Navigant Research Blog

Ford Targets Home Energy

Neil Strother — January 17, 2013

Ford Motor Company intends to become your home energy management supplier one day – or at least try to.  The automaker announced a new effort at the Consumer Electronics Show (CES) last week in Las Vegas called MyEnergi Lifestyle, and the ensemble of players Ford has brought together for this project is impressive.

The companies joining Ford in MyEnergi include Eaton, SunPower, and Whirlpool.  Nest Labs and chipmaker Infineon are two other firms rounding out the group.  The goal is to show how typical consumers can significantly reduce electric bills by combining smart home appliances, cloud computing, solar panels, off-peak pricing, and plug-in vehicles.  Besides the car, which Ford would sell, the package of goods necessary for MyEnergi to achieve its goal includes:

  • Energy efficient appliances like refrigerators, dishwashers, and clothes dryers
  • Hot water heaters
  • Connected smart thermostats
  • Rooftop solar systems

Ford quoted a Georgia Tech computer model that predicts a 60% decrease in energy costs and a 55% cut in carbon savings from a typical home that adopts MyEnergi Lifestyle products.

That sounds impressive.  But so is the estimated price for all the gear: a Ford C-Max Hybrid goes for $25,200, a new energy efficient Whirlpool refrigerator costs around $1,100, a new clothes dryer is around $500, a basic hot water heater sells for around $500, the Nest thermostat runs $250, and a rooftop solar system goes for around $10,000.  The total comes to $37,550.  How long for a payback on that investment?

Half a Century

A typical energy bill in the United States is $1,248 per year.  It would take around 50 years to pay back the equipment investment ($37,550 divided by $748.80, which is 60% of the annual bill).  These are averages, of course, and a homeowner could start with one or only a few products, so the initial investment would be less, but so would the savings.  The vision Ford has seems out of reach for typical household budgets today. Where it does make sense is for a family doing a major home remodel or building a new dwelling; but add to that a new plug-in car?

So while MyEnergi Lifestyle is an intriguing concept by Ford and its partners, it has major hurdles and this idea is probably ahead of its time.  First, plug-in vehicle demand remains sluggish; for example, Nissan sold fewer than 10,000 LEAFs last year, less than half the original estimate.  Second, electricity consumption is not expected to rise rapidly; the Energy Information Administration projects electricity use in the United States will increase on average just 0.7% a year for households through 2040; thus, with relatively flat consumption, prices aren’t likely to jump quickly either, and without a big spike consumers are not likely to feel much pain.  Third, it will take at least another 5 years to get significant numbers of people to upgrade to products like smart appliances or more efficient water heaters.  Color me skeptical at this point.  I need to see stronger market drivers and fewer, or weaker, inhibitors.

One response to “Ford Targets Home Energy”

  1. Chris Botting says:

    I agree that seeing payback on energy efficiency appliances requires a long term view. But I respectfully submit that your math may be wrong: the payback will be much less than 50 years!

    I haven’t seen the Georgia Tech study, but these numbers don’t add up. The average yearly household electric bill is indeed at least $1,200 (NPR: 908 kWh @ $0.12/kWh), but this is just for electricity. That doesn’t include gas (CNNMoney: household average is $357/mo, or $4417/year) for driving, or natural gas or other fuel for heating. The $37,550 of efficient hardware would save electricity, but also gas (the car) and heating fuel (Nest thermostat; hot water heater and dryer if run on natural gas). Without doing the math, I would expect the payback period to be under 10 years, or well within the expected lifetime of most of these appliances.

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