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What is a Home Energy Management System?

If you’re looking to optimize your electricity use or improve energy efficiency you may have heard of a home energy management system (HEMS). And many people who haven’t heard of them probably will soon since the home energy management system market is expected to grow from $2.1 billion in 2021 to $6 billion in 2027. 

The increase in solar panel installations is a big reason why home energy management systems are becoming more common. But can they be a benefit even if a home doesn’t have solar panels?  

In this article we’re explaining what a home energy management system is, and better yet, if most households need one.

Home Energy Management Systems 101

A home energy management system is an information gathering system that’s meant to improve energy efficiency by:

  • Analyzing data on energy use 
  • Monitoring energy requirements 
  • Measuring energy consumption for individual home components and appliances
  • Coordinating the operation of various appliances, solar panels and other devices
  • Automating systems for optimal energy consumption
  • Syncing with smart home devices to manage use
  • Managing backup power and home batteries
  • Syncing with the local utility to gauge energy demand


Some home energy systems can be linked to a solar panel system to efficiently distribute power throughout the day. This is extremely helpful given that solar energy isn’t generated consistently. A home management system can even determine if excess power needs to be stored in a battery for backup power later rather than redistributed to the grid. 

But they are highly beneficial even if you don’t use solar energy, and those benefits extend beyond homes that are outfitted with a HEMS. 

Home energy management systems don’t just provide insight on how many kilowatt-hours are needed to run a house. And they do more than reduce energy use and in turn lower utility bills by at least 5-10%. They also help people utilize energy in a more efficient way, which makes energy use more sustainable all around and eases the stress on electric grids. And as homes get smarter, a HEMS can potentially help increase the lifespan of connected appliances.

Components of a Home Energy Management System

There are a lot of different home energy management systems, but they all have some similar components. In particular, three components are absolutely necessary for the operation of a HEMS.


The hub is the heart of the home energy management system. The device hooks up to the electric panel in order to read the data from the house. The hub then relays the data to the software so the information can be seen by an end user. 


The software takes in the data from the hub so that it’s readable and actionable for the homeowner. It can be accessed either by an online account or app. 

Internet-Connected Device

The hub and software do the heavy lifting, but without an internet-connected device to sync up to the software you won’t get much use out of a home energy management system. 

What Factors Affect a Home Energy Management System?

So how does a HEMS make energy use estimations and optimize efficiency? The software uses complex algorithms to do more than measure how much electricity is being used or generated by solar panels. 

Many home energy management systems aren’t just considering how you use electricity when it determines how to optimize energy use. Yes, it is gathering data to learn energy use trends and patterns, which play a big role in improving efficiency and even predicting future energy needs. But there are a few other things that the home energy management system is taking into account.

Current Weather Conditions

What’s happening outside the home is a huge influence on how energy is used inside. The HEMS will take weather conditions into consideration to ensure the home stays comfortable.

Energy Costs

Some HEMS will consider the cost of energy when making suggestions and automating systems. Energy prices can change at any time, and some energy plans have a variable rate that can fluctuate from one month to the next or even at different times during the day. 

Grid Service Availability

Grid service availability refers to the grid’s ability to deliver electricity. This is especially important for homes with solar panel systems that have the ability to store power to use when the electric grid is strained.

You can manage your energy use at home with the help of Spark Energy whether or not you have a HEMS. Our energy bills provide a lot of insight into your unique energy consumption and needs. It’s a great starting point for optimizing energy use before investing in a home energy management system! 

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