An article in the UK mainstream press recently investigated the how smart thermostats and controls can be used to reduce household energy bills. The claims savings that can be achieve range from 10% by Hive of British Gas, up to around 20% for Google’s Nest thermostat. Given that the average energy bill of the UK household is around £1400/year, these represent significant amounts, though offset by the price of approx £200.
While anything that significantly dents energy bills will be well-received, these smart gadgets are more than just about price savings. For the user, they represent yet another example of the ‘datafication’ of everyday life, whereby one’s activities are captured, quantified stored in the cloud, and presented back in a pretty app or web page. Yet, there is genuine value being provided. The smart thermostats over a much easier way of managing heating and cooling systems, and provide greater transparency on what is driving energy consumption, which in turn nudges customers towards more energy-efficient habits. For the power companies, they provide not only a rare opportunity to differentiate on something other than price and tariff, but also give the opportunity to refresh the brand and image, through bright and colourful apps and web interfaces.
However these business and user benefits represent only the beginning of the story for smart home energy. To fully examine the potential, it is first necessary to understand typical domestic energy consumption patterns. Typically, for residences in relatively cool and dark climes as found the UK, this occurs in the evening, when most people are at home and are at their most active, watching TV, cooking, washing up, while making most use of lighting and heating. The peak demand can be triple the baseload (i.e. the constant power consumption by devices in standby etc), and twice the average daily consumption. As the cost of electricity generation and distribution is largely governed by the peak demand, for which all systems need to be dimensioned, there are clearly significant savings to be had by the power company, which could at least partly be returned to customers.
Typical Daily Electricity Consumption – Source Ofgem
A reduction of peak demand can be achieved by carrying out non-time-critical tasks such as using the washing machine, dryer, dishwasher, PC backups and upgrades outside this time window. Additionally fridges and freezers can be programmed to reduce consumption during this time window – e.g. by pre-cooling the freezer to allow to idle during the peak hour.
A glimpse of the future of demand management is provided by Nest, who run a programme in the US with several power companies called Rush Hour Rewards. Unsurprisingly, in hot places such as Austin, Texas, energy consumption in summer is dominated by air conditioner use, representing up to two-thirds of electricity used. The Rush Hour Rewards programme helps power companies reduce the demand in peak hour through the Nest thermostat reducing cooling during the rush hour, providing some form of monetary reward back to its customers. Nest claims power reduction of in excess of 50% when the system is engaged, providing average cost savings of 11% in Southern California. Crucially, Nest claim that only 14% of users chose to manually over-ride the temperature selected by the thermostat.
Nest Rush Hour Rewards Demand Shaping
Thus we are seeing the third generation of demand management take shape. Initially, utility companies simply relied on saver tariffs to encourage energy usage during the night. First generation smart apps gave customers greater insight into energy use during the day, thereby shaping user behaviour towards reducing energy consumption. Now this behaviour is becoming automatic, and as more home appliances are brought into control through an extended Nest API, Apple HomeKit, or potentially a standardised system such as AllJoyn, the potential for automatically managing and scheduling consumption will extend to white goods, lighting and home entertainment systems, linking up with home security systems.
Furthermore, as micro-generation, via photovoltaic, wind turbines or heat-pumps becomes more widespread, these systems will also plug into the home energy management system. In my opinion, the next significant step will come as electric or hybrid cars become common-place. Not only will cars require charging, but their batteries will also be able to provide an additional source of power if required, just as hydroelectric stations provide energy on demand (albeit on a much larger scale). Therefore, the smart thermostat has the potential to be a hub of activity, working perhaps in conjunction with a smart meter, to coordinate much of the home appliances, as well as managing the home’s power contribution back to the grid.