WBG semiconductors could further accelerate energy smart homes
Why investors should keep tabs on WBG innovations and production in light of rising smart home demand.
Smart homes expected to boom
The advent of Internet of Things (IoT) brought us the smart home. Interconnected smart sensors in residential homes now allow us to monitor and control various appliances - Alexa, dim the lights, please!
The global smart home market size was valued at a whopping $79 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 27% from 2023 to 2030, according to Grand View Research.
The smart home and the energy transition
A fast growing segment within the smart home market is energy consumption optimization. Smart sensors can enable remote control of heating and cooling systems and energy-demanding appliances during optimal times.
However, the full potential for smart home impact on the energy transition is much larger than just consumption optimization.
Smart homes stand at the forefront of the energy decentralization movement, as local energy hubs. The pressing demand for decarbonization is driving the shift towards decentralized energy systems, which are less vulnerable to large-scale outages, and ensure a more resilient and sustainable grid that can harness renewable sources more effectively.
Equipped with solar PV panels and energy storage systems, along with the integration of electric vehicle (EV) batteries acting as auxiliary energy storage, these smart homes are not just electricity consumers but pivotal contributors to the energy matrix, both generating and storing energy.
The rise of the smart home in the energy segment will accelerate several industries, including residential solar and batteries systems, power electronics devices, and smart energy management software.
A particular key component of power electronics - power semiconductors - are expected to see a surge in demand. At the same time, innovation in semiconductors could further accelerate the role of the smart home in our energy transition.
Each smart home will require a number of power electronic systems that act as the electrical control interface for solar energy generation, feeding electricity to the grid, and controlling the charging and discharging to batteries and EVs. In turn, power electronic systems require a number of power semiconductors.
Silicon (Si)-based power semiconductors are widely adopted and a mature technology for utilization in power electronics. However, there are still some challenges in utilizing Si-based semiconductors in power electronic systems for smart homes. Current power electronic devices have reached their theoretical limits of efficiency, have reliability issues when operating under variable operating conditions, such as stochastic electricity generation in renewables, and take space in the home.
Wide-bandgap (WBG) semiconductors can increase power electronics efficiency, make them more reliable and smaller. In particular, two emerging WBG technologies - Silicon Carbide (SiC) and Gallium Nitride (GaN) - show great promise in improving power electronics.
The use of WBG power semiconductors unlocks efficiency improvements beyond 98.5%1, resulting in reduced energy losses and reduced total costs2 of power electronics by 25%3 when compared with Silicon-based power semiconductors.
Similarly, by unlocking small-sized power electronics, WBG semiconductors will ease the installation of devices in smart homes, while reducing the manufacturing costs associated with materials. This could greatly accelerate the adoption of energy smart homes, by requiring less space and making installation and device cost significantly cheaper.
How close are we to commercial applications?
As exciting as WBG semiconductors are, there are some challenges to widespread adoption - a key one being how to develop and scale the manufacturing processes to reduce production costs. Currently, WBG devices are 2-34 times more expensive than Si-based devices.
Another challenge is the need to design power electronics devices that can be mass-produced using WBG semiconductors, as these are not always drop-in replacements for Si-based semiconductors.
Despite the challenges, commercialisation of WBG semiconductors in power electronics for the smart home is a fast approaching reality given significant advances on manufacturing and increased demand.
A couple of years ago, Tesla introduced SiC technology to the Tesla 3, increasing its driving range significantly and thus extending battery life. SMA also embraced SiC in its solar inverters, managing to push efficiency of the inverters close to 99%. SiC power semiconductors have found pilot applications in railways, battery storage, and more. Meanwhile, GaN technology has found a solid foothold in data center power supplies.
In 2022 the WBG semiconductor devices market was estimated at $1bn, and is expected to grow to around $6b by 20285.
Alongside the long-standing semiconductor suppliers turning their attention towards WBG (such as Infineon 🇩🇪, STMicroelectronics 🇨🇭, and Mitsubishi Electric 🇯🇵), some newer players are already packing a punch - for instance Wolfspeed 🇺🇲 and Navitas 🇺🇲.
Needless to say, power electronics is a complex field. Investors interested in the area should equip their due diligence processes with the level of expertise required to assess the feasibility of new technologies.
We have experts from leading institutions in this domain. Reach out to us to schedule expert calls or to conduct technology reviews of your next opportunity.
Investment costs in components including WBG devices and operating cost that includes losses over 20 years, in comparison to the existing non-WBG (i.e., Silicon) technology