Smart Thermostats – More than a Widget, More than Energy Efficiency

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This article written by AESP Members Abi Daken and Claire Miziolek and appeared in AESP July 2018 Strategy.

Smart thermostats have emerged as a major player in efficiency programs in recent years. By optimizing use of HVAC, they can achieve energy savings in heating and cooling months as well as deliver demand response peak reductions; these two-way communicating, connected gadgets offer a lot to energy efficiency programs.

The Environmental Protection Agency (EPA) set ENERGY STAR® performance standards for smart thermostats with the first brands earning the label in early 2017. As of May 2018, there are more than 18 million households covered by efficiency programs that offer rebates on ENERGY STAR certified smart thermostats.

Now that smart thermostats are gaining market and program acceptance, it is important to understand some of the nuance this technology offers. NEEP and EPA have teamed up to explore some of the similarities and differences between a smart thermostat and more traditional efficiency measures and help the industry understand how these devices fit into the future of energy efficiency.


What is a Widget?

Let’s start with the basic question for efficiency programs thinking about smart thermostats – is it a widget? Well, a widget is a funny thing; defined for daily use by Merriam Webster as “an unnamed article considered for purposes of hypothetical examples. ” Widgets are widely understood in the energy efficiency world as energy-using pieces of equipment that, for the most part, can be easily swapped out. An inefficient product (or widget) can be replaced by a more efficient version of that widget. Lightbulbs and refrigerators are prime examples.

Utilities typically rely on widgets for much of their energy efficiency program savings, providing incentives for their purchase and counting the savings according to a technical resource manual, which has a “deemed savings” for each widget installed based on program evaluation findings. For instance, it’s well understood how much energy is saved when an incandescent bulb is replaced with an LED bulb, and if the program increases sales of LED bulbs by a certain number of units in their territory, they can multiply that by the deemed savings per bulb and report that to their utility commission as savings. There is relatively little risk to utilities in these widget-based programs.


A Different Kind of Widget

So, are smart thermostats widgets? Yes, though they differ from other widgets in some important ways. They can be easily swapped out in most homes and can deliver reliable energy savings. However, savings aren’t predictable for single homes, only on average for groups of homes. In addition, part of the savings, and the demonstration of savings, come from the combination of the hardware device in the home with a service in the Cloud. Lastly, the thermostats are constantly updated during their service life. We’ll examine each of these in more detail.

Consider first the nature of controls. The thermostat itself uses only a small amount of energy, but affects the use of a large percentage of energy used in most homes. In addition, it doesn’t control that energy use entirely, instead working with the choices of the people in the home. Thus, the actual energy savings attributable to thermostats can vary widely between homes and users. Some (though data suggests few) households manually adjust thermostats in a very efficient way. Others pick a comfortable setting and leave thermostats there all season or year long. A smart thermostat’s ability to save would be quite different between those two extremes. However, average savings over groups of homes are predictable. The ENERGY STAR Method to Demonstrate Field Savings (described below) relies on predictions of average savings over a group of homes, and the results of utility pilots bear it out. Unlike traditional thermostats or even programmable thermostats, truly smart thermostats can apply additional mechanisms to further reduce HVAC runtimes. The connection to a service provider offers wider scope for such mechanisms. In addition, that connection allows service providers to collect data including indoor temperature and heating and cooling equipment run time. These data provide a unique perspective into the use and actions of the thermostat.

Of course, the mere fact that smart thermostats are internet connected is not enough to guarantee energy savings. That’s why EPA, with the support of smart thermostat vendors and efficiency programs, developed the ENERGY STAR Method to Demonstrate Field Savings 1. To explain the method, we need to review some basics.

For purposes of the ENERGY STAR program, EPA considers the thermostat product to be a combination of hardware and service. Many functions, such as sensing indoor temperature and switching equipment on and off, must happen in the home. Others, such as changing temperature remotely and keeping a record of temperature and run time history, require Cloud services. The majority of functions can be enabled by various combinations of local capabilities and cloud services. EPA sets requirements for the smart thermostat device (the hardware) and the product as a whole. The smart thermostat service provider is the ENERGY STAR partner, responsible for ensuring that the product meets the specification requirements and using the ENERGY STAR mark in accordance with EPA requirements.

To verify that the thermostats are being used in an energy-saving way, the method relies on data service providers hold about the set points, indoor temperatures, and equipment run times in their users’ homes. In the ENERGY STAR Method to Demonstrate Field Savings, thermostat service providers run the use data from a random sample of homes using their products through EPA-provided software, which calculates the mean percent run-time reduction in heating and cooling for the sample, based on the temperature choices of actual users. Requirements on these metrics are the heart of the ENERGY STAR Specification for Connected Thermostats. While different smart thermostats use different techniques to ensure that their customers use setbacks, a wide variety of products have shown they are successful in doing so. For almost all types of HVAC, setbacks that call for less heating or cooling but still meet the comfort needs of the consumer, result in less energy used to heat or cool a home.

Results of utility pilot programs also bear this out. For instance, a National Grid study found 16% cooling and 8-10% heating savings and a NIPSCo study found 16% cooling and 13% heating savings, with several other evaluations falling in those ranges 2 . These results are variable across technology type, time of year, and climate zone, but evaluations have consistently shown potential for smart thermostat energy savings.

As we have described, the ENERGY STAR program uses the data from smart thermostats themselves to ensure savings nationally. NEEP outlined a mechanism to enable efficiency program use of the data from smart thermostats and the ENERGY STAR metric to calculate average savings for a specific section of the country in the Claiming Savings from Smart Thermostat: Guidance Document 3.

Another key way smart thermostats differ from other widgets is that they are constantly updated with new software and firmware, causing their service offerings to change. It’s as if a refrigerator got regular compressor upgrades a couple times a year! Because of this, participation in the ENERGY STAR program requires smart thermostat service provider partners to submit newly-calculated metric data every six months, to account for any recent software updates that may have impacted performance.

To review, there are three specific properties that make smart thermostats different from other widgets. First, as a control technology for which user behavior impacts savings, what happens in any particular home is hard to predict, though the savings of groups of homes are predictable. Second, a smart thermostat consists of the thermostat device (hardware) in combination with a service offered through the cloud connection, which provides wide scope for innovation and a window into how customers use the thermostat. Third, smart thermostats are constantly updated.

You can read more about the exciting potential of smart thermostats to do more than reliably save energy. Look for an article from the same authors, titled “Smart Thermostat on the Wall, it could be the Fairest Efficiency Measure of the All” in the 2018 AESP Magazine that will be mailed to all AESP members this month.


Abigail Daken is an Environmental Engineer in the ENERGY STAR Program at the U.S. EPA. Claire Miziolek is the Senior Manager of Technology and Market Solutions at the Northeast Energy Efficiency Partnerships (NEEP).






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