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Smart Thermostats Are Looking Like Dumb Policy

Smart Thermostats Are Looking Like Dumb Policy

Earlier this month Xcel Energy made national headlines when it locked out 22,000 customers in Colorado from adjusting their thermostats as temperatures rose into the 90s.

Those affected were customers who had signed up for the Colorado AC Rewards program, which allows the company to adjust the temperature setting on internet-connected “smart thermostats.” In exchange for ceding control of your home heating and cooling, Xcel provides participating customers a $100 enrollment credit and $25 each year they stay enrolled in the program.

The rationale behind the program is that customers get subsidized utility bills in exchange for allowing Xcel to adjust their thermostat during times of extreme weather or peak demand in order to ease strain on the electrical grid.

Xcel’s adjustments are typically capable of being overridden by participating customers, according to the utility. Events like the one at the beginning of the month, where customers are literally locked out of their thermostats, are an anomaly they claim.

The theory is that customers enjoy fewer costs from subsidized bills and reduced electricity consumption, and Xcel gets to better maintain the reliability of the electric grid. Aberrant events aside, it should be win-win for everyone right?

The problem is that even during the course of normal operations, smart thermostats don’t actually appear to be working in practice as advertised.

According to the Washington Examiner:

SMART THERMOSTATS MAY NOT SCALE UP: An important new study finds that “smart” thermostats do not have a statistically or economically significant effect on energy use.


The problem occurs when the technology is “scaled up” and distributed to a broader population, John List, an economist at the University of Chicago and one of the lead authors of the study, circulated by the National Bureau of Economic Research Monday, said.


The findings: Popular smart thermostat devices, such as the ecobee and the Nest, advertise annual savings of up to 26% and 27%, respectively, on consumers’ annual heating and cooling bills.


But the new study—which examined data from 1,379 households over a period of 18 months—found major discrepancies between these statistics, which assumed certain behaviors, and their actual use by the general public.


Instead of saving energy, in fact, researchers found the devices actually slightly increased electricity and gas consumption, by 2.3% and 4.2%, respectively.

Now that poses a bit of a problem. Utilities like Xcel are increasingly relying on so-called smart thermostats and other demand-side management tools in order to cope with a massive shift in electricity generation toward variable renewables, which cannot always accommodate periods of peak demand.

Adoption of the meters is currently voluntary, which means in theory those already participating should be the most energy conscious. In practice, however, revealed preferences appear to take over.

In the case of home thermostats, the problem wasn’t necessarily one of usability: In fact, researchers observed, nearly all users with the smart devices programmed them almost immediately, and many did so with energy savings in mind.


The problem was how often, and to what extent, users deviated from the devices’ programmed schedules: Users were more likely to override the devices’ scheduled setpoints in ways that used more energy – i.e. when cooling, they set temperatures colder; when heating, they set them warmer.


Ultimately, researchers found “little to no evidence” that the smart thermostats reduced household energy consumption.


And, “[viewed through] the lens of climate mitigation, our results provide little justification for the amount of subsidies directed towards smart thermostats; such technologies have no impact on energy use and associated greenhouse gas emissions,” the study concludes.

So, not only do the technologies run the risk of allowing utilities to hijack control of your home temperature on days when they fail to guarantee the reliability of the grid, but they also waste huge amounts of taxpayer/ratepayer money on useless subsidies for no measurable benefit.

Rather than the win-win that was promised, it appears that the meters actually induce strain on the grid. Other studies beyond the new NBER paper have found similar results. That means first of its kind events like the smart meter lockout from earlier this month could be even more frequent as more residents are incentivized to adopt smart meters and other “energy efficiency” technologies. That becomes increasingly important as the state looks to electrify more sectors of the state each year.

Instead of throttling down the power to Colorado families and businesses when they need it most, our grid should be built to be capable of providing abundant, reliable electricity that does not rely on ratepayer-funded gimmicks like smart-thermostats. To do this, Xcel Energy should maintain its natural gas fleet for the duration of its useful life, while considering replacing its soon-to-be retired coal fleet with reliable, carbon-free nuclear.

Jake Fogleman