Can Google speed the growth of smart thermostats?

During the recent smart grid frenzy, smart thermostats (also known as programmable communicating thermostats or PCTs) developed in popularity alongside announcements of ambitious smart meter rollouts and demand response (DR) programs. Smart thermostats utilize integrated technologies that surpass the basic sensing and control functions of traditional thermostats, ranging from remote reading and control to fully automated control systems that balance learned user habits with utility demand-side management. In some cases, the smart thermostat is part of an integrated home automation system that includes other devices such as smart lighting, plugs, entertainment, and security systems.

Unlike products and solutions that are directly integrated by government-sponsored utility smart grid programs, smart thermostats have remained largely in the commercial sphere, where uptake relies on individual energy-efficiency awareness and cost savings as purchasing incentives, resulting in a struggle to gain traction, according to Navigant Research, especially given a much higher perceived average cost compared to that for basic programmable thermostats.

Google’s $3.2 billion cash purchase of smart thermostat manufacturer Nest Labs by Google indicate that growth is likely to accelerate. In fact, Navigant Research predicts worldwide revenue from smart thermostats will grow from $86 million in 2013 to almost $1.4 billion in 2020.

“Large retailers, including Lowe’s and The Home Depot in the United States and B&Q in Europe, have begun selling smart thermostats, signaling that sales of these devices could grow in coming years,” said Bob Lockhart, research director with Navigant Research. “It remains to be seen, though, whether marketing efforts on behalf of these retailers will raise the interest of a large pool of customers who are not already planning to replace an existing thermostat.”

Utilities are still cautious about investing in programs and tools that provide incentives for consumers to regulate their energy use. Likewise, vendors have struggled to produce user-friendly solutions with proof of substantial cost savings that will motivate customers outside of the energy-conscious segment. However, the combined factors of increased energy awareness, rising interest in home automation and security tools, and more user-friendly solutions have led to an uptick in shipments for smart thermostats and have revived a sense of optimism and excitement on behalf of vendors and stakeholders, Navigant contends.

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Read more: Can Google speed the growth of smart thermostats? – FierceSmartGrid