The residential sector accounts for about 25% of the total energy consumption in North America and Europe. The consumption is anticipated to increase substantially during the coming years due to the rapid adoption of electric cars and heat pumps. Solutions that enable homeowners to reduce their overall energy consumption and increase the share of energy coming from renewable sources therefore play a vital role in the transition to carbon neutrality and mitigating climate change. To support this transition, governments in Europe and North America have introduced targeted incentives and subsidies to encourage residential investments in renewable energy and energy optimisation technologies. The rising and increasingly volatile electricity prices seen during the past few years combined with more frequent power outages in some regions have also created a strong drive among homeowners to invest in such solutions.
According to Berg Insight‘s latest report, ‘The Home Energy Management Systems Market, 3rd Edition‘, a home energy management system (HEMS) is defined as a system that at minimum consists of a solar PV system, battery storage system and a web-based management portal or smartphone app that allows for remote monitoring and control of the system. A wider HEMS also integrates backup generators, EV chargers, heat pumps, home appliances and other connected products and systems in the home. A HEMS enables households to actively participate in the electricity market, reduce their monthly electricity bills and alleviate the strain on the grid during periods of high electricity demand.
Despite high interest rates and various market uncertainties, the number of European and North American households with HEMS grew substantially in 2024. At the end of 2024, there were an estimated 3.8 million HEMS installed in European homes. An estimated 1.2 million systems were added to the installed base in 2024. This figure includes both new installations of solar PV + battery storage systems as well as installations of battery storage systems in existing solar PV systems (i.e. retrofits). The penetration rate is still low in Europe, at around 3.2%. Germany is by far the leading market, accounting for close to half of the installed base and shipments in Europe. Growing at a CAGR of 22.8%, the installed base of HEMS in Europe is estimated to reach 10.6 million systems at the end of 2029. This corresponds to a penetration rate of 8.5%.
The North American HEMS market is smaller in terms of the number of installed and shipped systems compared to Europe. At the end of 2024, there were an estimated 700,000 HEMS installed in North American homes. Shipments, including both new installations and retrofits, reached 200,000 systems in 2024. About 0.6% of the houses and MDUs in the region had a HEMS installed at the end of the year. The US is estimated to account for about 95% of the North American market while Canada accounts for 5%. California, Texas, Hawaii and Puerto Rico are some of the largest HEMS markets in the US. Growing at a CAGR of 18.9%, the installed base of HEMS in North America is estimated to reach 1.7 million systems at the end of 2029. This will correspond to a penetration rate of 1.4%.
The HEMS value chain includes a diverse range of companies from various industry sectors. Some companies are vertically integrated, offering a complete HEMS based on in-house developed hardware and software solutions. Other companies focus on designing and manufacturing specific HEMS components. Some of these companies integrate devices from third-party companies to offer a complete HEMS. There are also several companies that specialise in providing software platforms that enable other companies to offer HEMS. Leading US-based HEMS players include Tesla, Enphase Energy, Generac, Lunar Energy, FranklinWH Energy Storage and Savant Systems. Leading Germany based companies include E3/D
To read Berg Insight’s latest reports, please visit their website: https://www.berginsight.com/
