Utilities, Nest aim to put 1M smart thermostats in Chicago area

By Jeffrey Tomich | 10/09/2015 07:13 AM EDT

Commonwealth Edison and a group of partners yesterday set out to make Illinois’ newest power plant a virtual one that will be attached to the walls of more than one-fourth of the electric utility’s 3.8 million customers in and around Chicago.

Commonwealth Edison and a group of partners yesterday set out to make Illinois’ newest power plant a virtual one that will be attached to the walls of more than one-fourth of the electric utility’s 3.8 million customers in and around Chicago.

But instead of generating electrons, the mission of deploying 1 million tiny devices is to avoid them.

ComEd, Chicago-area gas utilities along with smart thermostat markers Nest Labs Inc., ecobee and other partners crafted a program with the goal of putting 1 million thermostats in northern Illinois homes by 2020 by offering rebates that cut the cost in half.


The idea isn’t new — utilities in the United States and elsewhere have been offering smart thermostat rebates for years. But the Chicago-area program is unrivaled in scale and ambition, participants said.

Nest, owned by Google Inc., has millions of thermostats in homes in seven countries, Ben Bixby, Nest Labs’ general manager for energy products, said in an interview. "But we’ve never targeted this type of density of a million thermostats in a single service territory, and all that that can bring."

The smart thermostat initiative was announced at a news conference yesterday morning in Chicago that included U.S. EPA Administrator Gina McCarthy as well as the Illinois Commerce Commission chairman, utility executives, and representatives of the Environmental Law & Policy Center (ELPC) and the Citizens Utility Board, a consumer advocate.

"What makes this a game changer is that customers can achieve significant savings on their energy bills while improving the comfort of their homes," said Robert Kelter, a senior attorney for Chicago-based ELPC, a Midwest environmental advocacy group that was instrumental in fostering the partnership. "It’s a high goal, but a reasonable goal and an achievable goal for the ComEd service area."

Kelter said the program also will have broader benefits by reducing the need to run power plants as often or build new ones.

And 1 million smart thermostats could reduce carbon dioxide emissions by more than 700,000 metric tons, or the annual emissions of 150,000 cars, according to the ELPC.

That would prove useful as EPA issued the final rule for its Clean Power Plan, which will require Illinois to reduce CO2 emissions by up to 42 percent over the next decade and a half. While energy efficiency was eliminated as a "building block" for setting the target, it is expected that states will lean heavily on energy savings measures to reach their goals.

The program covers ComEd’s 11,000-square-mile service area in northern Illinois and includes participation by Nicor Gas, North Shore Gas and Peoples Gas, the natural gas utilities whose territories overlap and who will also help fund rebates.

The program is available to utility customers with Wi-Fi, central air and a furnace. They qualify for a $100 to $125 rebate on Nest or ecobee devices depending on where they are purchased.

The rebates will be provided using funds already allocated by ComEd and two natural gas utilities under existing energy efficiency programs.

The idea for the program originated from a wasted energy study that ComEd was required to do a couple of years ago to demonstrate energy efficiency potential. It showed that consumers could achieve a 38 percent savings on heating and cooling by properly setting their thermostats, Kelter said.

By law, energy efficiency programs in Illinois must be found to be cost-effective by regulators to enable the use of ratepayer funds.

"We have strong standards in Illinois requiring that ratepayer dollars can only be used in energy efficiency programs if those programs can deliver real savings to customers," ICC Chairman Brian Sheahan said. "The smart thermostat initiative meets that test."

Money back

Years ago, programmable thermostats gave hope for slashing residential energy use. But studies showed they were largely ineffective because consumers didn’t understand how to use them or bother to set them properly. Ultimately, they were withdrawn from the federal Energy Star program because savings were negligible.

But Wi-Fi-enabled smart thermostats have sensors that know when you’re home, software that learns your preferences, and technology that allows you to monitor and adjust them from a computer or a smartphone.

Stuart Lombard, president of Toronto-based ecobee, estimates that consumers can shave a combined 23 percent off heating and cooling costs. In the Chicago area, that would be 50 to 70 percent of total energy use, he said.

Meanwhile, Nest cites data from three studies that show consumers can save an average of 10 to 12 percent on heating and 15 percent on cooling costs for homes with central air conditioners. That can mean $130 to $145 annually, Bixby said.

"That’s millions of dollars that ends up back in people’s pockets rather than figuratively — I guess it’s almost literally — sending that money up a smokestack," he said.

According to data gathered by ELPC’s Howard Learner, 1 million smart thermostats across ComEd’s service area could save 342 million kilowatt-hours of electricity — annual energy savings totaling as much as $119 million, or $131 a year per customer.

Savings estimates also don’t include the potential for the smart thermostats to be used as part of demand-response programs, which could ultimately unlock even more value for participating customers, according to Nest and ecobee executives.

Marketing can make or break

Lauren Callaway, an analyst at Navigant Research, said the actual energy savings data won’t determine the fate of the incentive program or the goal of 1 million devices installed in five years, a goal that she describes as "very ambitious."

More important, she said, is the effort put into reaching consumers.

"It depends on how the device itself is marketed by the utility and its partners," Callaway said.

Lombard of ecobee agrees. "I think if the customers see it and understand it, they’ll get it," he said. "It’s really about letting customers know that the solution exists and it can have a big impact."

At $100 per rebate, the tab for incentives to cover 1 million smart thermostats could exceed $100 million. But Kelter believes that increased market penetration will, over time, help reduce costs for thermostats themselves, putting them within reach of more consumers.

Said Kelter: "Utility-run programs like this help transform the market, and that’s our hope here."