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‘Smart’ thermostats are the latest ‘it’ device

Actor Matthew McConaughey hawks one device in television commercials in a folksy twang. Power utilities are signing exclusive deals with manufacturers. Online tech forums are awash in discussions over different devices’ virtues.

More than five years after smart thermostats were introduced as an easy-to-use alternative to the current programmable models, manufacturers are reporting triple-digit sales increases. The thermostats are pitched as the next “it” device and a revolutionary step in getting households to better manage their electricity use.

Parks Associates, a Dallas market research firm, estimates about 1 in 10 U.S. homes with a broadband connection now own a smart thermostat. That has driven what is now an $86 million-a-year global market, which may grow to $1.4 billion by 2020, according to a report published late last year by Navigant Research.

“Six (million) to 8 million thermostats are sold annually, and in the future a larger and larger portion of those are going to be smart,” said Tom Kerber, director of energy research for Parks Associates. “Think about automatic door locks. They used to be only on Cadillacs. But it moved down to the lower-tier cars. And now you can’t buy a car without automatic locks.”

With more than two dozen models available, smart thermostats vary in features. But the basic principle is a wall-mounted thermostat that, through sensors and algorithms, learns the patterns of a home’s occupants to cut down on wasteful heating and cooling when no one’s there.

Add in user-friendly interfaces that can be controlled via smartphone and deals with utilities to automatically adjust thermostats in power shortages and the devices are purported to reduce electricity bills by as much as 20 percent.

While adoption has yet to hit critical mass, there is plenty of speculation about what widespread adoption would mean for the power grid. If the devices were coordinated by utilities, they could be ordered to raise the thermostats of willing customers en masse.


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NRG Energy already has such a program on a limited scale with manufacturer Nest. CPS Energy in San Antonio has distributed similar power management devices to more than 15,000 customers willing to let the temperatures in their homes go up a few degrees in shortages. One day last August, CPS shed more than 21 megawatts through the program, enough to power more than 6,000 U.S. homes on an average day.

Probably the best known device is Nest. Developed by two former Apple executives, Nest was introduced in 2011 at the jaw-dropping price of $400. Some traditional thermostats sell for less than $50.

Nest has since lowered its price to $250 and is estimated to sell about 50,000 units a month, according to Forrester Research.

Its simple design and functionality have proven a big hit with users – not to mention piqued the interest of Google Inc., which bought Nest, based in Palo Alto, Calif., for $3.2 billion in January.