Do homeowners prefer the idea of a smart thermostat that they can set from their smartphones while they’re away from home? Or do they prefer the kind of smart thermostat that does all the thinking for itself?
Reliant Energy and TXU Energy, two of Texas’s biggest retail electricity providers, have both rolled out new sets of smart thermostat programs this summer that could help answer which of these two flavors of home energy control resonate most with customers. If it helps the state beat summer peak loads without sky-high power costs or brownouts, all the better.
Texas, with its competitive power markets that allow customers to shop around for the best deals on electricity, is a good place to test the linkage between energy efficiency and effective customer engagement. While both utilities offer efficiency as a selling point for various customer programs, they also offer cash-back programs, free-nights-and-weekends energy deals, frequent flier miles and many other perks and promises to get customers to sign up.
Smart thermostats fit into that paradigm, with in-home devices coming along with new rate plans and new technologies to connect homeowners with their energy use. So what are TXU and Reliant pitching their customers? Here’s a breakdown of how they’re going at it.
Reliant Tempts Customers With Light-Touch Savings With Nest, EcoFactor
Reliant Energy, a subsidiary of NRG Energy, is a big power retailer in Texas, with more than 1.5 million residential, commercial, industrial and institutional customers. Of those, more than 400,000 are using one or more of Reliant’s set of tech-enabled programs, which include a popular weekly summary email and text alerts, a web portal, an iGoogle widget and cash-back nights and weekend plans. Earlier this month, it launched a critical peak rebate program for residential customers.
As for smart thermostats, Reliant has two interesting offers underway for customers. In June, the utility announced it would be selling digital touchscreen thermostats from Nest Labs, the startup founded by Apple alums, as part of Reliant’s “Learn and Conserve” program. In exchange for agreeing to a two-year fixed electricity rate, Reliant is sending program participants a Nest thermostat, which promises to adjust itself to a homeowners’ desired comfort and save around 20 percent on energy bills.
Nest is currently selling its thermostat online via Lowe’s, Amazon and the Apple store at a cost of about $249 and up, so presumably Reliant is hoping to pay back the cost of the free Nest it’s offering via the two-year rate plan, which at 11 cents per kilowatt-hour is a few cents higher than competing low-cost, two-year offers, the Dallas Morning News reports.
In July, Reliant added a new thermostat program, called e-Sense Ideal Temp, that features technology from startup EcoFactor. Unlike Nest, EcoFactor doesn’t make its own thermostats. Instead, it pulls data from two-way communicating thermostats that can be made by such players as Honeywell, Cooper Industries, Radio Thermostat and many others. These can be quite a bit cheaper than high-end models like Nest -- though the fact that they have to be connected via broadband to the home does increase the price above and beyond the thermostat itself.
Once it’s connected to those thermostats, Ecofactor analyzes it via its cloud-based software to adjust settings to save money. “We believe that having control rest in the cloud will in the long run be a much more profitable and scalable way to approach this market,” EcoFactor’s new CEO, Roy Johnson, told me in an interview last week.
The system uses patented algorithms to learn from and adapt to residents' temperature preferences and each home's individual thermal characteristics, then optimizes the heating and cooling system automatically to drive savings. That means that EcoFactor can theoretically work without much if any interaction from the homeowner. While the startup has recently added individualized month-by-month energy savings reports, it also promises a set of capabilities that don’t rely on homeowners changing their behavior.
For example, EcoFactor has been testing out its abilities to provide demand response, or power reduction when grid power demand is at its peak. The startup has been working with Las Vegas utility NV Energy since 2010, and moved from a pilot to full-scale deployment last year. While it has shown an average of 17-percent energy reductions overall, it also showed that it increased demand response by 36 percent compared to traditional residential DR programs.
TXU’s iThermostat With Smartphone Control, Facebook Links
TXU was one of the first utilities in the country to go big into the two-way communicating thermostats via its iThermostat program. Launched in 2008, iThermostat is managed by demand response provider Comverge over its IntelliSOURCE platform, and connects low-power wireless ZigBee-enabled thermostats to a broadband gateway from Digi International, which allows the devices to communicate in near real time with the wide world.
Comverge announced plans to deploy 100,000 thermostats with TXU in August 2010, despite having to recall about 5,000 of its thermostats months beforehand because of a fire risk. In April it announced that it would be delivering “thousands” of new “Brighten” iThermostats for TXU, featuring Carrier-branded ComfortChoice Touch thermostats from United Technologies Electronic Controls (UTEC). Comverge is still providing the key underlying software platform for the program, providing a nice boost to the company amidst the financial troubles that led to it being acquired by H.I.G. Capital for $49 million in March.
As for mobile connectivity, TXU has been connecting iPhone users with their iThermostats for about a year now, and has seen about 60,000 downloads of the app so far. On Wednesday, it launched a version for Android phones, opening up most of the rest of the smartphone market. Development of the entire smart thermostat-networking-software-mobile apps system has been the result of a broader energy efficiency effort that has been driven by about $100 million in TXU research and development funds.
I took a virtual tour of the technology with TXU earlier this month, and found it an easy-to-use and intuitive interface, accessible via website or smartphone, that allows the customer to establish baseline settings for days of the week on an hour-to-hour basis, with real-time calculation of how those changes will effect current charges and estimated energy bills on a monthly basis.
In short, it’s a good tool for people who want to get involved in their home energy use, have a broadband home internet connection, and are familiar with logging into an online interface to do so. There are a lot of ways to encourage these kinds of people to get more involved, and TXU is trying them out.
Last month, for example, it launched a new Facebook hub where customers can share energy saving tips and brag about accomplishments. Tapping Facebook and other social media platforms for energy saving is a technique that’s also being tried out by home energy startups like Opower and utilities that participated in the White House’s Biggest Energy Saver Campaign last year.
What Will Customers Want?
Of course, Reliant isn’t abandoning the customer interaction part of its smart thermostat rollout. While both Nest and EcoFactor are promising a “light-touch” approach to home energy saving, Reliant is also connecting to its customers via Facebook and the Smart Meter Texas web portal, and offers smartphone connectivity for its Nest thermostat program.
At the same time, TXU is developing pricing programs, like Reliant’s, that help shift power usage from peak times to off-peak times. In May, for example, it launched a Free Nights plan, offering no charge for energy used from 10 p.m. to 6 a.m., and a rate of about 11 cents or 12 cents per kilowatt-hour the rest of the time.
Texas is far from the only place where smart thermostats are being deployed by utilities. Oklahoma Gas & Electric is doing a big rollout with Energate and Silver Spring Networks aimed at reducing peak loads enough to avoid building a new power plant. Canada’s Ontario province has a multitude of home energy management offerings, including smart thermostats, to help customers adjust energy usage to manage the time-of-use pricing plans that have been in effect there for more than a year now.
What makes Texas different from most of these other regions, of course, is the fact that utilities working in a deregulated market have to consider customer acquisition and retention issues as much as they do energy efficiency and peak reduction issues when planning their technology offerings.
The hard fact is, there’s little evidence that homeowners care that much about managing their energy. Consumer surveys show most homeowners are unwilling to pay much more than $50 for home energy management, and a recent survey found that only 13 percent of Americans want an energy dashboard in the home.
That means that utilities like TXU and Reliant will have to find clever ways to entice their customers into allowing these devices into their homes, along with innovative rate plans and incentives to get them on board.
No doubt both companies will be watching the results of their new smart thermostat programs to see which approaches work, and which don’t. Perhaps the new push by telecommunications providers, home improvement stores and cable companies like Comcast into home energy management will provide valuable results as well.