For utilities, smart thermostat programs more than a ‘set it and forget it’ effort

Getting customers to invest in smart thermostats requires more than just financial rebates, efficiency experts say.

Illinois’ largest utilities are not on pace to meet ambitious smart thermostat goals, and their experiences illustrate some of the challenges with getting customers to adopt new energy-saving technologies.

Smart thermostats are part of a growing number of energy efficiency tools developed in recent years that can be monitored and controlled remotely by users. The thermostats have been shown to reduce customer energy bills, and in large numbers they could significantly reduce electric grid load, especially during hot summer months when air conditioning use is high.

ComEd is four years into an initiative to get 1 million of the devices sold throughout its territory by 2020, while Ameren is one year into its effort to get 300,000 throughout its territory by 2030. To motivate customers, the utilities offer rebates and discounts up to $100; the thermostats usually cost between $150 and $250 at full price.

ComEd reported that more than 200,000 thermostats have been purchased with energy efficiency incentives. Ameren recorded 21,000 thermostats sold in 2018 through its incentive program, according to company spokespeople, who acknowledged that rate will have to increase to meet the goal.

ComEd’s program is “going a little slower than we had hoped,” said Rob Kelter, a senior attorney at the Environmental Law & Policy Center, which spearheaded the initiatives. He added that ComEd’s was the first of its scale in the country. “Nobody else said, ‘Let’s do a million.’”

To hit their goals, the utilities have focused on financial incentives to lower the cost for customers. Those incentives are key, experts said, but it will take more than discounts for the technology to ramp up. Customers also need to understand the benefits, and utilities are one of several players that can help.

“The more thermostats there are out there, the greater the societal benefit,” Kelter said. That means less energy, fewer emissions and less power that utilities have to buy, especially at peak hours. Kelter noted that as utilities shift focus from how much energy customers use to when they use it, thermostats are an easy way to balance load.

The Environmental Law & Policy Center works with the utilities and manufacturers, mainly Ecobee and Nest, to make the thermostats accessible to customers. Even small changes — like shifting from mail rebates to instant discounts, which the utilities offer on their online marketplaces and in some stores — ramp up customer adoption significantly, Kelter said.

ComEd uses digital advertising, billboards and bill inserts to promote the thermostats, Erica Borggren, the company’s vice president of customer solutions, said via email. The company also sends staff to community events, Borggren said.

Kelter said more outreach and marketing efforts will be necessary to get more people to buy the thermostats. Customers need a better understanding of the benefits, he said. For example, the devices can save them money on their electric bill through demand response programs. And bills will presumably already be lower because of reduced energy usage. On top of that, the thermostats can significantly reduce grid load if enough people have them: By changing the temperature on 500,000 thermostats just a degree or half a degree, “it can make a difference,” Kelter said.

ComEd customers who purchase Nest thermostats can sign up for a demand response program that earns them up to $40 during the summer. The company would not disclose how many customers participate, but customers report greater satisfaction with their utilities when they take part in the program, Hannah Bascom, Nest’s head of regulated energy partnerships, said via email.

Customers are hesitant about having to install the devices, Kelter said. Self-installation is the most common choice, but it can be daunting for a person who’s never done it before, which makes professional installers appealing. Utilities may have to make easy installation access a larger priority, Kelter said.

Installation concerns haven’t come up much for ComEd, according to Borggren. “We believe this could use further exploration to understand how much a barrier installation is for customers and to see what’s possible in both our program design and education efforts to account for this, if necessary.”

Ameren helps coordinate installation through its Smart Savers program, which serves low- to moderate-income customers in several downstate cities. Bascom said the program, with its installation services, “stands as a national example on how to meet customers where they are.” The Smart Savers customers are a large part of Ameren’s outreach efforts, which include live events that highlight the benefits of thermostats and other energy-efficient products, said Kristol Simms, Ameren Illinois’ director of energy efficiency.

Utilities can be a valuable resource for customers, Kelter said. While the thermostat manufacturers themselves need to advertise the devices, the utilities — which are regulated and aren’t in competition to sell products the way manufacturers are — can play a more neutral role in helping customers understand the benefits.

But it’s not always easy to get utilities on board. It’s been especially difficult to launch programs outside Illinois, Kelter said. “By nature, utilities are risk-averse.” Measuring the savings results from the thermostats has been more challenging than he expected, which could account for hesitation from utilities. Still, “it’s been a little disappointing and frustrating that utilities haven’t done more to embrace this program,” he said.

Utilities and developers are only two of several resources, though. Other players can help get the message out too.

“I think it requires a combination of entities,” said David Kolata, executive director of the Citizens Utility Board, which was an early supporter of the smart thermostat initiatives. It takes a joint effort, including utilities and manufacturers, consumer groups like the Citizens Utility Board, and municipalities like the city of Chicago, he said. That’s true not just for smart thermostats, he added, but for all energy efficiency and demand response programs.

Simms said that local contractors are also important to help spread the word to customers. She agreed that utilities have an opportunity to educate customers on the benefits of smart thermostats, and noted that for Ameren to reach its goal, increased educational efforts will be necessary in the coming years.

ComEd’s research at first indicated that customers didn’t feel the need to replace their old thermostats if they worked, Borggren said. “To help customers better understand the benefits of early replacement, we simplified our list of key benefits in education and awareness materials to focus on control, comfort and savings.”

“You’re asking people to go out and do something most people have never done before, which is buy a new thermostat,” Kelter said. Most people don’t make that kind of purchase unless they’re buying a new air conditioning system or a new house.

“I think it’s ultimately the consumer and environmental value proposition” that encourages customers to invest, Kolata said. Customers are attracted to bill savings and environmental benefits, and the “set and forget” aspect helps too. “It sort of optimizes your savings without you having to think about it,” he said.

The financial incentives seem to be the biggest driver in encouraging customers to buy the thermostats, Simms said, adding that purchases increase even more when retailers or manufacturers add promotions on top of the incentives.

She also noted that the thermostats are a conversation piece: People have them in their homes, and they can tell guests about them.

“Customers want to save money and want to save energy,” Simms said. “They just don’t exactly know how.” The thermostat is a valuable first step, she said, “because it opens them up to further opportunities to save.”