Smart Thermostats: Why Is It So Hot?

By Rebecca Anderson

On March 4th I attended the ZINO Society’s Green forum at the McKinstry Innovation Center where emerging greentech startups from Washington and Oregon pitched their business plans to a room filled with investors and greentech industry leaders. Not only does this annual event escalate the green buzz that seems to be so prevalent in today’s technology market, it also tends to highlight certain emerging trends. This year that trend was smart thermostats, otherwise generally known as home energy management systems.

Three out of the thirteen presenting companies were smart thermostat concepts, all with similar general objectives and concepts, which led me to do some further investigating. What I discovered is that there is an influx of smart thermostat technologies that have recently emerged from the smallest startup to some of the biggest players -- everyone is looking to get a piece of this thermostat action.

So what exactly is a smart thermostat? To answer this question we need to begin with the smart grid, which according to a recent Harris Poll 68% of Americans haven’t ever heard of. Electricity is delivered to Americans via the “electric grid” and the smart grid is literally smarter. At the epicenter of the smart grid is the smart meter which is a two way communication system that instead of merely tracking how much total electricity a consumer uses each month, tracks usage continually throughout the day and uses wireless technology to automatically transmit the data in real time to the utility to make the utility smarter. Don’t you feel smarter now?

The information gathered from this system will help utilities and regulators control price and consumption thus modifying our energy usage behaviors. For a more in depth definition of the smart grid see this publication sponsored by the DOE.

Coming back full circle, the smart thermostat is the homeowner’s version of the utility’s smart meter. It is an in home device that shows you your energy consumption, but also allows you to control the things in your house that consume energy based on the consumption patterns shown to you. For example, I think everyone has seen the iPhone commercial showing the app that allows you to turn your lights off from your phone (If not here is the commercial), the thing transmitting data to the iPhone is the smart thermostat. Most smart thermostat technologies have a wireless communication function and a web or mobile device portal for access. Other common features for the smart thermostat include, touch screens, learning ability of your usage habits, display of utility data, and remote programming and operation.

For now smart thermostats will struggle to gain consumer adoption due to lack of awareness, usability and the fact that not every consumer will have appliances or the ability to convert their appliances to communicate with the thermostat. The reason why people will eventually adopt this technology is to save money and, of course, to save the earth. Some call the smart grid the revolution no one knows about. Regulators, utilities, business around the world are continuously gathering to discuss implementation of a smart grid which will open the door to a new world of technology innovations aimed at energy consumption. Even investors are excited about home energy management technologies, over $23 million of venture fund investments were made within the first month of 2010.

With such a fast saturation of competing technologies in a young market, to succeed, smart thermostat companies will need to move fast to get to market, which may be tough because of other players in this space. We can assume that the utilities are no competition because they have much bigger fish to fry in trying to tackle the smart grid, and historically utilities have not been the epicenter of innovation. However the deep pockets and manpower behind giants such as Microsoft, Intel, Itron and Apple are going to give the startups a run for their money in this space. Aside from all of these factors, the companies that will end up on top will have to crack the code to consumer adoption, the key of which, in my opinion, will be to create a product that consumers will want to use because it is easy and fun. So stay tuned, this is a hot area that is moving fast and I predict sometime in the very near future we will all being playing with our smart thermostats from work, at home and on our phones.