Navigant Research Blog

Smart Thermostats Power Residential Demand Response

Marianne Hedin — July 26, 2012

Old-fashioned thermostats are morphing into smart thermostats, also referred to as programmable communicating thermostats (PCTs), which enable residents to manage their energy usage more effectively and actively, and at a much more granular level than ever before.  These devices have also made it increasingly easier and more convenient for consumers to participate in utility demand response (DR) programs.  Continued software enhancements, along with connectivity to the Internet, is turning smart thermostats into mini-PCs that the utility customer can access remotely from a smart phone, iPad, or website.

Having used smart thermostats for some time already to enable DR in homes, U.S. utilities are increasingly relying on these more advanced devices as the technology of choice in supporting their direct load control as well as dynamic pricing programs.  Smart thermostats that support two-way communications allow the utility to execute load management automatically by sending a signal to the thermostat to adjust the temperature in the home by a few degrees (agreed to by the customer in advance) to reduce the use of an air-conditioning or heating system for a certain period of time during peak demand.  For their part, customers can program a smart thermostat to adjust the temperature in the home  when rates become high in order to reduce their utility bill.  Most important, this technology helps utilities engage their customers more effectively in DR programs by offering them a device that makes such involvement easy, convenient, and even fun, while at the same time be able to save money.  Some smart thermostat vendors claim that they can help consumers save at least 20% or perhaps as much as 30% to 50% on their energy bills.

A wide variety of smart thermostats is available in the market, but Honeywell’s UtilityPRO thermostat has gained attention lately because of its rich functionality and its many software features – thanks to its reliable operation and smart grid capabilities, developed in partnership with Cooper Power Systems.  A touchscreen programmable thermostat exclusively designed for residential DR, the UtilityPRO is currently one of the company’s top-selling advanced thermostats, and has so far been installed in about 600,000 homes and small businesses in North America.  The UtilityPRO can communicate via paging signals, or via wireless technology based on the ZigBee Smart Energy communication standard.  ZigBee communication enables consumers to program the thermostat online from any location at any time.  It also allows utilities to communicate with the thermostat to automatically regulate heating and cooling systems to curtail or shift peak demand.  At the same time, the utility can verify that the thermostat is able to respond when it receives a DR event or price signal.  Because UtilityPRO has a backlit display and messaging capability, utilities can also deliver near, real-time usage and billing data to residents.  Honeywell has estimated that in 2011 UtilityPRO gave utilities combined control of more than 500 megawatts of peak energy use.

In the years ahead, smart thermostats will continue to develop to offer even more advanced capabilities. It is quite possible that PCTs will become a serious competitive threat to the in-home display units that some vendors are trying, with limited success, to push in the market.  As consumers increasingly assume the role of home energy manager, they would most likely choose a device that is inexpensive and easy to install (no hard-wiring) but also offers a user-friendly web interface along with access to data and information that motivate them to take action with respect to their energy consumption.

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