restrictions, to encryption, to clear guidelines for ownership of data, to safeguards against hacking and piracy. As UK06 and USA05 respectively commented 'stronger consumer protection and regulation is a must, regulation to protect consumers is essential' and 'if we do not figure out how to secure IoT devices in terms of privacy and data management, the smart homes revolution is destined to fail'. Certainly, the urgency increases when sensitive data based on the private lives of users is shared with third parties and results in discrimination from insurance companies, financial institution or employers (Wachter 2019).

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Respondents also suggested the need for stronger regulations for energy services or IoT. Indeed, in order to protect user privacy, the European General Data Protection Regulation (GDPR) constitutes a first good scheme to enhance trustworthiness, to treat users fairly and protect them from harm (Véliz and Grunewald 2018) by making data protection by design and by default a mandatory requirement (Véliz and Grunewald 2018).

In the technical domain and related to trust in SHT manufacturing companies, experts discussed the need for both innovation and technical learning, as well as the necessity of standards, especially concerning obsolescence (guarantee longer product lifetimes and warranties) and interoperability (between devices as well as technology providers). On the latter, our research indicates that when technology systems communicate with each other, their value increases, which makes interoperability key for maximizing benefits to users and the energy system. On this point, research indicates that interoperability among systems is required to capture 40% of the potential value within the IoT (McKinsey Global Institute 2015, Noura et al 2019). Governments were identified as needing to play an essential role in creating an environment where the smart home sector can both learn what policymakers want and deliver it in ways that protect consumers. This suggestion was followed by setting standards—across a variety of domains, including technology, advertising and marketing. The promotion of required interoperability and upgrades is yet another vital area for governments to address. Hargreaves and Wilson (2017) note that clear national policy guidelines can ensure hardware and software is compatible not only with the home, but also with communications portals as well as energy suppliers or system operators, especially during periods of peak usage. This latter issue is central to the evolution of smart grids that are connected to smart homes. The authors also suggest creating national systems of independent certification schemes for SHT assessors, installers, and finance providers.

Other subjects that were covered by experts is the need for a more open market as well as protections in place to minimize vulnerability and 'smart poverty.' In their systematic review of the smart homes literature, Marikyan et al (2019) warned that regulation and legal stipulations have fallen behind innovation, with many gaps in national policy and legislation. As a consequence, UK08 stated that regulatory protections are 'inadequate' that that there is a 'clear regulatory policy and architecture problem.' Respondents also mentioned the need to protect vulnerable groups, especially those that could be 'left behind' in a smart economy, leading to aforementioned notion of 'smart poverty.' While USA03 added: 'The last thing we want is a smart system that only benefits some in the society and in the western world. We must always hedge against this distribution risk and make sure no vulnerable groups are left behind.'

Research already warns that lower income households, vulnerable groups, the elderly, or those in rural areas with poor internet access are late adopters SHTs (Hargreaves and Wilson 2017) and smart meters (Sovacool et al 2017). This became increasingly apparent during the COVID-19 health pandemic (Lake and Makori 2020). Grants, subsidies, and free technical advice could be targeted at these groups, as well as efforts to improve high-speed internet access.

While SHTs hold the promise to deliver energy savings by helping consumers change their behavior and use resources more efficiently, it is unclear whether these savings outweigh the energy production footprint and rebound effects that may derive from SHT use (Hittinger and Jaramillo 2019). Here the term rebound effect is used to describe sudden or unexpected increases in energy consumption or waste following the adoption or use of a more energy efficient SHT device. Given the potential for energy rebounds and waste, respondents discussed the importance of ensuring that SHTs deliver on improvements in efficiency, emissions reduction, energy consumption, and sustainability. As our respondents put it: UK01:

I am most interested in scripting, how to design hardware, control systems, algorithms, and other factors that push energy downwards. This SHTs are not neutral, cannot be controlled any way they like. We need to make smart tech directional, to design it to explicitly reduce energy. There are a multitude of ways to do that, from building it into the kit, or making it the default, a 'harder' path, to merely allowing people to set controls a certain way, a 'softer' path. The result would be setting constraints on people, SHTs allow people to do some things, but it also does not allow them to do others.

Technologies can be programmed to respond to grid signals, I think that's where the real potential is. Otherwise the cost is too high, you cannot spend a lot of money in each home doing big installations, integration and all the labour to set up the network; it has to be plug and play. I think smart homes have the potential to overcome that barrier, but the technology has to be better before we really get to that point.

These technologies can reduce household energy consumption and improve efficiency. Thanks to these technologies consumers now have a better understanding of how much energy they are using and governments now understand how much electricity they need produce. Making sure that we all share this view is the greatest potential of the digital revolution.

UK01 added that without scripting (or explicit programming), 'until reductions in energy demand or carbon are guaranteed, there is no case for smart energy homes.' Such scripting would automatically cutoff smart home devices if they exceed a certain threshold in terms of emissions or energy consumption. Respondents also suggested that SHTs only be broadly deployed to meet policy objectives when coupled with investments in other sustainability measures, such as energy efficiency, passive design of infrastructure, or fuel poverty mandates. This would ensure that all households are supported, not just those rich enough to afford smart technology.

One implication from these points is that consumers may need more than 'nudging' to make their use of SHTs is more sustainable or environmentally friendly. They may need pushed, incentivized, or even coerced and forced via punitive measures that are more akin to 'command and control' policymaking than those relying on the voluntary goodwill of actors (Dubois et al 2019). Punitive measures, however, often end up hurting the most vulnerable in a society and so issues of 'flexibility justice' (Powells and Fell 2019) or 'data justice' (Taylor 2017) need considered to ensure that sustainability goals are balanced with consumer protection for vulnerable groups.

Another clear implication from these points is that the sustainability attributes of smart homes are neither predetermined nor certain; they will depend upon context and how such technologies are incorporated into homes and the domesticated and daly routines of actors. The sustainability of smart homes will thus exist on a spectrum as shown in figure 2, with some attributes such as vulnerability and materials intensity leading to socially and environmentally unsustainable homes, and attributes such as strong privacy protections and resource efficiency leading to more socially and environmentally sustainable homes.

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As a promising sign, policymakers have begun to erect more robust regulations, standards, and other policy incentives intended to steer SHT development in positive ways. Woetzel et al (2018) already report that Dubai and Abu Dhabi in the UAE are the most advanced cities in the Middle East for smart city technology deployment while London in the UK is the most advanced in Europe and all of the most advanced cities in the North America are in the US. Tokyo in Japan is the tied with Beijing in fourth place in the Asia-Pacific. Abu Dhabi has launched the Zayed Smart City Project for demonstration of smart city technologies as well as Masdar City, which is an Abu Dhabi government initiative to 'demonstrate the state-of-the-art in sustainable cities' (Griffiths and Sovacool 2020, p 5). Dubai has ambitions to become the smartest city in the world, investing in up to Dh 7 billion in the short, medium and long-term to achieve this objective (WAM 2019). Japan is positioning itself as a world leader in smart city developments with around 160 projects funded by the national government (Nyberg and Yarime 2017). The US Department of Energy (DoE 2018) states that U.S. utilities were investing roughly $3.4–$4.8 billion per year in 2016 in smart grids and smart meters with the intent of making American homes more energy efficient. The UK's Industrial Strategy has examined the energy revolution and smart systems, with an explicit policy to boost the country's digital infrastructure with more than £1 billion of public investment (BEIS 2017).

However, many of these policies focus on promoting SHTs via investment or learning, or accelerating the diffusion of smart technologies across households. Less covered are policies actively seeking to make SHTs more sustainable, or to moderate their diffusion so that they contribute to energy and climate goals. Therefore, we have mapped out very specific policy changes that could be implemented, immediately, across components of the European GDPR, standards on communications networks, regulations on technological obsolesce, directives on product liability, as well as Waste Electrical and Electronic Equipment Regulations (WEEE) table 3 summarizes our recommendations across the four dimensions of social, technical, political, and environmental sustainability. Where available and relevant, we include frameworks, and related framework gaps, from the countries studied.

Our evidence strongly suggests that we need an integrated set of smart home policies that not only protect consumers, but also set restrictions to ensure such devices meet other climate and energy goals (such as fuel poverty or efficiency), sponsor innovation and trials for learning, and set technical and marketing standards. Perhaps then, with a more thoughtful and coordinated mix of policies in place, SHT adoption will begin to fulfill some of the objectives their advocates continually promise.

We do note that our analysis relies heavily on European data protection schemes as best practice. However, laws and regulations are only as useful as the systems that implement them. Hence, GAIA-X has been launched as a European initiative to bring cloud computing infrastructure itself under EU oversight as opposed to international technology companies that largely reside outside of Europe. Although the full technical details of GAIA-X are outside the scope of this paper, figure 3 clearly shows the intent and potential of this initiative to not only alleviate SHT data privacy concerns, but also make SHT ecosystems much more efficient and effective. While we are not proposing by any means that the GAIA-X architecture is optimal for all locations, it does provide a useful model to consider regarding necessary coordination of policy and infrastructure.

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To conclude, because not all smart home devices meet sustainability goals, and for the technology to have transformative impacts on reducing energy demand—or, even just incremental reductions in demand—the sector needs to be strongly guided by government policy. Such policies, currently, appear to occur in a fragmented manner across different silos such as smart meters, smart grids, or the IoT. This issue is one that needs to be addressed with some urgency given the important role that SHTs will need to play in achieving global sustainability targets across a broad range of sectors, not the least of which is energy. We have drawn significantly on EU policy and policy implementation best practices in deriving policy recommendations and suggest that policy makers globally consider these recommendations and tailor them their own socio-political contexts.

Finally, while much of this paper has focused on the SHTs in the individual home, we do believe that great potential also exist in terms of systemic coordination at the neighborhood and city level, as these involve larger scales and thus significant volumes of energy consumption and corresponding greenhouse gas emissions. Here we note that emerging models for smart city governance may benefit from following a polycentric approach that is more inclusive to community and grassroots actors and hence may facilitate broad and beneficial SHT adoption (Nyangon 2020). Within the extended concept, technologies like smart grids and smart meters need to integrate with the full suite of SHTs to enable opportunities like demand response, which is a central means of achieving high shares of intermittent renewable energy and reducing energy consumption overall. It may be easier to implement policy that promotes sustainability across the broader electricity system than just to focus on individual households given that the focus would be shifted toward industry and government organizations. Such a systems perspective, a noted throughout this paper, can help achieve SHT sustainability objective even if some of the sustainability challenges noted, such as rebound effects, ultimately materialize.

The authors gratefully acknowledge support from UK Research and Innovation through the Centre for Research into Energy Demand Solutions, Grant Reference Number EP/R035288/1.

All data that support the findings of this study are included within the article (and any supplementary files).