Smart thermostats seem to be getting smarter these days.
Up until a few years ago, programmable thermostats were as smart as their technology. The problem, of course, was that they weren’t that smart as they needed to be in the hands of the average person. Even though the thermostats had the potential to save energy through personalized settings, homeowners had to actually set them to realize the savings.
Now, all of the major HVAC and thermostat companies makes smarter solutions -- wireless, connected thermostats that can often be set up online. The most celebrated example is the Nest thermostat, which recently released its second version.
Some of the incumbents are finding startup partners to bring the smarts to their thermostats. The most recent is Carrier, which just announced EnergyHub as its partner for its ComfortChoice Touch thermostat.
“Carrier is pleased to team with EnergyHub to offer customers the ComfortChoice Touch thermostat with the Mercury smart thermostat platform,” said Ray Archacki, senior product manager at Carrier. “With more than twelve years of two-way demand response field experience, Carrier recognizes that modern software platforms, such as Mercury, are the key to introducing homeowners to the benefits of advanced communicating thermostats.”
EnergyHub is already working with Radio Thermostat of America, offering its software-as-a-service for the 3M thermostat. The Brooklyn-based startup has used its market penetration through the Radio Thermostat of America partnership to build demand response offerings for utilities -- something that Carrier is also interested in. There are already 20,000 of Carrier's ComfortChoice Touch thermostats in homes, and EnergyHub's platform will be offered for thermostats being sold moving forward.
Carrier is hardly new to the demand response game. Old-school demand response programs mostly revolved around switching off AC units or water heaters during peak demand. Even though Carrier has been doing two-way demand response for more than a decade, increasingly sophisticated software platforms make the proposition of demand response more attractive to the homeowner. Software can pre-cool homes before a peak event, for instance, or respond to price signals to adjust a thermostat.
There are already a handful of programs taking advantage of smart thermostat penetration within utilities’ territories. SDG&E is working with EnergyHub and Alarm.com to offer the customers with smart thermostats a more aggressive pricing option as part of the peak rebate program. CenterPoint teamed up with WeatherBug, which is owned by Earth Networks, to offer its home energy management app to customers that take part in their residential demand response program. EnergyHub said it is also working with a few other utilities implementing similar programs. Carrier and EnergyHub will look to add on even more programs, according to Seth Frader-Thompson, CEO of EnergyHub.
Carrier, which is owned by United Technologies Electronic Controls (NYSE: UTX), has been retooling its demand response offerings through different partnerships. In 2011, Carrier struck a deal with Comverge for its thermostats to be integrated into the demand response provider’s platform. Comverge has been growing its C&I business substantially in recent years, but it still has a larger portion of its business coming from residential compared to other major demand response players. In April, Comverge announced that it would be delivering “thousands” of new “Brighten” iThermostats for TXU, featuring Carrier-branded thermostats.
The question for energy management companies, HVAC suppliers and utilities is how to maximize the opportunity for everyone -- and that includes the customer. EnergyHub can provide performance tracking for HVAC along with optimizing and reducing energy use.
For utilities, the appeal of tapping into thermostats already in their territory is huge -- but the opportunity is still fairly small. In the case of SDG&E and Alarm.com, the home security company has around 1,000 customers with its thermostat offering in the utility’s territory that serves more than three million people. So while partnering with residential energy management companies is relatively easy, the penetration is not substantial.
Of course, the solution there is to offer rebates -- or give away -- the increasingly sophisticated thermostats. Reliant was offering up the thermostat from Nest Labs for customers that signed a two-year agreement for a fixed rate. For many utilities, the appeal of offering rebates or demand response incentives for energy-saving technology is a safer route than deploying hundreds of thousands of thermostats and then hoping to see the energy reduction during peak days.
Frader-Thompson has proclaimed that aggregating residential customers is officially a trend. “Which makes sense, of course, given the rapid growth of non-utility distribution channels for connected thermostats,” he added. The next question is how this trend will scale across slow-moving utilities.