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in other words: $250 for a Thermostat?!

Posted by Lester Shen  |  Date July 3, 2012  |  Comments 0

in other words is a regular feature of i.e. Every couple of weeks, we take a closer look at current events and trends in energy, ground them in relevant data and context, and offer our insight about their potential impacts and implications. We look forward to your input and feedback.

Last October, former Apple employees garnered a lot of media attention when they announced that they were designing the Nest: a smart and aesthetically pleasing thermostat. i.e. reviewed their product in May, and the Home Energy Pros forum is currently hosting an interesting discussion about its energy saving potential. 

As an Apple fanboy, I was intrigued. But I wasn’t seeking a $250 replacement for my 20-year-old programmable Chronotherm any time soon. Programmable thermostats are available for a little more than $50: why would any rational person spend four to five times that price for a Nest or other comparable wifi-enabled smart thermostat?

According to the Nest website, the thermostat learns your schedule and automatically programs itself. It senses when you are gone and adjusts the temperature. You can program it from your smartphone or tablet, and it can display your energy history. To do all this, the thermostat has activity sensors to monitor occupancy, a humidity sensor, three temperature sensors, and a wifi connection to enable monitoring of local weather conditions. It uses its wifi connection to upload data to the cloud.  It could be possible to observe a house’s energy history including house air temperature, thermostat set point, and energy use (since it knows when the furnace or AC is on or off); as well as outside weather. 

Wow!  As a building researcher, I hate to estimate the cost of measuring and monitoring this data. But with it you could calculate the time constant of the home, create a house UA value or overall building thermal response factor. And Nest now has people paying $250 to create this data set?! Nest has not released its sales figures, but its units sold are presumably in the tens of thousands, perhaps more. Wouldn’t it be great to access this data? Imagine a home energy label based on actual energy use and house balance point! We wouldn’t even need to visit the house. (Hmm, maybe for a free $250 thermostat, a homeowner might sign a release form...)

Researchers have found that most homeowners do not use the programmable thermostats correctly and so the installation of programmable thermostats fails to provide the anticipated energy savings. Two of the Nest’s key selling points are its usability and its learning capabilities. Maybe this is the programmable thermostat that will actually achieve its energy savings potential!

Oh, and did I mention that it is really cool? When celebrities like Leonardo DiCaprio drive Priuses, it certainly doesn’t hurt their sales. The Nest thermostat would not receive the same media coverage if it weren’t being mentioned in the same breath with Steve Jobs and Apple. The connection embues Nest with an aura of innovation and user-friendliness. Their product has a lot of cool energy saving features. A recent update added more and I suspect even more are on the way. And perhaps its $250 price tag is attracting attention and motivating purchases. People are willing, and maybe even expect, to pay a premium price for a brand they trust or covet even when cheaper alternatives are available. 

As consumers, we would like to think that we are rational and objective in our purchases, but often we are much more swayed by emotion than logic. When selling home energy retrofits, our auditors use a rational approach to convince homeowners, our customers, to invest in energy saving products and services. We feel that we are delivering a successful residential energy program because 28% of our homeowners complete our recommended home energy improvements. But we have room to grow. Almost three out of four homeowners who could have work done on their houses -- to reduce their utility bills, improve their comfort, and increase the resale value of their house -- chose not to do so, even with incentives like rebates and low-interest loans. 

Perhaps we could expand and multiply our approaches. We have a lot to learn from the marketing of the Nest thermostat. We need to clearly define the segments of our target audience and understand how to truly engage each segment. We need to create a message that appeals emotionally to our audience. In the case of the Nest, the message is “energy efficiency is cool and fun and we don’t mind paying a little extra for the experience.” Can you guess who their target audience is? My guess is that it’s one of ours as well.

Related CEE program:

Community Energy Services

Related post:

The Nest Thermostat: Saving Energy Can Be Fun


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