Cleantech Market Intelligence
With Developer Program, Nest Raises Questions
This week Nest Labs introduced its Nest Developer Program, which integrates smart devices for both home and lifestyle uses. The results suggest that energy efficiency is going mainstream without most people even knowing it. This program, which has already enrolled partners such as Mercedes-Benz, Whirlpool, Jawbone (UP24 maker), LIFX, and Logitech, allows communications between smart devices in order to influence and optimize their overall functionality. For example, the Nest thermostat could receive better information on a homeowner’s sleep/wake cycle, whereabouts, and habits from data transmitted through the UP24 bracelet. It can then incorporate this information into its intelligent algorithm for determining household heating and cooling patterns.
But that’s only a small part of it. Nest has already taken a stab at utility-scale demand response (DR) through its Rush Hour Rewards program for climate control, but the program can now enroll other energy-heavy appliances, such as washers and dryers, in the same DR events. Following device trends in electric vehicle charging, where smart communications are increasingly integrated and relied upon, it’s fair to speculate that this type of developer program has the potential to solve a lot of the problems utilities are currently facing as growing renewables penetration causes instability along the distribution grid.
The potential to optimize energy usage will grow significantly as cloud-based home energy management advances technologically and adds functionality. But the market is likely to experience setbacks as privacy issues are raised. Nest and Apple have both created privacy guidelines for data as it is communicated between devices, but protection and control over this information will still be an issue for customers. As public utilities incorporate software platforms for managing connected devices, it’s unlikely they will be able to avoid the type of pushback (seen here, here, and here) that has hindered the deployment of smart meters.
Another question inherent in this move to a connected life is how the interaction between devices and software will take shape. Nest and its associated partners have built value propositions off the premium quality of their networked thermostats and the software that controls them. But competitors like EcoFactor and EnergyHub build value off the ability be flexible in the devices they connect to – asking if premium devices are really all that necessary to realize the same gains. When you involve multiple customer demographics (with different levels of income and values) and budget-conscious public organizations, different needs and limitations will require different solutions. There’s no denying that people become emotionally connected to well-made, well-designed hardware – and they will pay a premium for it. But, as the cellphone industry has shown, there are limitations in terms of hardware development. So how long will the novelty last for thermostats?