Navigant Research Blog

Lone Smart Devices Less Effective than Those Paired with Programs and Services

Paige Leuschner — March 17, 2016

Home Thermostat DialThere is a wide variety of options on the market for consumers interested in better managing their energy consumption, becoming more environmentally friendly, and generating their own energy. Enabling technologies such as smart thermostats can help customers achieve these goals. They can also be a point of contact for utilities that want to increase customer engagement and improve customer satisfaction, a concept that is covered in Navigant Research’s recent Residential Customer Engagement research brief.

However, the problem with the way these technologies exist today is their lack of integration with other enabling technologies, demand-side management programs, and other energy services. In essence, enabling technologies themselves may not be as useful to consumers as one might think.

In fact, smart thermostats on their own may actually result in increased energy consumption, despite the popular belief that owning these devices will reduce a consumer’s energy use and energy bills. This increase in consumption can occur because of the remote control capabilities of smart thermostats, which allow consumers to adjust their thermostats preemptively (or before arriving at home), whereas traditional programmable thermostats can only be adjusted once a user is home. Because of this, on December 31, 2009, ENERGY STAR required that manufacturers cease the use of the ENERGY STAR label for thermostats, asserting that although thermostats do have the potential to save energy, it is not the thermostat itself so much that saves energy, but the behavior of the consumer and the thermostat’s connection or integration with other devices and systems.

This lack of integration between energy services and enabling technologies not only causes problems for consumers, but also vendors and companies. In a survey of 423 web and mobile application stakeholders, 74% reported that the lack of integration in existing tools affects their ability to use data effectively. Essentially, the existing technologies that we have today are not integrated, which leads to the data becoming siloed. This makes devices and enabling technologies themselves less valuable and less effective to the consumer.

Startup Solutions

However, several vendors in this space are offering integrated enabling technologies and energy services. Quby, a startup company founded in 2004 and acquired by the Dutch Utility Eneco, offers a white-label smart thermostat and energy display device where consumers can subscribe to energy services, such as monitoring power generated by rooftop solar panels and tracking home energy consumption. The company has seen success with utilities in Europe and plans to spread to the United States later this year. Salus, a subsidiary of Computime, manufactures devices, sensors, and control switches and offers an integrated energy management solution that utilizes combinations of its manufactured hardware devices with software to form a complete platform.

The growth in enabling technologies is allowing consumers to participate in energy activities that were not possible or accessible before, and they are enabling additional points of contact between utilities and their consumers. However, it is important to keep in mind that these technologies are much more useful to consumers, vendors, and utilities when integrated with programs, energy services, and other enabling technologies. The integration of these devices is the key to saving energy and reducing consumption, not necessarily the device itself.

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