Smart thermostats garnered a lot of energy industry and media attention in 2012 and will likely continue to do so as the market continues to grow (for example, a recent GigaOM article claims Nest is shipping 40,000 to 50,000 thermostats each month).  While the energy industry tries to figure out a) what smart thermostats are capable of and b) if consumers will pay to swap out their “dumb” thermostats, it’s clear these devices have the potential to help create more efficient homes by enabling consumers to adjust their energy use.  Still, some consumers continue to debate whether smart thermostats can actually save energy.  Thus, it’s a good time to review that ways in which thermostat setbacks can save energy.

Thermostat setbacks are defined as setting a thermostat at a lower – or higher, depending on the season – temperature than normal so the HVAC system will run less often.  Typically, setbacks are deployed when less heating or cooling is needed, i.e., during the day when occupants are at work, or at night when occupants are sleeping.  The common misconception around setbacks is that the extra energy needed to recover the original temperature nullifies the energy saved by using the setback, and can even raise energy bills.  The fact is, that’s not how setback savings works.

How It Works

The savings from temperature setbacks are directly related to the amount of time spent at the lower temperature setpoint (or, in summer, a higher setpoint).  The energy savings accrued while the indoor temperature falls (or rises) is approximately equal to the additional energy needed to bring the indoor temperature back to the original setpoint.  Since those two conditions cancel out, the measurable savings amass during the time spent at the lower setpoint.

Let’s look at a specific example in the winter.  Consider a thermostat using a comfort setting of 70°F while the home is occupied and a setback setting of 62°F while the home is unoccupied.  At 9 a.m., the thermostat lowers the indoor temperature from 70°F to 62°F.  At 5 p.m., the thermostat brings the home back to 70°F.

The savings accumulate during the 8-hour span while the home is at 62°F; again, the assumption is that the energy saved while the house dropped from 70°F to 62°F equals the energy required to bring the house back to 70°F.

Some argue about setback savings because they don’t agree with that key assumption.  Variables like a home’s physical characteristics (envelope, insulation, solar heat gain, etc.) as well as the HVAC system’s efficiency all help determine the effectiveness of setback savings.  In general, the older a home and/or its HVAC equipment, the more likely efficiency losses are present, especially while the HVAC system recovers from a setback.

However, it’s worth pointing out that the HVAC system doesn’t work harder per se to recover the original temperature; the system just cycles longer.  As North Dakota State University’s (NDSU) “Thermostat Setbacks Do Pay Off” article puts it, “It is not like the throttle on your favorite automobile, where the harder you push, the harder the motor works.  Heating systems are simply on or off.”

Still don’t believe the savings setbacks are selling?  Feel free to comment below to provide your arguments.

I am not sure who first coined the term “Internet of Things” (or, since everything technical must be an acronym, IoT), but I first heard it in the early 2000s.  I thought at the time it had already outlived its usefulness.  I thought the more mundane term “machine-to-machine communications” (or M2M, an even cuter acronym) was far better, and it appeared the market agreed with me, at least for a while.

However, the IoT is back with a vengeance, and this time the term is loaded with additional meaning that may be elusive.  Early uses of the term conveyed the power of allowing “things” – ranging from vending machines to home appliances to building controls and sensors – to communicate with each other.  The current use of the term implies much more: it’s not just that things should communicate, but it’s about how they communicate.  Things should communicate like the Internet, with the capability of ubiquitous any-to-any communications.  More specifically, they should accomplish this ultimate connectivity via the Internet Protocol (IP) or some relevant flavor of IP.

This more specific IoT understanding is attractive.  The idea of open, layered protocols that mix and match physical media on the bottom of the protocol stack and virtually unlimited applications above them has been fundamental to Internet innovation.  So all things being equal, all M2M communications should be based on IP.   But all “things” are not equal and going all-IP is not necessarily free.  Hence strict adherence to a narrow definition of IoT as being IP-based may hinder innovation more than it helps or at least imply over-hyped benefits that are rarely evident in the world of things.

Everything’s a Peer

One universe of things where this risk appears evident is in building automation and control systems.  A true IoT implies that every sensor, actuator, thermostat, lighting ballast, and switch should be a peer IP-based communication node.  However, these are rarely independent, intelligent nodes on a network, and rather elements of a specific subsystem (lighting control, HVAC control, humidity control, etc.).  It’s highly unlikely that an occupancy sensor will ever need a software download to become something other than an occupancy sensor.  So, top-of-stack application flexibility is not really a relevant benefit for these devices.  The added cost in microcontroller memory and processing of supporting even a stripped-down IP stack in such a device may be higher than any benefit.

On the other hand, the situation of isolated, proprietary, non-connected subsystems that has been the norm in the building controls industry for about 100 years is unacceptable in the long run.  There has been real, if gradual, progress in developing and applying reasonably open and interoperable building control networks using non-IP based specifications such as BACnet, though there are probably still too many such “standards” to choose from.  Using IP networking and the application architectures implied by IP as the basis for subsystem integration and common network transport is not only a good idea but necessary for the continuing building systems evolution.  Applying the IoT model to building controls, though, does not mean everything must have an IP address.  This is similar to the difference between your laptop having IP networking and having the devices within your laptop – disk drives, video controller, keyboard, and so on  – be IP-based.

So as we consider the IoT applied to our own universe of things, let’s be clear on how much Internet-ness we really need to pay for.

In mid-October, San Diego Gas and Electric (SDG&E) regulatory filings indicated that the company has changed plans to deploy a foundational private WiMAX network as part of its ongoing smart grid deployment, opting instead for a mix of various public and private network systems.  This move is noteworthy because SDG&E is a leader in adopting a comprehensive, integrated, smart grid communications strategy.  Its abandonment of WiMAX raises questions about the future of private 4G network technology for smart grid.  Pike Research has been bullish on the future of standards-based private wireless for smart grids, so naturally we’re asking ourselves the same questions.

Utilities have a longstanding preference for private wireless over public cellular (though this is often overstated as vocal proponents of private wireless usually also have pervasive public cellular deployments, especially for advanced metering infrastructure (AMI) backhaul).   However, for critical applications (such as distribution and substation automation), private networks are still considered more reliable and resilient in the face of disruptions, and in some areas, the regulatory preference for returns on deployed assets tilts the field toward private networks.  Private 4G technologies such as WiMAX offer a standards-based private solution with strong performance and are expected to displace the plethora of proprietary solutions available.  SDG&E, CenterPoint Energy, and Oklahoma Gas and Electric (OG&E), as well as many smaller utilities in Canada, were and are heading in this direction.

Smart Grid Communications Node Shipments (Excluding Smart Meters), As % of Total, North America: 2012-2020

(Source: Pike Research)

However, as SDG&E discovered, reserving guaranteed spectrum for such private networks is challenging.  SDG&E had earlier been a showcase customer of Arcadian Networks, which built a product offering around dedicated spectrum that covers most of the United States.  However, Arcadian failed to attract enough customers to convince its investors that such networks were the best use of their spectrum, and ultimately failed.  This is less of an issue in Canada, where WiMAX-suitable spectrum has been reserved for utility use, leading to greater usage.

Against some of these challenges, public cellular companies have more aggressively supported some of the bandwidth and service guarantees required by utilities, enabled by new capabilities delivered by their own 4G networks.  Public telecom carriers have been riding a wave of greater acceptance by utilities for AMI applications (both to the meter and for backhaul), but not all of these are considered mission-critical, at least from the perspective of immediate availability during an outage crisis.

Where will this lead? At Pike Research, we still see a strong trend toward adoption of open standards for public and private, wired and wireless network technologies, and the benefits of integrating these in a unified communications architecture rather than in separate application silos is too great to ignore.  The ongoing post-mortems of recent major storms, such as Hurricane Sandy, should help guide in the private versu public network resiliency debate, if utilities are willing to share their experiences.  We still see a strong future for private 4G wireless technologies but also strong growth of public 4G networks (40% CAGR, 2011-2020, for unit shipments into distribution automation and AMI backhaul applications in North America).   We’ve never said that there will be “one network to rule them all,” much to the chagrin of some network equipment vendors.  Diversity will remain the key defining attribute of grid communications networks long into the future.

In 1807, London’s Pall Mall became the first street in the world to be illuminated with gaslight.  Since then street lighting (first by gas and then electricity) has become so ubiquitous that few people give it a second thought (unless they see a broken lamp in their street).  But street lighting is once again becoming a focus for innovation and a priority issue for city managers as they try to reduce energy costs and meet their sustainability targets.  Smart street lighting can play a similar role in the development of 21^st Century smart cities to the one played by gaslights in Victorian London.

Street lighting can account for up to 40% of a municipality’s electricity bill, not counting maintenance costs.  Some U.K. cities have tried turning off lights to save money (though this commonly leads to a public outcry and subsequent rethink).  The dimming of the lights can also stand as a potent metaphor for a city’s decline, as in the case of Detroit.  Many cities are now looking at alternative approaches to reducing the energy consumption of their street lighting.  The most attractive solution is to move to more efficient lighting technologies.  LED lighting is generally seen as the future for street lighting, as falling costs and improvements in quality are driving adoption in cities such as Seattle.  Our recent report, Smart Street Lighting, estimates that shipments of LED street lights will rise from fewer than 3 million in 2012 to more than 17 million in 2020.  Other cities, such as San Diego, have chosen to introduce induction lighting to replace their existing high-pressure sodium lamps, with the same aims – a significant reduction in energy use and maintenance costs and savings to the city purse that can reach millions of dollars (around $2.4 million a year for Seattle and $2.2 million for San Diego).

The Piggyback Approach

The biggest challenge for cities looking to change their lighting systems is one common to many smart city innovations: finance.  The long term savings may be indisputable, but cities still need to find the upfront investment.  In the United States, stimulus funding has played a significant part in getting smart lighting pilots underway.  However, in many municipalities street lighting is provided by the local utility, so building the business case for energy efficiency depends on the incentives set for the utility by regulators.

The adoption of LED lighting is only the first step: the real revolution comes when intelligence is added to lighting systems.  Networking the street lighting system can further improve energy efficiency and introduce more adaptive local lighting without reducing public safety.   The network infrastructure can also be used to support additional services, such as traffic monitoring and even local Wi-Fi.  A pilot in San Francisco, for example, is looking at smart street lighting in this broader context.

But if building the business case and finding the investment funds for LED lighting is hard, justifying an advanced control network is still a step too far for many cities.   The additional costs and complexity have slowed the adoption of networked street lighting systems, behind that of LED lighting.  Cities must be able to leverage that network investment for other services or piggyback street lighting systems onto other systems.  This, of course, presents a chicken and egg problem as to which application can provide the initial cost justification for the network.

Most cities still struggle to develop investment models for new technology that take the holistic view of city operations.  Pilots in areas like Barcelona’s 22@ district show what can be achieved by taking an integrated view on energy, communications and city operations, but scaling such projects up to city-wide deployments requires innovations in city financing as much as in technology.  The implementation of smart street lighting will depend on new forms of private-public partnership based not on cost-saving models of traditional outsourcing but new approaches to long-term energy efficiency and improved operational effectiveness.